Legislative protection for infrastructure investors on the anvil

P Manoj Mumbai | Updated on July 27, 2020 Published on July 27, 2020

Extra revenue source for Central Road Fund to be tapped

A law for facilitating infrastructure development is being considered by the government, according to an official.

The planned Infrastructure Facilitation Act could contain clauses for investor protection by prescribing timelines for provision of clearances, breach of which may be prevented using sanctions through specific, defined penalties.

The government is also looking to “strengthen and diversify sources of revenue for the Central Road and Infrastructure Fund (CRIF), which is currently made up of cess on petrol and diesel to address the long-term negative outlook on oil consumption”, the official said.

Reducing delay in clearances

“Transparency in time-bound issuance of clearances and deemed clearances beyond specified time frames, would greatly aid prevention of time overruns for infrastructure projects. It may offer protection for action taken in good faith to promote expeditious decision making. Further, the financial security for maintenance of the project can be ensured by following the best practices in terms of creation of escrow and reserve accounts,” he said.

The government is exploring innovative ways of financing given the massive fund requirements for infrastructure development.

One potential avenue could be more efficient usage of the CRIF, which is earmarked for various infrastructure sectors such as transport (road and bridges, ports, shipyards, inland waterways, airports, railways, urban public transport), energy, water and sanitation, communication and social and commercial infrastructure, as per the CRIF Act.

The CRIF — a big source of funding for infrastructure projects — received ₹1.13 lakh crore in FY19 and ₹1.2 lakh crore in FY20.

Negative outlook

“Since the CRIF is singularly dependent on petroleum product surcharges on excise duty and taking into account the long-term negative outlook on oil consumption, a futuristic plan to strengthen and diversify sources of revenue for CRIF need to be planned to provide a robust long-term revenue stream for financing infrastructure development,” the official stated.

Accordingly, additional sources of revenue for the CRIF is being explored, the official said.

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Published on July 27, 2020
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