INFRA PUSH: Government steps up to infrastructure reforms, remove bottlenecks

In a bid to keep up the reform momentum, the Indian government has taken a slew of decisions to revive the infrastructure sector. Here are the key decisions taken the Cabinet Committee on Economic Affairs, chaired by the Prime Minister Narendra Modi recently and their likely impact:

Segregation of civil construction cost from capital cost of NH projects
In a move that should significantly expedite project approvals, the Cabinet approved a mechanism by which the construction cost of a project will be segregated from the cost of land acquisition, centages and pre-construction activities.
“By adopting the policy, the avoidable delays in the process of appraisal and approval of NH projects will be suitably addressed. Speedy appraisal and approval will help in meeting the award target of 10,000 km set for this year,” the government said in a press release.

Authorising NHAI for rationalised compensation
The Cabinet has authorised the road ministry to clear projects up to Rs 1,000 crore on its own, besides empowering it to take appropriate measures, including compensation to developers. It has also authorised National Highways Authority of India (NHAI) to allow extension of concession period for all current projects in BOT (Toll) mode that are languishing during the construction period due to causes not attributable to the concessionaire.

“The main object of the proposal is to revive the languishing highway projects in the country. It will facilitate uplifting the socio-economic condition of the entire nation due to increased connectivity across the length and breadth of the country leading to enhanced economic activity,” a government statement said.

Sale of 10 per cent stake in Coal India
The Cabinet Committee has approved the disinvestment of 10 per cent paid up equity capital of Coal India Limited. The government is expected to get around Rs 20,000 crore from the disinvestment.

The paid up equity capital of the CIL is Rs 6,316 crore. After the disinvestment of 10 per cent equity, the government’s shareholding in CIL would come down to around 68.65 per cent.

IPO of Cochin Shipyard Limited
The Cabinet approved the Initial Public Offer (IPO) of Cochin Shipyard, the first IPO among the major ports. The approval is for issue of an IPO to the public consisting of 3,39,84,000 equity shares of Rs 10 each amounting to an equity capital of Rs 33.984 crore of CSL consisting of fresh issue of 2,26,56,000 equity shares and sale of Government of India’s stake in CSL worth 1,13,28,000 equity shares of Rs10, through a public offering in the domestic market according to Securities and Exchange Board of India (SEBI) rules and regulations.

The raised money will be utilised to part-finance CSL’s expansion in short and medium term, setting up of an International Ship-repair Facility (ISRF) at Cochin Port Trust area, and setting up of a large dry dock within the CSL premises to take up construction of larger ships such as large sized aircraft carriers, VLCCs etc. and to take up underwater repairs to rigs and semi submersibles.

“The disinvestment of the Government of India’s stake in CSL is in line with the government’s decision on the issue. It will raise resources for the government due to the sound financial condition of CSL. There would be no financial outgo from the government on account of the issue of shares. Instead, the Government would earn revenue due to sale of its shares to the public,” a statement issued by CCEA said.

Expansion of railways network
The Cabinet cleared big-ticket rail projects in Odisha, Andhra Pradesh and Chhattisgarh relating to doubling and construction of new railway lines costing over Rs 8,000 crore. It has cleared projects for doubling of 189.278 km Kottavalasa-Koraput railway line costing Rs 2,977.64 crore, doubling of 164.56 km Koraput-Singapur Road line costing Rs 2,361.74 crore and 110.22 km Jagdalpur-Koraput line with a cost of Rs 1,839.02 crore. These projects are crucial for enhancing railways’ freight business which will help in raising revenue.

The Cabinet has also given its approval for revised cost estimate amounting to Rs 2,774 crore where  railways and road ministry will contribute Rs 1,247 crore and Rs1,527 crore respectively. “The railway line part of this project is likely to completed during the current financial year,” an official statement said.

7