Government Takes Steps To Redefine Infrastructure, Funding Frameworks, To Align Them With Current Economic Realities

The finance ministry has assigned a distinguished committee led by Bibek Debroy, chairman of the Economic Advisory Council to PM, to conduct a thorough evaluation of the attributes and criteria that define infrastructure, as well as its financing structure.

The government aims to redefine the concept of 'infrastructure' and develop a fresh framework that facilitates the smooth flow of funds into this sector.

The committee is anticipated to deliver its report by September.

This development arises in the midst of a significant expansion of the nation's infrastructure — which includes the introduction of the National Infrastructure Pipeline and the PM Gatishakti plan by the government.

During the budget presentation for the fiscal year 2023-24, Finance Minister Nirmala Sitharaman emphasised the necessity of reassessing the extent and inclusiveness of the infrastructure definition, as well as the framework for financing infrastructure projects.

According to an office memorandum issued by the finance ministry, the other members in the five-member committee are — economic affairs secretary Ajay Seth, civil aviation secretary Rajiv Bansal, chief economic adviser V Anantha Nageswaran, State Bank of India chairman Dinesh Khara and Solomon Arokiaraj, joint secretary in the finance ministry, reports Economic Times.

"Infrastructure is a catalyst for sustainable and productive economic growth. Infrastructure spending not only increases creation and upgradation of national assets, but also has a high multiplier effect in terms of employment generation, industrial and ancillary growth and socio-economic development," the ministry said in its memorandum.

Following the guidelines set by the Rangarajan Committee under the National Statistical Commission, the term 'infrastructure' was defined, leading to the creation of the 'harmonised master list (HML) of infrastructure' in 2012 — based on the Rangarajan framework.

However, the government believes that since the implementation of the HML in 2012, there have been substantial changes in global economic conditions, resulting in significant alterations to the sectoral composition that defines 'infrastructure'.

The ministry urges a redefinition to match the present economy and find optimal ways to finance infrastructure to increase investment in the sector.