Government Forms Expert Committee To Redefine Infrastructure And Rework Financing Strategy

As part of its plan to ease flow of funds to the infrastructure sector, the government has set the ball rolling for redefining ‘infrastructure’.

The Finance ministry has tasked a high-level committee under Bibek Debroy, chairman of the Economic Advisory Council to PM, to undertake a comprehensive assessment of the characteristics or parameters defining infrastructure and its financing framework, a report in the Economic Times said.

“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

The five-member committee September includes Economic Affairs Secretary Ajay Seth, civil aviation secretary Rajiv Bansal, Chief Economic Advisor V. Anantha Nageswaran, SBI Chairman Dinesh Khara and Solomon Arokiaraj, Joint Secretary in the Ministry of Finance.

The committee will reclassify the existing Harmonized Master List of Infrastructure, review existing infrastructure financing strategy and is expected to submit its report by September.

Budget Declaration

Earlier in February 2023, while presenting the Union Budget 2023-24, Finance minister Nirmala Sitharaman had said that the Harmonized Master List of Infrastructure would be reviewed by an expert committee for recommending the classification and financing framework suitable for Amrit Kaal.

The Rangarajan Committee under the National Statistical Commission had defined the term’ infrastructure’. Based on the Rangarajan framework, the Harmonized Master List of Infrastructure (HML) list was created in 2012.

The HML List was introduced with the intent to guide financial institutions/ agencies that are responsible for supporting infrastructure in various ways. Bank and NBFC finance to the sectors laid down in the Harmonized Master List would qualify as ‘infrastructure loans’, which are loans that are subject to different regulatory requirements given the nature of these loans. For instance, infrastructure loans are subject to different asset classification norms, concentration norms, etc.

However, since the adoption of HML in 2012, the sectoral mix that constitutes ‘infrastructure’ has significantly altered, which has necessitated a relook of the definition of 'infrastructure’ to reflect the current economic realities, as well as, understand the ways in which infrastructure can be best financed to attract more investments into the sector.