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K.R. Srivats

RBI, SEBI and IRDA will also give comments on infrastructure financing proposals

New Delhi June 22 The Planning Commission is expected to soon submit to the Finance Ministry its views on the recommendations of the final report of the Deepak Parekh committee on infrastructure financing.

Similarly, the Reserve Bank of India, Securities and Exchange Board of India (SEBI) and Insurance Regulatory and Development Authority (IRDA) are also likely to provide their comments on the report.

Official sources said that the Finance Ministry has circulated the recommendations to the Planning Commission, RBI, SEBI and IRDA for their comments.

This committee, appointed by the Department of Economic Affairs in December 2006, was mandated to identify and estimate the need for different kinds of capital, including debt financing, sub-debt financing, equity capital, mezzanine and other quasi-equity capital for infrastructure financing.

It was also required to develop a vision for private financing in this sector in the medium term.

Asked to comment on the recommendations made in the final report, Mr Montek Singh Ahluwalia, Deputy Chairman, Planning Commission, told Business Line that "Planning Commission would soon submit its views on the final report to the Finance Ministry".

Although the private sector wants to invest in infrastructure, the requirement of long tenor debt remains a constraint. Given the inability of Indian banks to lend long-term, there is a felt need to deepen the Indian debt market so that risks are diversified and more long-term funds are mopped up from this market.

The seven-member Deepak Parekh committee, which submitted its final report to the Finance Ministry in end-May, has pegged the infrastructure-spending target at $475 billion for the next five years, much higher than the $320-billion estimated earlier by the Government.

One of the committee's recommendations is to use a small part of the foreign exchange reserves for financing infrastructure.

In fact, Mr Montek Singh Ahluwalia had first proposed the use of some of foreign exchange reserves for financing infrastructure.

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