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The Deputy Chairman, Planning Commission, Dr Montek Singh Ahluwalia, with the Senior Vice-President of FICCI, Mr Onkar S. Kanwar, at a meeting on Indo-US Economic Dialogue in the Capital on Friday. - Kamal Narang

New Delhi , Sept. 3

INDIAN infrastructure needs a major facelift, said the Deputy Chairman, Planning Commission, Dr Montek Singh Ahluwalia, while addressing an interactive meeting organised by the FICCI here on Friday.

"In recent years, lack of quality infrastructure has adversely affected the FDI flow towards India," he said. Elaborating on the Government's plan to address the issues related to infrastructure development, Dr Ahluwalia said that FDI would not flow in just because the Government's policy says that `investment is welcome'.

"It mainly depends on the underlying economic environment. There is a widespread perception that the single major factor holding investors back is really the quality of Indian infrastructure," he said.

Talking about the Government's initiatives to eliminate this major impediment, Dr Ahluwalia pointed out that "in a circumstance where large amount of resources needs to be channelised for social sector development, we cannot get the necessary infrastructure relying only on public resources".

"There has to be shift from the present case where public sector investment in infrastructure is dominant towards a system where the public-private partnership is functional," he said.

A major concern currently faced by investors is the unclear regulatory regime, he said. The Commission has been asked to prepare a paper on regulatory standards to bring about effective private-public sector partnership in critical infrastructure investments.

The Commission proposes to do this in a two-stage operation. First, it would work out the general principles that a regulatory framework should meet.

Then in the next stage, it would review the status of the regulatory system in each of the sub sectors such as telecom, power, ports, and roads. The idea is to pinpoint the changes actually required to evolve a credible regulatory structure to attract investments, he said.

The paper on regulatory standards will be done by the end of the year and it will be part of the mid- term appraisal of the Tenth Plan, which will first go to the Cabinet and then to the National Development Council for the approval of the States.

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