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Liberalizing FDI in retail would help bridge investment

Rs. 200 crore Scheme to implement e-platform for agri-marketing New Delhi: The Government has taken several important steps to make improvements in the area of Agricultural Marketing. According to the Economic Survey 2014-15, the Department of Agriculture (DAC) has issued a comprehensive advisory to states to go beyond the provisions of the Model Act and declare the entire state a single market with one licence valid across the entire state and removing all restrictions on movement of agricultural produce within the state. In order to promote development of a common national market for agricultural commodities through e-platforms, the DAC has approved Rs. 200 crore for a central-sector scheme for promotion of national Agricultural Market through Agri-Tech Infrastructure Fund (ATIF) to be implemented during 2014-15 to 2016-17. Under the scheme, it is proposed to utilize the ATIF for migrating towards a national market through implementation of a common e-platform for agri-marketing across all states. On the request of the Central Government, a number of State Governments have exempted the marketing of fruits and vegetables from the purview of the APMC Act. The NCT of Delhi has taken the initiative in this direction by issuing a notification on 2 September, 2014, ending the regulation of fruits and vegetables outside redefined market yard/sub-yard area of the APMC, MNI, Azadpur, APMC, Keshopur, and APMC Shahdara. The small Farmers Agribusiness Consortium (SFAC) has taken the initiative for developing a kisan mandi in Delhi with a view to providing a platform to FPOs for direct sale of their produce to prospective buyers totally obviating or reducing unnecessary layers of intermediation in the process. They plan to scale their activities in other states based on the outcome of the experience of the Delhi kisan mandi. Revive public investment to improve investment climate To improve the investment climate and reduce the backlog of stalled projects, Economic Survey 2014 – 15, tabled by the Union Finance Minister Shri Arun Jaitley in the Parliament today, argues for a three-pronged strategy: 1. The Survey recommends revival of public investment in short term, to act as an engine of growth in infrastructure sector. It argues that public investment cannot be a substitute for private investment; but is required as a complement and to crowd it in. 2. Creative solutions need to be devised to strengthen institutions relating to bankruptcy, says the Survey. This will ensure that exit options are available. This will also ameliorate over-indebtedness that lowers the capacity to generate new investments. Towards this end, it contemplates setting up of a high-powered Independent Renegotiation Committee. 3. Economic Survey highlights the need for reorientation and restructuring of the PPP model. This is expected to make them more viable in future. These recommendations come in the backdrop of a large number of stalled projects. The total stock of stalled projects stands at Rs. 8.8 lakh crore or 7% of GDP. Economic Survey states cause of stalled projects is different for private and public sectors. In private sector, credit related factors dominate, while in the public sector, delay in regulatory clearances is the primary reason. Stalling of projects has put tremendous pressure on the balance sheets of the corporate sector and public sector banks. This in turn, limits future private investment, thus completing and perpetuating a vicious cycle. The Economic Survey has made a case for liberalizing FDI in retail, saying that it would help bridge investment and infrastructure deficits and improve supply chain management. The Survey stated that India remains an attractive destination for long-term retail investment despite the sector facing many challenges in past few years. It highlighted that 58.3 per cent of Indian population is below 30 years. Around 31 per cent of this population living in urban areas with rising disposable income makes one of the key positives for the future of the retail sector. Initiatives to improve the performance in infrastructure sectors The Government has taken several initiatives to improve the performance in major infrastructure sectors. This information was given by the Minister of State (Independent Charge) for Planning, Shri Rao Inderjit Singh in a written reply in Lok Sabha today. The Minister said that initiatives taken in the field of power, railway, road and ports include the following: Power: (i)                 Automatic approval of Foreign Direct Investment: Automatic approval for 100% foreign equity is permitted in generation, transmission and distribution, and trading in the power sector without any upper ceiling on the quantum of investment. (ii)               Signing of Fuel Supply Agreements: The Cabinet Committee on Economic Affairs (CCEA) has issued a directive to the Ministry of Coal/Coal India Limited to sign fuel supply agreements (FSAs) for a total capacity of 78,000 MW, including tapering linkage, which are likely to be commissioned by March, 2015. (iii)             Pass-Through mechanism: Pass-through mechanism for the concluded Power Purchase Agreements (PPAs) has been approved by the CCEA. (iv)             “Deen Dayal Upadhyaya Gram Jyoti Yojana” for electricity feeder separation and strengthening sub-transmission and distribution systems in rural areas has been launched. (v)                “Ultra Mega Solar Power” projects in Rajasthan, Gujarat, Tamil Nadu, and Laddakh in J&K have been announced. Road: (i)                 Project Preparation: NHAI has decided not to award projects till all pre-construction approvals are in place to avoid post-bid delays and litigations. (ii)               Streamlining of land acquisition: The process of land acquisition and collection of data on this acquisition has been streamlined by standardizing formats and collecting periodic data for effective monitoring of land acquisition process. Guidelines have been issued for streamlining the land acquisition process. (iii)             Streamlining of Environment Clearances: The NHAI has taken several proactive measures and ensured that for existing and future projects the process of obtaining environment and forest clearances has been relaxed significantly. (iv)             Dispute Resolution: Mechanism for speedy resolution of long pending disputes in engineering, procurement & construction (EPC) and Built, Operate and Transfer (BOT) have been established. (v)               Exit for Equity Investors: NHAI has allowed complete exit to equity investors for all concessions post-completion of projects which is expected to unlock growth capital for utilisation in future projects and infuse capital into the sector. (vi)              Coordination with other ministries: Several mechanisms have been established to ensure better coordination with other ministries, namely Railways, utilities-owning departments/ministries, etc to ensure smooth execution of projects. Railways: (i)                 Initiatives for building rail connectivity to ports and mines have been undertaken. (ii)               Opening of Foreign Direct Investment in the sector. (iii)              Setting up of High Speed Rail Corporation of India to develop high speed rail corridors in India. Ports: (i)                 Upto 100% FDI under the automatic route is allowed for port development projects. (ii)               Bidding documents like RFQ, RFP and Concession Agreement have been standardised. (iii)             Enhanced delegation of financial powers to Shipping Ministry to accord investment approval for PPP projects. (iv)             Streamlining of security clearance procedures. (v)               Close monitoring of developmental projects in the Major Ports.

About Sanjay Trivedi

Sanjay Trivedi is honorary editor of Asia Times. He is senior Indian Journalist having vast experience of 25 years. He worked in Janmabhoomi, Vyapar, Divya Bhaskar etc. newspapers and TV9 Channel as well as www.news4education.com. He also served as Media Officer in Gujarat Technological University.

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