Parekh panel for hiking power charges, rail fares

Suggesting big-ticket reforms to attract investment in the infrastructure sector, a high-level committee on Wednesday recommended increasing electricity charges and rail fares in India.

The high-level committee on financing of infrastructure, which is headed by HDFC Chairman Deepak Parekh, also pitched for 100 per cent foreign direct investment (FDI) in the telecom sector. The limit at present is 74 per cent.

The panel also suggested raising prices of natural gas. These recommendations are aimed at attracting Rs 51.46 lakh crore for funding infrastructure sector during the 12th Five Year Plan (2012-17), said the report which was presented to Indian Prime Minister Manmohan Singh earlier in the day.

The government, the report said, should draw "a time- bound action plan...with a view to improving the enabling environment for private investment which is expected to finance about 47 per cent of the projected investment during the 12th Plan".

The share of private sector in infrastructure funding was 37.53 per cent during the 11th Plan, the report said, adding, the contribution of public sector is estimated to decline to 53.32 per cent in the 12th Plan from 62.47 per cent in the previous Plan.

Suggesting a slew of reforms in various sectors, including rail, power, coal, gas supply and telecom highways, the report said that projected investment of about Rs 51 lakh crore during the 12th Plan should be taken for granted.

"...it is likely to fall short significantly in a number of measures necessary for removing policy and implementation impediments are not taken within a short time-frame," it said.

Sustainable pricing of commodities and services, especially energy, would be necessary, it said, while underlining the need for promoting Public Private Partnership (PPP) model of development for projects in sectors like rail, ports, airports and highways.

In order to maintain flow of investment in the power sector, the report said, "Tariffs will have to be set at sustainable levels, while also improving the collection efficiency and reducing losses".

The report further said that the increase in fuel cost should be passed on to the consumers to prevent piling up of losses of the power distribution companies.

The Committee suggested rationalisation of gas allocations and pricing policy within the next two months as further delay would impact the viability of gas-based power stations.

With regard to rail fares, the report called for "rationalisation of the prevailing uneconomic rail fares, which have not been revised for a decade". It suggested greater involvement of private sector in rail projects and revamping of the Railway Board on commercial lines.

As far as telecom sector is concerned, the Committee made a strong case for raising FDI cap to 100 per cent from 74 per cent currently, arguing that it might be difficult for Indian partners to provide 26 per cent capital to companies seeking pan-India presence.