The Reserve Bank on Tuesday suggested setting up GST Council type apex authorities for land, labour and power to drive structural reforms and expedite implementation of national infrastructure pipeline. It said targeted public investment funded by monetisation of assets in steel, coal, power, land, railways and privatisation of major ports by central and state governments under an independent regulator can be the way forward to revive and crowd in private investment.
"In fact, Goods and Services Tax (GST) Council type of apex authorities can be set up in respect of land, labour and power to drive structural reforms," RBI said in its 2019-20 annual report. The reforms could include speedier implementation of the national infrastructure pipeline, a north-south and east-west road corridor together with a high-speed rail project that builds on the success of the golden quadrilateral, alongside steps to improve business sentiment and environment for investment.
It suggested that states can be encouraged to publicise the availability of litigation-free land in their jurisdictions with access to modern infrastructure. "In the power sector, the opportunity has arrived to leapfrog India into becoming the world leader in renewable energy by incentivising the domestic production of solar panels and connecting dispersed transmission links with remote areas," it said.
For the sector as a whole, elimination of cross-subsidisation through tariff structure and provision of subsidy, if any, through direct benefit transfer (DBT) should be a priority, along with due consideration to the privatisation of electricity distribution companies (DISCOMS). "With regard to railways, there is a strong case for manufacturing units to be corporatised," the report said, adding that FDI into railways can be encouraged by removing bottlenecks in access to infrastructure — land, procurement rules, project risk-sharing mechanisms.
The growth potential of land banks can be exploited, particularly in metropolitan areas, by long-term leasing to the private sector, including for development of commercial real estate. Further, "a comprehensive policy is needed with regard to building adequate reserves of strategic materials, including the initiatives undertaken for crude oil".
The report also said the progress made on building modern physical infrastructure in the country over the last five years has been noteworthy in the areas of roads, civil aviation and airport connectivity, telecommunication (including internet and broadband penetration), and ports. Nonetheless, the infrastructure gap remains large, needing around USD 4.5 trillion of investment by 2040, as per the Economic Survey 2017-18, with emphasis on upgrading the poor quality of infrastructure, it added.
"It is also time to turn to the unlocking of entrepreneurial energies and risk appetite by improving the business environment." Faster enforcement of contracts, including through expansion of judicial and insolvency capacities, would be a game changer, it said. "Property registrations can be speeded up from the current 58 days, and a centralised website can provide real time information on all regulatory compliance requirements. In general, the compliance burden can be streamlined substantially," the report suggested.
The COVID-19 crisis, RBI added, can be converted into an opportunity by using online provision of education and training to implement reforms in social infrastructure by skill development and reskilling so as to prepare a labour force equipped to keep pace with a big thrust on infrastructure.
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