Bhopal: Workshop on Alternate Project Financing Montek and CM lay stress on thinking outside FRBM

07:58 AM Feb 19, 2020 |

BHOPAL: Ex-deputy chairman of the Planning Commission, Montek Singh Ahluwalia and Chief Minister Kamal Nath stressed on the need for considering rewriting the Fiscal Responsibility and Budget Management (FRBM) Act in the changing contexts.

They were speaking at the inaugural session of Alternate Project Financing workshop at Minto Hall on Tuesday.


Most states have complained about devolution. On the other hand, considering limited finance options for the states they are left with no option but to take loans.


The constraints put in by the FRBM Act often creates different situation therefore time has come to rethink on it. Both had expressed almost same thought.

Stressing on innovative approach, Ahluwalia said that several things that were not open for private sector were opened after 1991 reforms. Instead of managing finances for large economic infrastructural projects, the system of providing annuity should also be considered.

Governments should assume the role of a friend in managing the financial risks for the projects. For example, in order to deal with the ill effects of climate change, infrastructure projects of economic importance should be given a guarantee, said Ahluwalia. These may include irrigation and water conservation projects.

Discussing PPP model, he said one needs to find ways of mitigating political risks. He cited instance of Andhra Pradesh where government reverted the decision taken by previous regime, shaking confidence of investors not only in AP but across the nation.

Ahluwalia said that a law should be made for PPP model to infuse more trust among private investors. MP ranks high in water management and forest cover. It could be used to raise budget resources, he added. This process can also be adopted for sector-specific dedicated infrastructure projects.

Chief Minister said that in a State like Madhya Pradesh, there are abundant natural resources but in expanding economic activities, MP is far behind.

Chief Minister said that there is a reduction of Rs. 14 thousand crores in state's share in the Union Budget. He emphasized on having a new vision and fresh approach to manage budget resources and improving governance.

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