Vibrant bond mkt and pension reforms on agenda

NEW DELHI: The government is in favour of creating “a single, unified exchange-traded market for corporate bonds” and introducing pension reforms to meet Rs 1,450,000 crore investment requirement of the infrastructure sector in the Eleventh Five-Year Plan.

“Appropriate financial sector reforms need to be carried out to provide long-term funds to infrastructure projects involving long pay back periods. This includes, in particular, the development of a vibrant bond market and pension and insurance reforms,” the government said in the Mid-Year Review of the current fiscal.

Although institutions like the IDFC and IIFCL are catering to the long-term debt needs of the infrastructure sector, the demand for funds is too large to be covered by such institutions alone, it said.

Stating that the “weak infrastructure continues to be the Achilles Heel of the Indian economy” the review asked for cutting subsidies and usher in the “user pays” regime.

“Fiscal space needs to be created by cutting down revenue expenditure including subsidies to enhance public investment in specified infrastructure where cost recovery is not possible,” in said.

Though the overall index of six core industries (electricity generation, coal, steel, crude oil, refinery and cement), which has a 27% weightage in IIP, grew 7.3% in April-September, the growth in these sectors lags the overall growth in the economy as well as overall growth in IIP, the report said.


“While refinery throughput, crude oil and electricity sectors improved their growth performances over the corresponding period of the previous fiscal, the deteriorating performance in cement, steel and particularly in coal was disappointing,” it said.

On the transport front, the mid-term review said that railways maintained its nearly double-digit growth in the first half of the current fiscal owing to factors like rational pricing policy.

It pointed at the wide gap between rural and urban tele-density levels while expressing satisfaction over telecommunications sector growth. The sector grew at a rapid pace with an average addition of 4.5 million telephones every month and the tele-density increasing to 15.1% in September this year, it said.