Infrastructure status refers to the designation given to certain sectors by governments to facilitate their development through preferential treatment in terms of financing, taxation, and regulatory frameworks. This status is typically conferred upon sectors that are deemed critical for economic growth and societal well-being, such as transportation, energy, telecommunications, and water supply. By granting infrastructure status, governments aim to attract investment, foster innovation, and ensure the efficient provision of essential services to citizens. This designation underscores the significance of infrastructure development in driving sustainable development and fostering resilience in the face of various challenges, including rapid urbanization, climate change, and technological advancements.
The Cabinet Committee on Infrastructure has given approval for the following measures:
- (i) Adoption of a framework for utilizing the harmonized Master List of infrastructure sub-sectors.
- (ii) Establishment of principles for updating the Master List.
- (iii) Formation of an institutional mechanism to maintain the Master List and review sub-sectors not included in it.
Standardizing the definitions of infrastructure sectors will enable a cohesive approach among agencies supporting infrastructure, thereby promoting more efficient infrastructure development.
Background:
- In response to a directive from the Prime Minister’s Office (PMO) dated August 4, 2009, the Ministry of Finance was tasked with addressing the issue of a consistent infrastructure definition.
- Consequently, the Ministry proposed to the Cabinet Committee on Infrastructure (CCI) the adoption of a harmonized master list comprising 29 infrastructure sub-sectors, as detailed in Annex.l, along with the establishment of a framework and institutional mechanism for its maintenance.
- The harmonized Master List serves as a reference for all agencies involved in infrastructure support.
- It is intentionally flexible, allowing each financing agency to customize its list of supported sub-sectors from the Master List based on justifications for inclusion or exclusion.
- Agencies currently supporting sub-sectors not included in the Master List may continue to do so, with a review scheduled by the institutional mechanism at a later date.
Moving forward, the inclusion of new sub-sectors by any agency will require an assessment of their alignment with six infrastructure characteristics (natural monopoly, high sunk costs and asset specificity, non-tradability of output, non-rivalry in consumption, possibility of price exclusion, and presence of externalities) and one or more of three parameters (importance to economic development, contribution to human capital, and specific Indian circumstances), along with a clear link to the agency’s support objectives.
The institutional mechanism responsible for maintaining the Master List and reviewing sub-sectors outside it will be chaired by the Secretary of the Department of Economic Affairs and include representatives from the Planning Commission, Department of Revenue, Chief Economic Adviser, RBI, SEBI, IRDA, PFRDA, and the concerned Administrative Ministry/Department. This committee will provide recommendations to the Finance Minister for final decisions.
| Sl.No. | Category | Infrastructure sub-sectors |
| 1. | Transport | Roads and bridgesPortsInland WaterwaysAirportRailway Track, tunnels, viaducts, bridgesUrban Public Transport (except rolling stock in case of urban road transport) |
| 2. | Energy | Electricity GenerationElectricity TransmissionElectricity DistributionOil pipelinesOil/Gas/Liquefied Natural Gas (LNG) storage facilityGas pipelines |
| 3. | Water Sanitation | Solid Waste ManagementWater supply pipelinesWater treatment plantsSewage collection, treatment and disposal systemIrrigation (dams, channels, embankments etc)Storm Water Drainage System |
| 4. | Communication | Telecommunication (fixed network)Telecommunication towers |
| 5. | Social and Commercial Infrastructure | Education Institutions (capital stock)Hospitals (capital stock)5Three-star or higher category classified hotels located outside cities with population of more than one millionCommon infrastructure for industrial parks, SEZ, tourism facilities and agriculture marketsFertilizer (Capital investment)Post harvest storage infrastructure for agriculture and horticultural produce including cold storageTerminal marketsSoil-testing laboratoriesCold Chain |
FAQs
1. What is Infrastructure Status?
Infrastructure status refers to the classification given by governments to certain sectors or projects deemed crucial for the economic development of a country. It typically entails various benefits, including access to financing at preferential rates, tax incentives, and regulatory support.
2. Which sectors are typically granted Infrastructure Status?
Sectors commonly granted infrastructure status include transportation (roads, railways, airports), energy (power generation, transmission, distribution), telecommunications, water supply, and sanitation. Additionally, sectors such as affordable housing and logistics may also be included depending on governmental priorities.
3. Why is Infrastructure Status important?
Infrastructure Status is crucial as it helps attract investments into vital sectors, fostering economic growth and development. It enables the implementation of large-scale projects that often require substantial capital investment and long gestation periods. Moreover, it provides a framework for streamlined regulatory processes, facilitating smoother project execution.
4. How does Infrastructure Status benefit investors and developers?
Investors and developers benefit from Infrastructure Status through access to long-term financing at lower interest rates, which reduces the overall cost of capital. Additionally, they may enjoy tax incentives and exemptions, along with regulatory support, such as fast-track approval processes. These advantages make projects more financially viable and attractive for private investment.
5. Are there any challenges associated with Infrastructure Status?
While Infrastructure Status offers significant advantages, challenges may arise in its implementation. These can include bureaucratic delays in project approvals, regulatory inconsistencies, and difficulties in securing land acquisition and permits. Additionally, ensuring transparency and accountability in project execution is essential to prevent misuse of benefits and ensure optimal utilization of resources.
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