Finance Minister may expand infrastructure definition to boost growth
The government is considering expanding the definition of infrastructure sector with a view to promoting industrial activity and boosting economic growth in the next financial year.
"Although the definition of infrastructure is there in the Income Tax Act and Direct Taxes Code, it can be expanded to include more areas to boost economic growth," sources said, adding that the decision would be taken in the budget as there are also revenue implications.
Finance Minister P Chidambaram will present the budget for 2013-14 in the Lok Sabha on February 28. The areas on which the country is focusing in a big way needed to be given the infrastructure sector status to ensure substantial impact on industrial development and growth, besides attracting overseas capital.
With regard to revenue implications on according infrastructure status to more sectors, sources said the losses can be made up by better performance of non-infrastructure sectors.
Several countries like Japan, Korea, Philippines, Indonesia and Thailand have earlier provided incentives that led to rapid growth of infrastructure sector, they added. Industry has been demanding that definition of infrastructure be expanded to include some of the key sectors like telecom, housing, shipping and education.
Infrastructure sector status ensures tax benefit and easier access to domestic and global funding.
Currently, a staggering sum of investments are being planned in infrastructure sectors like roads and highways, ports and airports, railways and power. India's infrastructure sector will require investment of about USD one trillion in the 12th Five Year Plan, beginning April 2012, with half of it expected to come from the private sector.
The government has been trying to boost infrastructure spending to pep-up the manufacturing sector, wherein the output growth was low at 0.7 per cent in April-December period of current fiscal. The growth was 4 per cent in the same period of 2011-12 fiscal.