The Prime Minister has constituted an empowered group of ministers (EGoM) to fast track infrastructure projects especially in the roads sector. The EGoM has been constituted by vice-chairman, Planning Commission, Montek Singh Ahluwalia, finance minister Pranab Mukherjee and road transport & highways minister Kamal Nath. It will look into ironing out all inter-ministerial issues related to the financing of infrastructure projects, especially those related to banks and the Reserve Bank of India (RBI).

“With a national target to build 20 km of roads a day, the setting up of such a group was seen as an urgent need by the government and it was set up last week,” road transport and highways minister Kamal Nath said at the India Economic Summit 2009 in Delhi today. The group would be allowed to take decisions, which in the normal course go to the Cabinet and the committee on infrastructure (CoI).

The EGoM will look into all the tricky issues revolving around project financing. As of now, there is no concept of project finance in the country as the RBI does not recognise securitised finance as tangible assets. In fact, one of the mandates of the EGoM would be to consider alternative financing models for the roads sector.

The minister said that the government had also asked the BK Chaturvedi committee to look into a suitable dispute resolution mechanism as $1-1.5 billion was stuck in disputes between the National Highways Authority of India (NHAI) and private developers. “The objective is to make it clear that claims are not treated as a mechanism of getting the government to finance part of the project and yet provide the developer the due reimbursement as per the agreement,” Nath said.

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