``Private participation will continue to elude the government, unless it clearly spells out its own objectives,'' said Infrastructure Development Finance Company (IDFC) chairman, Deepak Parekh, at a Confederation of Indian Industry (CII) organised meeting in the capital on Thursday. Infrastructure Leasing and Financial Services (ILFS) vice-chairman and managing director, Ravi Parthasarathy suggested that wishy-washy policy measures were responsible for the poor take-off of infrastructure projects, like power plants, only a handful of which have reached financial closure, out of the 250 memoranda of understanding (MoU) signed.

Parekh said policy-makers had put the cart before the horse by liberalising power generation, while controls remained overtransmission and distribution. National Council of Applied Economic Research (NCAER) director, Rakesh Mohan, suggested that resources for infrastructure projects be raised through user charges, which the users do not pay at present because of hidden subsidies.

Parekh hit hard. ``If the government sincerely wants private participation and to reap the associated benefits for efficient and sustainable development of infrastructure sectors, it needs to proactively redefine its role as a facilitator, roll back itself from certain areas and establish credible regulatory institutions that are empowered to introduce competition in infrastructure sectors,'' he said.

The IDFC chief cited the instance of the Telecom Regulatory Authority of India (TRAI), the decisions of which have been challenged in court by DoT. The regulatory authorities, like TRAI and the recently set up Central Electricity Regulatory Commission (CERC) lacked the teeth necessary to promote efficiency through competition, Parekh said, suggestingthat the long arm of the government was interfering with fair play in the free market.

``The government should restrain from unduly taking sides with either consumers or producers,'' he said, referring once more to DOT's tussle with TRAI. The liberalisation of the telecom sector emerged as an universal example of a policy gone wrong.

Parekh said the high tariff levied on licencees and the consequent high cost of telecommunication services restricted their volume of business and so business margins. He suggested that the Centre should not mix up its revenue gathering goals with liberalisation.

Rakesh Mohan (who had chaired the committee on infrastructure) suggested more realistic user charges on infrastructure facilities, to pay for development projects, instead. ``Neither the private sector, nor the public sector could afford to make the kind of investment required (for infrastructure development) unless the resources flow back,'' he said.

Mohan suggested toll on roads and bridges and cess on motorspirit and diesel, as potential resources for building infrastructure. The user charges could replace the hidden subsidies that are equal to roughly 10.7 per cent of the GDP (gross domestic product), he further added. Parthasarathy cited the example of the water tax as a hidden subsidy. Industrial users, who use 65 per cent of the municipal water supply, pay 90 per cent of the tax, he pointed out.

Mohan also suggested opening up of the insurance sector to ``rekindle the capital markets,'' and so make more investible funds available for infrastructure projects.