Infrastructure deficit may dampen GDP target

Government on Monday said the huge infrastructure deficit can prove to be a dampener to the 9 per cent gross domestic product growth envisaged by the country during the 11th Five-Year Plan.

"The private sector needs to come forward and invest in building infrastructure that is sustainable and conducive for the increasing urban populace in India," Urban Development secretary M Ramachandran said.

He said the government itself will not be able to finance the infrastructure requirements of the country and as such the private sector needs to chip in.

Ramachandran was speaking at the 'India Infrastructure Investment Forum2007', jointly organised by Confederation of the Indian Industry and Commonwealth Business Council.

While economic growth in India has accelerated in the last decade, the country still faces a huge infrastructure deficit.

"Although the 11th Five Year Plan envisages a growth of 9 per cent, many experts fear that poor infrastructure growth may slow this growth," he said.

Government is planning to invest in urban infrastructure through the Jawaharlal Nehru Urban Renewal Mission. "This is a Rs 1,00,000-crore (Rs 1,000 billion) programme covering 63 cities across India," he said.

Advisor to Planning Commission deputy chairman, Gajendra Haldea highlighted importance of public-private-partnership for developing the infrastructure sector. "There is a requirement of 350 billion dollars in the sector during the 11th Plan," he said, adding that the government plans PPP-led projects in building highways and airports, modernising railways and ports and improving the power sector.

"We have already established the India Infrastructure Finance Company Ltd and hope to attract more private sector investment," he said.

Haldea said that the need of the hour was not only to study where investment can be made, but how sustainable and commercially viable will they be.

Prime Minister Manmohan Singh had last year said the infrastructure development is a major constraint for the country's industrial growth. "The country would need Rs 14 lakh crore by 2012 for this sector and some of the investment would have to come from the private sector," he had said.

The 11th Plan (2007-12) envisages an investment of $350 billion in infrastructure. CII infrastructure council chairman Vinayak Chatterjee said around 70 per cent will be by the government and 22 per cent by the private sector.

"We must work toward channelising private investment; work to establish independent eco regulators; engage meaningfully with organisations like the World Bank and ADB; and invest in long term financing," he said.