While India is one of the fastest growing economies in the worldtoday, a major obstacle for sustaining its real GDP growth has been the lack of adequate infrastructure, which can support the growth process. Low levels of public investment have made India’s physical infrastructure incompatible and without improving the rate of infrastructure investment, the overall growth rate would remain modest. Therefore, there has been a growing emphasis by the Government of India to mobilise infrastructure investments to the tune of$1 trillion during the 12th plan (2012-17) across sectors such as roads, railways, seaports, airports, power, telecom, water and irrigation of which 50% is expected to come from the private sector in the form of both debt and equity. However, there is a realisation that expecting private sector to contribute nearly 50 per cent to the total infrastructure deficit is a stiff ask given that there are lack of bankable projects and mistrust between the private and government sector.
The 11th FYP had projected investment requirements in infrastructure to be about $514 billion. This target was doubled in the 12th FYP to nearly $ 1 trillion highlighting that GDP growth averaging 9% per year can be achieved only if this infrastructure deficit can be overcome. It was opined that domestic savings can contribute significantly to boosting infrastructure investment. However these savings have to be intermediated into infrastructure to achieve these targets.Read More