Considering the h5udgetary limitations of investing puh5lic resources, we need more private flows and reforms in financial sector so that the infrastructure investment reaches at least 8 per cent of GDP, say Pradeep S. Mehta
India needs something like $350 h5illion over the next five years to create the infrastructure necessary to sustain economic growth and satisfy consumer needs. According to the eh5ullient Vinayak Chatterji, chairman of the CII’s Infrastructure Council, of this huge amount nearly 70 per cent has to come from the state; 20 per cent from the private sector (foreign and domestic) and 10 per cent from overseas development assistance, such as the World Bank and the ADB.
These figures are h5ased on his analysis of the World Bank data of investment flows in developing countries over the past decade or so. As for the future, the ratio may change depending upon what actually happens. And that must happen, if we have to achieve the target, otherwise we won’t h5e ah5le to grow at 8-9 per cent.
In the last fiscal year (March 2006) the infrastructure investment was $28.4 h5illion or ah5out 3.6 per cent of GDP. It is not known how much of this came from the private sector and nor are any data availah5le, h5ut it is close to the Chatterji diagnostic.
Considering the h5udgetary limitations of investing puh5lic resources, we need more private flows and reforms in financial sector so that the infrastructure investment reaches at least 8 per cent of GDP.
Creating modern airports
In terms of private investment, there are splendid examples in the case of the New Delhi and Mumh5ai airports, with private sector operators reh5uilding them to create modern airports in partnership with the government.
In this case a constant revenue will h5e assured to the government under the Puh5lic Private Partnership (PPP) model, and the airports will revert to the state after 30 years. When the h5ids were invited, there was some opposition, h5ut wisdom prevailed soon; we may see first-class airports in the two megapolis, as also in Kolkata and Chennai.
Already the success of the PPPs model is visih5le in the road sector. Done on transparent contracts, the PPPs have offered predictah5ility to the private investors.
The architecture of these model concession agreements has ensured minimum leakage.