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    Issues in Infrastructure Development in India

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    Shahenjit Singh
    India requires significant investment in infrastructure to sustain economic growth but has been investing less than China. The 11th Five Year Plan aims to increase infrastructure spending to 8% of GDP. Key challenges include meeting large investment needs, but opportunities exist in sectors like transportation, ports, and roads for public-private partnerships and foreign investment.

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    Issues in Infrastructure Development in India

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    Shahenjit Singh
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    India requires significant investment in infrastructure to sustain economic growth but has been investing less than China. The 11th Five Year Plan aims to increase infrastructure spending to 8% of GDP. Key challenges include meeting large investment needs, but opportunities exist in sectors like transportation, ports, and roads for public-private partnerships and foreign investment.

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    India requires significant investment in infrastructure to sustain economic growth but has been investing less than China. The 11th Five Year Plan aims to increase infrastructure spending to 8% of GDP. Key challenges include meeting large investment needs, but opportunities exist in sectors like transportation, ports, and roads for public-private partnerships and foreign investment.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    179 views17 pages

    Issues in Infrastructure Development in India

    Uploaded by

    Shahenjit Singh
    India requires significant investment in infrastructure to sustain economic growth but has been investing less than China. The 11th Five Year Plan aims to increase infrastructure spending to 8% of GDP. Key challenges include meeting large investment needs, but opportunities exist in sectors like transportation, ports, and roads for public-private partnerships and foreign investment.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 17

    ISSUES IN INFRASTRUCTURE DEVELOPMENT IN INDIA

    WHAT IS INFRASTRUCTURE?

    Infrastructure is generally defined as the physical framework of facilities through which goods and services are provided to the public.
    A strong correlation exists between per capita GDP and availability of certain services such as telecommunications, power, roads, and access to safe drinking water etc. With the rise in per capita GDP, composition of infrastructure changes significantly. Basic infrastructure such as water and irrigation are more important in less developed countries whereas power and telecommunication play a vital role in highly developed countries.

    INFRASTRUCTURE REQUIREMENTS

    World Economic Forum has noted that Indias annual investments in infrastructure between 1998 and 2005 averaged 4% of GDP compared to 8.2% for China Government of India is addressing the infrastructure requirements 11th Five Year Plan (2007-2012) calls for more than doubling the financial outlay for infrastructure

    PROGRESS IN INFRASTRUCTURE
    Chart Title
    Airports

    Ports

    Roads and Bridges

    Electricity

    100000

    200000

    300000

    400000

    500000

    600000

    700000

    11th Plan Target( Crores)

    10th Plan Actual( Crores)

    10th Plan Target( Crores)

    CHALLENGES BEFORE INDIA


    India growth story likely to continue Strong economic growth will fuel further demand on infrastructure India should absorb the large investments in infrastructure sector to sustain growth momentum Indian rupee has appreciated against the dollar by 5% over the past year and 20% in the past five years

    WHAT IS INDIA DOING ABOUT INFRASTRUCTURE?

    Actions taken in the 11th 5 year plan - 2007- 2012


    1.

    2. 3.

    The amount of money spent on infrastructure will be raised to 8% of GDP (earlier, infrastructure spending was only 4.6% of GDP) One Half of all new investments in the 11th plan will be in infrastructure The planning Commission has estimated that a total investment of $450 Billion in infrastructure is required over the next 5 years to meet Indias infrastructure needs over 5 years

    TRANSPORT SECTOR THE POTENTIAL IN INDIA


    Aviation infrastructure

    100% foreign direct investment allowed


    $ 9 billion programme to upgrade 25 airports Delhi and Mumbai International airports two PPP projects with estimated investment of $3.8 billion 19 greenfield airport locations identified

    Airport Economic Regulatory Authority being set up

    AIR TRANSPORTATION - GROWTH

    Passenger traffic is projected to cross 100 million passengers p.a. by 2010 Cargo traffic to grow at over 20% p.a. over the next five years - To cross 3.3 million tonnes by 2010 Maintenance, Repair and Overhaul (MRO) growing in a big way

    MRO market expected to grow by 10%

    ROADS AND HIGHWAYS

    India has the second longest road network in the world of 3.3 million KMs
    Expressways and highways constitute only 2% of the above US $54 billion earmarked for the sector Cargo traffic expected to grow by 15-18% over the next 5 years

    ROADS - POTENTIAL

    100% foreign direct investment allowed


    Incentives:
    1. 2. 3.

    100% income tax exemption for a period of 10 years Grants/viability gap funding for marginal projects available Model Concession Agreement formulated

    Opportunities in construction equipment (earth moving, material handling equipment etc), tolling equipment services and advisory (architecture, structural design, soil investigation etc)

    RAILWAYS

    India has one of the largest railway networks in the world (63,000 route KMs network) Accounts for 30% of total freight traffic Traffic volumes set to double by 2012

    Potential for rolling stock, locomotives, passenger coaches, track equipment, signalling equipment

    PORTS

    India has coastline of 7500 KMs


    12 major ports; 187 minor ports Traffic has grown by a compounded average of 8.5%

    Traffic expected to reach 880 million tonnes by 201112

    95% of Indias exports & imports moved by sea India expects to double its exports to $150 billion in the next five years

    PORTS

    100% FDI under the automatic route is permitted for port development projects 100% income tax exemption is available for a period of 10 years

    Tariff Authority for Major Ports (TAMP) regulates the ceiling for tariffs charged by Major ports
    Investment needed in the next 5 years $18 billion

    PORTS - OPPORTUNITY

    Opportunities exist in

    Development of greenfield ports Development of container and bulk terminals Logistics infrastructure Dredging services Port related equipment Ship building, ship repair, maritime training

    ROLE OF IIFCL

    IIFCL is a SPV to provide long term finance to infrastructure projects


    Overriding priority to PPP projects Finance projects in sectors like roads, airports, ports, power, urban infrastructure etc Financed 77 projects to the tune of $4.3 billion with a total project cost of $31 billion

    Since inception in April 2006

    CONCLUSION

    Investment requirements of infrastructure sector huge


    India growth story to continue

    50% of the population is below 25 years Huge domestic demand

    Need to bridge infrastructure gaps to sustain economic growth Opportunities for international investors significant India can leverage on its vast human capital to successfully adopt the PPP model

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