| "Unlike China, India does not have enough cash to self- finance its considerable infrastructure wish-list, although the country boasts of $190 billion in foreign exchange reserves to leverage project funding," global professional services firm Ernst and Young (E&Y) said in its latest report titled Infrastructure 2007: A Global Perspective. |
| The report, which examined trends in infrastructure and finance, said these hurdles could block India's transformation from a third world country into a 'global powerhouse'. |
| Prime Minister Manmohan Singh had last year pegged the investment requirement for the infrastructure sector at $320 billion for the next few years. |
| Though India welcomes private investments through public-private partnerships, allowing up to 100 per cent of foreign equity in projects, loopholes like weak regulatory controls and bureaucracy create delays and uncertainties, besides adding to costs. |
| "Corruption in India has made international financing for infrastructure hard to come by. Without it, India's infrastructure will remain stuck in the previous era," the report said. |
| However, the country's capitalist environment and strong legal tradition provide a solid foundation for growth and gives confidence to investors despite the evident impediments. Besides, tax exemption had also been enacted for infrastructure investments, it said. |
| The World Bank forecasts Asia's infrastructure needs at one trillion dollar over the next five years, led by emerging economic powers China and India. |
| In contrast to the world's fastest developing economies (China and India), mature markets such as Japan, South Korea and Singapore offer examples of how to cope with augmenting infrastructure systems. |
| Singapore, the world's 22nd wealthiest country and which operates the world's largest port, can be an example for countries like China and India as to how infrastructure can drive economic growth. |
| Going forward, India would have to focus on upgrading its infrastructure in order to remain competitive and gain advantages to avoid falling further behind. |
| Planning Commission Deputy Chairman Montek Singh Ahluwalia on May 25 reiterated the fact and said "to achieve a nine per cent growth, we need to scale up our investment in the infrastructure sector to nine per cent during the terminal year of the Plan from the current five per cent." |
| "The pay-off for infrastructure is not delivered until many years after it is built. The political generation that pays for it is not usually the political generation that benefits from the rewards," E&Y said. |
| Transport infrastructure needs the most immediate attention for maintaining a seven per cent GDP growth, or better. The country's 12 major ports require expansion. To ensure growth in business travel and tourism sector, expansion and face-lift of airports were also necessary, the E&Y report said. |
| About 45 per cent of Indian households have no power and transmission quality is poor. Individuals and businesses steal an estimated 55 per cent of electric transmissions. "The country would be hobbled until its transport network becomes more advanced and increases capacity to meet its economy's potential. Basics like electricity, water delivery systems must become more dependable," the report added. |
| The government has pegged $22 billion for new ports and modernisation plans. Port construction would be facilitated by allowing more foreign participation into market. Large-scale expansions are currently underway at Delhi, Mumbai, Bangalore and Hyderabad airports, in which government retains power over security and air traffic control and the rest is managed by the private players involved. |
| China adopts the latest models and technologies to transform backward systems into state-of-the-art systems, but in India progress came more in fits and starts after decades of neglect, the report said. |
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