Michiko Nishimizu, World Bank vice-president for South Asia, has expressed concern at the considerable lag in Indias infrastructure growth in relation to the countrys impressive economic performance.
Addressing the US-India Business Council here yesterday, Nishimizu said while the growth in the country in the last five years was unprecedented, the task is far from complete and the work ahead is considerable.
The acceleration of growth has exaggerated Indias tremendous infrastructure problems... Unless the development of infrastructure accelerates significantly, growth will suffer.
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She cited power cuts, waiting times in ports and railways, congested roads, excess demand for telecommunications, and tremendous inefficiencies in urban infrastructure as becoming worse, as the growth in other sectors burgeoned.
Nishimizu pointed out to a report by a high-level government expert group, which said the country needed to infuse $10 billion a year in infrastructure sectors, in addition to the existing annual $15 billion investment.
Even this estimate, the experts said, was a conservative one, and the need for additional investment may be higher by as much as 50 per cent.
Nishimizu agreed with the conclusions of the expert group and its recommendations, including the need for regulatory reforms to translate the infrastructure needs into viable commercial ventures, capable of attracting private capital.
The fiscal reforms are required to strengthen state and local governments capacity to invest in infrastructure and mobilise resources for that purpose.
Without significant improvement in their finances, the states will not be able to maintain and expand the provision of key services that in addition to infrastructure, include basic health and primary education programmes, the experts said.
They had recommended financial sector reforms to enable the large pool of Indias financial savings to flow to high returns infrastructure investments.
Nishimizu said the three-pronged approach recommended by the expert, is exactly what India needs at this moment and added that supporting the implementation of this agenda is one of the Banks most important priorities in India.
She cited the example of power projects in Orissa, which she said, are perhaps the best example of what we are doing to introduce reforms in the power sector.
She said instances of largesubsidies from the states to the public utilities is an aberration which mask the need for fundamental institutional reforms.
Projects product, and to water supplied for irrigation and other uses as aberrations which mask the need for fundamental institutional reforms.
Loan disbursal to MSEB stopped
Press Trust of India WASHINGTON
The World Bank has suspended disbursements on an electricity loan to Maharashtra as the states electricity board (SEB) failed to meet some of its financial commitments in the project, a Bank official has said. The public disclosure of the action came in an address by Robert Drysdale, World Bank country director for India, Nepal and Bhutan, at a meeting of the US-India Business Council here yesterday.
The Maharashtra State Electricity Board (MSEB) has been unable to meet a number of financial undertakings in the operation. The way MSEB is structured, it is essentially unable to collect its bills the way a commercial entity ought to be able to, Drysdale said.
He expressed the hope that the recognition by the authorities of the state of the underlying circumstances that led to this situation for the electricity board will help advance the formulation of a reform programme that would radically alter the relationship between the government and state electricity board, between the state electricity board and the consumers of power, in the state.