Core sector will need $331 bn investment: CII study

The country's infrastructure sector will require investments of $331 billion in the next five years and about $67 billion of it will come from the private sector, says a Confederation of Indian Industry (CII) study.

At present, India lags behind other east and south-east Asian economies in infrastructure spending as a proportion of GDP. While China spent 10.6 per cent of its GDP on infrastructure in 2003, India's capital spend was below 4 per cent in the same year.

The disparity was even more stark in absolute figure terms, with China spending $150 billion on infrastructure in 2003 against India's $21 billion.

On the renewed thrust on infrastructure spend in the approach paper of the 11th Five-Year Plan brought out by the Planning Commission, the CII has said the approach paper correctly recognises that investment in infrastructure needs to increase significantly.

The Plan approach paper calls for the investment to increase from the current 4.6 per cent of GDP to between 7 per cent and 8 per cent in the 11th Plan period.

While the target of 8 per cent for the 11th Plan is still short of the 10 per cent figure which India needs to achieve, there is a need for adopting a strategy in terms of how much the government will be investing and how much will be the private sector share, including the FDI in infrastructure.

The study states that the government has correctly identified public-private partnership (PPP) as a corner stone of its policy on infrastructure development. However, it states that obstacles still remain regarding the successful rollout of PPP projects across all states and across all sectors.

While absence of a regulatory framework is one such obstacle, the issue of transparency in bidding for PPP projects is also emerging as a critical one. It also highlights the need for evolving an agreed road map between the government, the states and the private sector for drawing an overall investment plan in infrastructure.

An understanding of the total investment requirement, its break-up and also the time-frame, would enable the constituents especially the private sector to accept a target for bringing in its share of the total investment in infrastructure.