Need of the hour is to expedite, synergise and consolidate the efforts addressing the bottlenecks to growth.
Investment in infrastructure needs to keep pace with the rapidly growing economy “to complement and sustain the growth momentum (of the economy),” states the Economic Survey for 2009-10 tabled in Parliament today. This would, however, be a challenging task, it adds.
“Considering the dimensions of the infrastructure deficit in the country, growth in infrastructure capacity and services will need to be accelerated on a big scale,” the Survey further says.
To plug this deficit, the government had fixed a target of investing 9 per cent of Gross Domestic Product (GDP) in the infrastructure sector in the 11th Five-Year Plan (2007-2012). The Survey notes: “Reaching the target of an infrastructural investment of 9 per cent of GDP fixed by the 11th Plan would be an extremely challenging task.”
This would require “promoting flow of domestic and global resources to infrastructure, facilitating formulation, approval, financial closure and award of projects and easing implementation hurdles,” says the Survey.
While legislative, administrative and executive efforts are being made to address the bottlenecks in infrastructure growth, “the need of the hour is to expedite, synergise and consolidate these efforts… so as to… meet the demands of… faster economic growth,” it adds.
The large infrastructure deficit, especially striking in sectors like power and roads, depresses economic growth by 1-2 per cent, according to industry experts.
The infrastructure sector has failed to pick up steam, despite the fact that net bank credit to infrastructure almost tripled in the current fiscal to Rs 64,321 crore in the April-November period, compared to Rs 21,918 crore in the same period last year, says the Survey, citing data from select banks collated by the Reserve Bank of India.
Flow of external commercial borrowings or ECBs to infrastructure continues to remain sluggish. ECB flow to this sector halved to a little over $5 billion last year from over $10 billion in 2007-08. ECB inflow in the first half of the year of the current year is about $2.7 billion.
