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| Infrastructure won't meet plan target, says industry |
| Vandana Gombar / New Delhi Mar 10, 2010, 18:30 IST |
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Investment in infrastructure during the 11th Five Year Plan (2007-2012) is likely to meet the Rs 20 lakh crore target set at the beginning of the Plan — then equal to $514 billion — according to officials of the Planning Commission.
However, officials from the private sector believe that actual investment is likely to be about a third lower than the target, at about $300-350 billion or Rs 14-16 lakh crore at today’s prices.
“We are on track for the first two years. We are confident of achieving the target,” said B K Chaturvedi, member, Planning Commission.
He is responsible for energy and transport, the two key infrastructure sectors, which account for almost half the investment envisaged at the beginning of the plan.
The investment covered 10 infrastructure sectors, including telecom, railways, irrigation, water supply, ports and airports.
The shortfall in investment, if any, would not be more than 10 per cent, according to Chaturvedi. This was confirmed by another official.
“Actual investment will be between $450-500 billion (Rs 20-23 lakh crore at today’s prices),” said Chaturvedi.
Even at $450 billion, this investment would be double the amount invested in infrastructure in the 10th plan. About half of this was to be invested in the first three years of the plan.
“I believe the actual investment in infrastructure during the plan will not be more than $310 billion (Rs 14 lakh crore at current prices),” says Vinayak Chatterjee, the chairman of Feedback Ventures, as well as the National Council on Infrastructure of the Confederation of Indian Industry.
Many private sector industry officials agree with this number. “I think $300-350 billion is more like the actual number we will end up with,” says Amrit Pandurangi, leader-infrastructure practice at PricewaterhouseCoopers.
According to him, this is not simply because of lack of funds, but because of challenges of land acquisition and environmental clearances, which continue to plague sectors like power and roads. “We don’t see any quickening of the pace of those problems,” says Pandurangi.
Jayesh Desai, who used to head the infrastructure practice at Ernst and Young, agrees. He has now joined Enam Holdings, where he plans to float an infrastructure fund. “I think the lower estimate is likely to be more realistic,” says Desai. This is due to shortfalls in the power sector —- where capacity addition could just be about half of the 78,000 Mw targeted at the beginning of the plan —- and the roads sector.
“The key reason is land and land acquisition problems,” he says.
Infrastructure deficiencies are estimated to have a drag effect of 1.5-2 per cent on the GDP.
The infrastructure gap was acknowledged in the government’s Economic Survey tabled last month, which said that “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”.
“There cannot be an India story without an infrastructure story,” agrees Desai.
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