PPP only way to develop infra as govt faces resource crunch: Assocham

Requires about $1 trillion in next five years

Public-private partnerships (PPP) hold the key to infrastructure development as the Centre is able to spend less than 15% of its entire expenditure budget on creating capital assets, a study said.

Industry chamber Assocham pointed out PPP projects are the only way left for India to build infrastructure such as roads, ports and airports. Infrastructure sector requires about $1 trillion in the next five years.

Of the total expenditure of Rs 14.90 lakh crore budgeted for the current financial year, only Rs 2.04 lakh crore would be spent on building the capital assets, under the head ‘capital expenditure’. This is similar to the money the government would be spending towards subsidies.

The money earmarked for the capital expenditure is much less than the Central Government has to pay for interest on its borrowings. As much as Rs 3.19 lakh crore would be paid for the interest payments. In fact, the interest payments would claim more than half of new borrowings of Rs 5.14 lakh crore that the government would resort to in the current fiscal of 2012-13, as per the Budget estimates.

“That leaves a big question as to where the resources are going to come from for building roads, hospitals, colleges, ports and airports. If we have to achieve our aspiration of reviving and maintaining plus eight% GDP growth, we desperately need this basic infrastructure. Otherwise, our manufacturing, service and the social sectors would suffer from high rates of inefficiencies and cost escalations,” the Assocham study said.

 As per the study, the Southern states, Karnataka and Andhra Pradesh account for the highest number of PPP projects, followed by Madhya Pradesh, Gujarat and Rajasthan. This depicts that state governments at their level are implementing the PPP projects to undergo extensive transformation to create capital assets.