S&P Global Ratings today said India's infrastructure deficit is "too large" and the country still has a long way to go before it can close the sizable deficit between supply and demand.
"India's infrastructure deficit is simply too large to eliminate any time soon. Infrastructure takes time to build, and perhaps more so in India than for many other countries," S&P Global Ratings credit analyst Abhishek Dangra said.
The Indian government estimates infrastructure investment of USD 4.5 trillion will be needed through 2040, it said.
In an article titled 'India's Infrastructure Marathon: Why Steady Growth Can't Close The Supply Gap', S&P said India is making progress at scaling up its infrastructure, but still has a long way to go before it can close the sizable deficit between supply and demand.
"Project delays and cost overruns are attributable to complex land acquisitions and environmental issues. And in all democracies, societal considerations play a part, too," S&P said.
The country's progress at scaling up its infrastructure is shown in its decreasing power deficits, high passenger growth for airports, rising renewable capacity, and large metro train projects in progress. The government is leading the buildup in view of growing urbanisation, said the US-based rating agency.
"We believe the power sector is moving towards equilibrium in demand and supply from a deficit situation. However, fortunes will vary for thermal and renewables," Dangra said.
"No more new thermal power capacity is required until 2027, other than for projects already under construction; while renewables will continue their strong growth based on competitive tariffs," he added
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