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An estimated $492 billion needed to fund India’s infrastructure

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India requires $492 billion to fund its infrastructure needs, and that is possible only with the participation of private and foreign players, Planning Commission Deputy Chairman Montek Singh Ahluwalia has said. “Investment by public and private sector in infrastructure is one of the key pillars of India’s economic reforms,” Ahluwalia said during a discussion at the “India@60: A New Age for Business” conference held in New York, co-organised by the Confederation of Indian Industry (CII), the Asia Society and US India Business group.

The Planning Commission, Ahluwalia said, had identified various sectors such as roads, ports, airports, irrigation and power for private and foreign players to enter, and observed that telecom sector showed how the private sector could spur growth.

He said the Planning Commission’s calculations – part of a consultation paper – showed that in order to sustain a growth of 9 per cent per annum over the next five years, the investment required in infrastructure would be $492 billion.

Of the amount, $240 billion would be raised as debt by private and public sector. Seventy per cent would be accounted for by the public sector, and the rest by the private sector.

“This will raise the amount of investment in infrastructure spending from the current 5 per cent of GDP to 9 per cent during the 11th Plan period (2007-12),” Ahluwalia said.

“We have sent the consultation paper to all ministries, including the finance ministry, for getting their views and hope to incorporate them in the 11th Plan document, which is expected to be approved by the third week of November.”

Ahluwalia said it would also prove to be difficult to raise funds entirely from internal sources since India does not have a strong debt market. “You can raise it externally but the pressure would fall on the rupees,” he said.

“We have not yet resolved the issue,” Ahluwalia told the session that was opened by Madeleine Albright, former US secretary of state and now principal of the Albright Group LLC.

– Bangalore Bureau

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