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Budget 2012: Will infra & realty get what they are hoping for?

While India continues to be one of the fastest growing economies, this pace of development is unlikely to continue unless it is supported by an equally robust development of its infrastructure.


By Rajesh Srivastava, Managing Director, Meinhardt India


While India continues to be one of the fastest growing economies, this pace of development is unlikely to continue unless it is supported by an equally robust development of its infrastructure. Development of infrastructure continues to face significant challenges, whether due to lack of monitoring resulting in time and cost overruns or acquiring land for projects.


The implementation gaps, leakages from public programmes and the final quality pose a serious challenge to the industry & overall growth. There are a lot of crucial things which needs immediate attention like proper Master-planning, Transport connectivity, strengthening basic infrastructure on water, sewage-system, solid-waste management, power etc.


Compared to other developing countries, India has been slow to urbanize, but the pace of urbanization is expected to accelerate over the next two decades. The 2011 Census also shows an increase in the urban population from 27.8 per cent in 2001 to 31.2 per cent in 2011, and it is likely to exceed 40 percent by 2030. This would generate a heavy demand for better quality infrastructure in urban areas, especially water, sewerage, public transport and low cost housing. Since it takes time to create urban infrastructure, we must introduce a sufficiently long term focus on urban planning. Major thrust should be on accelerating the pace of investment in infrastructure, as this is critical for sustaining and accelerating growth.


Public investment in infrastructure will have to bear a large part of the brunt of meeting infrastructure needs in backward and remote areas to improve connectivity and expand the much needed public services. Since resource constraints will continue to limit public investment in infrastructure in other areas, PPP based development needs to be encouraged wherever feasible. It is necessary to review the factors which may be constraining private investment, and take steps to rectify them.


Inadequate infrastructure emphasized the need for a massive expansion in investment in infrastructure based on a combination of public and private investment, the latter through various forms of public-private partnerships. Substantial progress has been made in this respect. The total investment in infrastructure which includes roads, railways, ports, airports, electricity, telecommunications, oil gas pipelines and irrigation is estimated to have increased from 5.7 per cent of GDP in the base year of the Eleventh Plan to around 8.0 per cent in the last year of the Plan.


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The pace of investment has been particularly buoyant in some sectors, notably telecommunications, oil & gas pipelines; while falling short of targets in electricity, railways, roads and ports. Efforts to attract private investment into infrastructure through the PPP route have met with considerable success, not only at the level of the Central Government, but also at the level of the individual States. A large number of PPP projects have taken off, and many of them are currently operational in both the Centre and the States.

Special attention must be paid to the financing needs of private sector investment in infrastructure. Infrastructure investment (defined as electricity, roads and bridges, telecommunications, railways, irrigation, water supply and sanitation, ports, airports, storage and oil

first published: Mar 15, 2012 01:08 pm

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