Issues in Infrastructure Development in India

7/29/2019 Issues in Infrastructure Development in India

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ISSUES IN INFRASTRUCTURE

DEVELOPMENT IN INDIA


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WHAT IS INFRASTRUCTURE?

Infrastructure is generally defined as the physical framewfacilities through which goods and services are providedpublic.

A strong correlation exists between per capita GDP andavailability of certain services such as telecommunicatipower, roads, and access to safe drinking water etc. Wrise in per capita GDP, composition of infrastructure cha

significantly.

Basic infrastructure such as water and irrigation are morimportant in less developed countries whereas power atelecommunication play a vital role in highly developedcountries.


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INFRASTRUCTURE REQUIREMENT

World Economic Forum has noted that Indiasannual investments in infrastructure between1998 and 2005 averaged 4% of GDP comparedto 8.2% for China

Government of India is addressing theinfrastructure requirements

11th Five Year Plan (2007-2012) calls for more thandoubling the financial outlay for infrastructure


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PROGRESS IN INFRASTRUCTURE

0 100000 200000 300000 400000 500000 600000

Electricity

Roads and Bridges

Ports

Airports

Chart Title

11th Plan Target( Crores) 10th Plan Actual( Crores) 10th Plan Target( Crores)


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CHALLENGES BEFORE INDIA

India growth story likely to continue Strong economic growth will fuel further deman

infrastructure

India should absorb the large investments ininfrastructure sector to sustain growth momentu

Indian rupee has appreciated against the dolla5% over the past year and 20% in the past five y


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WHAT IS INDIA DOING ABOUT INFRASTRUCTU

Actions taken in the 11th 5 year plan - 2007- 2011. The amount of money spent on infrastructure will be

to 8% of GDP (earlier, infrastructure spending was onof GDP)

2. One Half of all new investments in the 11th plan will binfrastructure

3. The planning Commission has estimated that a totalinvestment of $450 Billion in infrastructure is required othe next 5 years to meet Indias infrastructure needs years


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TRANSPORT SECTORTHE POTENTIAL ININDIA

Aviation infrastructure

100% foreign direct investment allowed

$ 9 billion programme to upgrade 25 airports

Delhi and Mumbai International airportstwo

PPP projects with estimated investment of $3.8billion

19 greenfield airport locations identified

Airport Economic Regulatory Authority being sup


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AIR TRANSPORTATION - GROWTH

Passenger traffic is projected to cross 100 millionpassengers p.a. by 2010

Cargo traffic to grow at over 20% p.a. over thenext five years- To cross 3.3 million tonnes by 2010

Maintenance, Repair and Overhaul (MRO)growing in a big way MRO market expected to grow by 10%


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ROADS AND HIGHWAYS

India has the second longest road network in the world million KMs

Expressways and highways constitute only 2% of the abo

US $54 billion earmarked for the sector

Cargo traffic expected to grow by 15-18% over the next

years


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RAILWAYS

India has one of the largest railway networks in tworld (63,000 route KMs network)

Accounts for 30% of total freight traffic

Traffic volumes set to double by 2012

Potential for rolling stock, locomotives, passengecoaches, track equipment, signalling equipmen


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PORTS

India has coastline of 7500 KMs 12 major ports; 187 minor ports

Traffic has grown by a compounded averof 8.5% Traffic expected to reach 880 million tonnes by

12

95% of Indias exports & imports moved by

India expects to double its exports to $150billion in the next five years


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PORTS

100% FDI under the automatic route ispermitted for port development projects

100% income tax exemption is available foperiod of 10 years

Tariff Authority for Major Ports (TAMP)regulates the ceiling for tariffs charged byMajor ports

Investment needed in the next 5 years $18 billion


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PORTS - OPPORTUNITY

Opportunities exist in Development of greenfield ports

Development of container and bulk terminals

Logistics infrastructure

Dredging services

Port related equipment

Ship building, ship repair, maritime training


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ROLE OF IIFCL

IIFCL is a SPV to provide long term finance toinfrastructure projects Overriding priority to PPP projects

Finance projects in sectors like roads, airports, ports, powerurban infrastructure etc

Since inception in April 2006 Financed 77 projects to the tune of $4.3 billion with a total

project cost of $31 billion


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CONCLUSION

Investment requirements of infrastructure sectohuge

India growth story to continue 50% of the population is below 25 years Huge domestic demand

Need to bridge infrastructure gaps to sustain

economic growth Opportunities for international investors

significant

India can leverage on its vast human capital tosuccessfully adopt the PPP model


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Documents

Issues in Infrastructure Development in India