The Hindu : Business : ‘Face infrastructure challenges squarely to sustain growth’

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Friday, Feb 29, 2008
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‘Face infrastructure challenges squarely to sustain growth’

Special Correspondent

Long-term debt market should be developed during the XI Plan, says Survey

NEW DELHI: While pointing out that the overall performance of the infrastructure sector of late has been ‘somewhat subdued,’ the Economic Survey has urged the Government to face the challenges squarely so that the overall growth rate is not impaired.

Acknowledging the immense challenges in implementing infrastructure projects, the Survey advised the Government to immediately address stumbling blocks such as land acquisition, regulation, financing and environment with sensitivity, fairness and transparency for all stakeholders. The need to develop the domestic market is also ‘overarching’.

“Despite efforts to accelerate the pace of infrastructure development, the demand for infrastructure services has grown even faster than the supply so that the constraints may have become more binding,” noted the Survey. Infrastructure growth during April-December slowed down to 5.7 per cent from 8.9 per cent a year ago.

“The development of adequate infrastructure is a critical pre-requisite for sustaining the growth momentum and to ensure inclusiveness of the growth process,” it added.

Resource mobilisation

This would require mobilisation of huge amounts of capital along with shaping of policy and regulations that are comprehensive but simple and clear and credible. The long-term debt market should be developed to support infrastructure projects during the XI Plan. Nine per cent growth during the XI Plan could be achieved only if infrastructure deficit was overcome. Concerned over the modest growth in the infrastructure sector and its capacity, especially power, compared to robust performance by services and manufacturing, the Survey noted that, “an early head start is crucial for translating investment targets into investment intentions and investment into ground realities.”

Further expansion in all sectors of the economy will increasingly depend on availability of physical infrastructure and related services. The Centre would have to invest more than 37 per cent of the $500 billion funding requirement, while the private sector would have contribute over 30 per cent.

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