Key infrastructure sectors are showing strong growth in 2007-08.The accelerated growth of the economy need to be supplemented by sufficient investment in all the infrastructure segments. The growth rates of all segments of the infrastructure sector is improving, but there is a requirement of more investment in this vital sector.

The overall performance of the infrastructure during April-December 2007-08 presents a somewhat subdued picture compared to the corresponding period of last year. Growth in electricity generation has decelerated to 6.6 per cent from 7.5 per cent in the corresponding period in 2006-07. The transport sector presents a mixed picture, with a deceleration in the growth of railway traffic and an acceleration in the growth of traffic through ports and in air cargo. The highly competitive telecom sector has maintained its phenomenal growth rates for addition of new connections. The production of universal intermediates like steel, cement and petroleum showed a distinctly weaker performance during April-December 2007-08 as compared to the corresponding period of the previous year while the performance of coal shows a marginal improvement.

The Eleventh Five Year Plan envisages total investment in physical infrastructure (electricity, railways, roads, ports, airports, irrigation, urban and rural water supply and sanitation) to increase from around 5 per cent of GDP in 2006-07 to 9 per cent of GDP by the end of the plan period if the targeted rate of growth of 9 per cent for the Eleventh Five Year Plan period (200712) is to be achieved. Consistent with the above projection, the investment in physical infrastructure alone during the Eleventh Five Year Plan has been estimated to be about Rs. 2,002 thousand crore (at 2006-07 prices which is equivalent to about US$ 500 billion: @ Rs. 40/$). Alternative estimates based on a bottoms-up approach have also arrived at figure of Rs. 2,060 thousand crore (about US$ 515.05 billion), at 2006-07 prices. Of this amount, the share of the Central Government, the State Governments and the private sector is projected at 37.16, 32.76 and 30.07 per cent, respectively.

Such a large magnitude of investment during the Eleventh Five Year Plan period would need to be financed through non-debt and debt resources of the order of Rs. 1,064 thousand crore and Rs. 996 thousand crore, respectively. During 2008-09 alone, the projected investment in infrastructure is expected to be more than Rs. 322 thousand crore (comprising non-debt and debt resources at 2006-07 prices). The substantial requirement of debt resources would have to be financed through various sources including domestic bank credit, non-bank finance, pension and insurance funds and through the ECB route.

India has witnessed a rapid increase in private investment in infrastructure over the last five years. In 2006, commitments to Indian infrastructure projects with private participation were around double that of Brazil and China, making India the leader amongst the middle and low income countries. A survey of the 221 PPP projects was undertaken at the instance of DEA for preparation of an online database on PPPs. This survey included PPPs - where a contract has been awarded and projects are under way (i.e., they are either operational, have reached construction stage, or at least construction/implementation is imminent). The survey covered projects totaling an estimated cost of Rs. 1,29,575 crore. The road projects account for 78 per cent of the total number of projects (36 per cent by total value) because of the small average size of projects. Ports, with a much larger average size of project, account for 17 per cent of the total number of projects (47 per cent by total value). Most of the contracts have been of the BOT/BOOT type (either toll or annuity payment models) or close variants. Almost all the projects in the sample (limited to the data available for 201 projects) were competitively bid (either national or international competitive bidding) with the negotiated ones (through MoUs) primarily accounted for by railways and ports sector.

Urban transport is one of the key elements of urban infrastructure. Effective urban transportation enhances productivity and growth of the economy. The urban transportation covers two broad modes, viz. private transport and public transport. The public transport empowers poor by making access to economic opportunities easier. It is also more energy efficient and less polluting. Public transport system also helps to improve urban-rural linkage and improves access of the rural/semi-urban population in the periphery to the city centres for the purpose of labour supply without proliferation of slums.

To provide better public transport and ease congestion, proposals for Bus Rapid Transit System (BRTS) have been approved for Ahmedabad, Bhopal, Indore, Jaipur, Pune, Rajkot, Vijayawada and Visakhapatnam cities  covering a total length of more than 310 km with total estimated cost of Rs. 2,740 crore, out of which the Central assistance is around Rs. 1,295 crore.

The challenges in implementing projects in this sector are immense. Each segment in the physical infrastructure sector has its own specificities, be it of land acquisition, environment, regulation, financing or of designing of contracts. In case of land acquisition, the problems are well known. There is no option but to squarely address them with foresight, sensitivity, fairness and transparency for all stakeholders. The need to develop appropriate mechanisms for financing infrastructure, especially the development of a domestic debt market, is overarching. It is also important to ensure synergy in the efforts being made to develop different types of infrastructure through effective coordination between different agencies. Only then can the sum total be greater

than its parts. These challenges are serious, but they are by no means insurmountable. The critical requirements would be determined and well designed efforts by the Government(s) and the private sector partners to implement the policy initiatives already under way with the requisite amount of detailed technical, managerial, administrative and human skill and, not the least, with the will to implement in a transparent and inclusive manner.