NEW DELHI: Infrastructure investments in India will “gain momentum” in the next five years as more roads, airports, ports and railroads are built in the world’s second- fastest growing major economy.
The investments will depend on the development of a “vibrant” bond market, and pension and insurance changes as investments in infrastructure require funds with long repayment periods, the government said in the Economic Survey for the fiscal year ending 31 March.
India will need investments of as much as Rs14.5 trillion in the next five years starting 1 April to develop infrastructure. India’s economy will probably grow 9.2% in the year ending 31 March, the fastest pace on record. India has averaged 8.6% growth in the past four years, the quickest expansion since the country’s independence in 1947.
“The drumbeats of infrastructure are gradually getting louder and in the next few years, their rumble will be felt and heard all over the country,” the government said. “There exist strong, well-recognized linkages between infrastructure on the one hand and economic growth and poverty alleviation on the other.”
Short-term solutions such as cutting transmission and distribution losses in the power sector need to be implemented to fasten the pace of infrastructure growth, said the annual survey, which was prepared by the finance ministry.
Progress on building roads and highways will also depend on removing constraints such as difficulties in land acquisition, law and order problems in some states and the poor performance of some contractors, the survey said.
“A single, unified exchange-traded market for corporate bonds would help create a mature debt market for financing infrastructure,” the survey said.
The highest investment of Rs3 trillion will be needed for the Indian Railways in the 11th Five-Year Plan that begins 1 April. A total of Rs2.2 trillion will be needed to build more highways and upgrade highways, Rs400 billion for civil aviation and Rs500 billion for ports.
The investments will be generated from the government, the private sector and private-public partnerships, the survey said.