Does India need to spend even more on upgrading its physical infrastructure than was earlier assumed? It seems so.
In January 2006, Prime Minister Manmohan Singh told McKinsey chief Rajat Gupta in an interview that India needs to spend $150 billion over six to seven years to build new roads, ports, airports, etc. And his confidant Montek Singh Ahluwalia said on Tuesday that the required spending is $350 billion over the next five years.
This means the estimate for annual spending on infrastructure has more than doubled, from $25 billion to $70 billion. These new estimates make privatization even more urgent. Let’s face it—the government does not have the revenues to spend even $25 billion a year, let alone $70 billion. Borrowing these amounts over five years will wreck public finances all over again. The only sensible option is to encourage private capital to invest in the task of rebuilding India.