New Delhi: India needs an investment of $410 billion (Rs18,45,000 crore) in the next five years (2007-2012) to develop its infrastructure, according to a new report.
The report titled “Regional Cooperation for Infrastructure Development in Asia: Toward a Regional Mechanism for Public Private Partnership,” prepared by the Regional Cooperation for Infrastructure Development in Asia (RIS) says the Planning Commission’s estimate of $320 billion (Rs14,40,000 crore) investment by 2011 in infrastructure may not be enough as “sectoral estimates suggest much larger requirements”.
The sectoral investment requirement figure for the whole of Asia is $608 billion per year, against which resources to the tune of 388 billion only are available leaving a financial gap of $220 billion for the region.
The report, however, lauds India’s initiative in creating a special purpose vehicle (SPV) for infrastructure and proposes a $300 billion SPV for the Asian region on the same lines.
Pointing toward the decline in infrastructure investments as percentage of gross domestic product in many countries including India and Indonesia, the report says public financing of infrastructure has declined from 60% in 1955 to 54% in 2003.
It points toward the need of funding the investment gaps through foreign direct investment, assistance from debt and equity markets, forex reserves and more involvement from the private sector.
“Private sector will have to play a vital role in meeting with these infrastructure deficits and there is an urgent need for major regulatory and institutional reforms to facilitate private sector investment in infrastructure,” it says.
The report prepared in assistance with the United Nations Economic and Social Commission for Asia and the Pacific was released today by Finance Minister P. Chidambaram.