NEW DELHI: Out of the $320-billion (Rs14.1 lakh crore) of infrastructure investment that India desperately needs over the next five years, most of it must come from the private sector.
Yet, at a conference here, while Union finance minister P. Chidambaram asked the private sector to come up with more credible and bankable projects to meet the “enormous” needs for port, rail and other core projects, railway minister Lalu Prasad said he would continue to oppose key railway operations going into private hands. The meet was jointly held by the World Bank and Infrastructure Development Finance Company.
“I am against privatisation of the railways and as long as I am here, railways will not be privatised,” he told foreign delegates at a conference on public private partnerships (PPPs) in Infrastructure. “I am not against PPPs, and we can use it in our non-core activities (such as those not connected to running of trains),” Lalu said.
Chidambaram said he believed that most of the infrastructure investment needs would be met by the private sector, especially now that rating agency Standard & Poor’s had upgraded the country’s sovereign rating to investment grade. He added that both savings and investment ratios needed to rise by another 2 percentage points from the existing 32.4% and 33.8% of GDP to help sustain 9-10% overall growth.
He specified four constraints to more PPPs—states were not doing enough on the policy and regulatory front, more long-term investment instruments were needed to raise money, not enough institutional capacity to sustain long-term contractual projects, and lack of good and bankable projects.
”We do not envy China. We wish to emulate China in the matter of infrastructure,” the finance minister said. “But we believe that we can learn from China about execution of projects within time, strict discipline and reward-punishment system for those incharge of project execution.”
The railway minister said that the cash surplus target for the current fiscal had been set at Rs20,000 crore. The outlay for the next five years would cross Rs3 lakh crore, 40% of which is expected to come from PPPs.
He added that the proposed Rs30,000 crore dedicated freight corridor project would, after completion, guarantee exclusive tracks for freight trains connecting Delhi with Mumbai, and Mumbai with Kolkata, and revolutionise rail technology in the country.