India sees jump in private funding for infrastructure

India sees jump in private funding for infrastructure

New Delhi: India expects private firms to fund half of the projected $1 trillion investment in infrastructure between 2012 and 2017, an adviser said on Friday, nearly triple the current proportion.

The government has made building of roads, bridges, airports and power plants a priority, but red tape and difficulties in acquiring land, along with an underdeveloped domestic bond market have put off investors to commit to the long-term, big-ticket projects.

Gajendra Haldea, who advises the Planning Commission on infrastructure, said the target was achievable, but projects had to be made attractive for bidders by allowing them flexibility on costs and user fees.

“All these numbers are real and within striking distance," he told a conference, citing a recent government assessment of India’s economic goals.

“Foreign companies are not wary of the risks. Whether they are happy with the structuring of individual projects, the manner in which the bidding in conducted, is to be ascertained from them," he said.

Haldea said there would be shortfalls in targets for specific sectors, such as roads. India has a plan to build 20 kilometres of highways daily, but currently manages less than half of that.

“It is possible to do it ... There will be interest as long as the projects are bankable," he said. “For them to be bankable, either you raise toll rates or rationalise costs."

Concessionaries are currently limited in their ability to fix user charges or to make changes in the design that would cut their costs.

Between 2007 and 2012, India plans to spend $514 billion — with private firms contributing 36% — to overhaul its creaky infrastructure that is an obstacle to achieving faster growth in Asia’s third largest economy.