Core Sector Requires $1,400 Bn Push, Planning Commission

New Delhi: Indian planners have estimated that the economy will need over $1.4 trillion to improve infrastructure over the next decade. The figure has been finalised by the Planning Commission recently. As against the earlier estimate of $320 billion, it is now estimated that $498 billion will be needed in 2007-12 (the 11th five-year Plan period) and another $989 billion between 2012 and 2017 (the 12th Plan period).

Massive infrastructure creation has become imperative for the Indian economy, which is facing capacity constraints. This was restricting the economy from growing by another 1-2 percentage points, Finance Minister P Chidambaram had said at the London Business School June this year. A committee constituted by the finance ministry had estimated that $475 billion was needed for capacity addition in the core sector during the 11th Plan period. At this rate, investment in infrastructure is expected to nearly double to 9 per cent of GDP every year during 2007-12. A massive infrastructure capacity upgrade through the public-private partnership (PPP) model has been one of the key initiatives of the UPA government. This is expected to help meet these ambitious targets.

Also, the private sector''s contribution has been targeted to increase to 29 per cent of the total investment, up from 16 per cent during the 10th Plan. In telecom, ports and airports, the government aims to attract around 65 per cent investment from the private sector. The Planning Commission had arrived at a much higher investment figure of $585 billion for the 11th Plan. But it assumed that 15 per cent of the projected investment would spill over into the 12th Plan period and lowered the estimate. The Plan panel also recognises that sustaining these large investments is challenging, especially the $244 billion that is required as debt.