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India To Invest Billions To Improve Infrastructure

By Anjana Pasricha
New Delhi

India to Invest Billions of Dollars to Improve Infrastructure

India says it needs to invest billions of dollars to improve its creaking infrastructure. The building of roads and ports has failed to keep pace with the country's runaway economic growth in recent years.

Indian officials say infrastructure investment must increase dramatically if the country wants to sustain growth rates of around 9 percent.

The deputy chairman of the government's Planning Commission, Montek Singh Ahluwalia, told an economic summit in New Delhi recently that India needs to invest $500 billion in infrastructure projects over the next 5 years.

The government says it will provide 70 percent of the money. It is asking private investors, domestic and foreign, to come up with the balance of about $150 billion.

A consultant at the Confederation of Indian Industry, Bidisha Ganguly, says India needs everything, from high-speed expressways, to new power plants, airports and freight corridors.

"It is very, very critical, and the good news is that you now have the government recognizing that and setting policy guidelines that gears up for an increase in investment in the infrastructure sector," said Ganguly. "Without that investment you could see some kind of slowdown in growth, you could also see disparities among states increasing."

The high growth in recent years has exposed the country's antiquated transport and power systems. Foreign businessmen say this often discourages them from scaling up investments in India.

Highways, used to transport most goods, account for only 2 percent of the country's roads. Average unloading and reloading time at clogged ports is 85 hours, 10 times longer than in Singapore or Hong Kong. Power cuts last for hours, even in the country's prime business districts.

The Asian Development Bank calls infrastructure the most pressing problem in the economy, and says the deficiencies have eroded growth already. Ganguly agrees.

"To an extent you can say it is already hurting," added Ganguly. "You may have been growing by 10 percent rather than the 8.5-9 percent that is likely this year."

Adding pressure on Indian planners are frequent comparisons with China, Asia's other high-growth economy.

China is credited with making massive investments in infrastructure, helping it to attract billions of dollars in foreign investment. This is partly possible because the authoritarian governments at central and local levels can over-ride public opposition.

For India, the challenge is not just finding the money, but moving people out of the way, in its more open and democratic society.


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