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$80 bn committed to infrastructure: Govt

Infrastructure projects worth over $80 bn involving foreign investment have achieved financial closure, says Commerce Secretary GK Pillai.

business Updated: Mar 28, 2008 20:37 IST
Gaurav Choudhury

Infrastructure projects worth over $80 billion involving foreign investment have achieved financial closure, Commerce Secretary GK Pillai said here on Friday.

Pillai, who was speaking on the sidelines of the third Mint-Hindustan Times Luxury Conference here, said foreign investment is beginning to flow into the infrastructure sector.

India would require an estimated $500 billion over the next five years for the infrastructure sector.

Analysts feel that lack of credible and bankable infrastructure projects along with absence of long-term financing instruments as the major weaknesses affecting the growth of the infrastructure sector in the country.

The pre-budget economic survey has said that substantial requirement of debt resources would have to be financed through various sources including domestic bank credit, non-bank finance, pension and insurance funds and through the external commercial borrowing route.

The government is trying to work out various innovative funding options including relaxation commercial borrowing (ECB) norms to fund infrastructure projects.

A committee, headed by HDFC chairman Deepak Parekh, which had gone into the details of using surplus forex reserves, felt there is a need to find out suitable structures “that can effectively help in channeling these reserves for investment in infrastructure projects without the risk of monetary expansion.”

Infrastructure industries grew at a slower pace in January at 4.2 per cent in January against 8.3 per cent in the same month last year, amidst concerns about a possible slowdown in the economy in wake of slow industrial growth, rising prices and a likely fall in the country's national income.

The Associated Chambers of Commerce and Industry of India, (ASSOCHAM) has expressed its serious concern over the stiff fall in 6 core infrastructure industries to 4.2% in January 2008 against 8.3% in the corresponding period last year, the association has sought government’s intervention to address the issue and take corrective steps to revive the core sectors.