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India to add more than 20,000 MW of power in FY11

business Updated: May 17, 2010 13:34 IST

Reuters
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India plans to add 20,359 megawatts of power to its present capacity in the financial year 2011, a top adviser said on Monday, helping ease a big electricity shortfall.

Montek Singh Ahluwalia, deputy chairman of India's Planning Commission, told a news conference that the private sector would fund 40 per cent of the 2007-12 infrastructure funding.

India aims to spend $500 billion in the five years to end-March 2012, to overhaul its creaky infrastructure that is a drag on plans for Asia's third largest economy to grow at double-digit rates and catch up with peer China.

India has an installed power capacity of about 160,000 megawatts. China adds about 100,000 MW of power every year.

It is considering doubling the investment figure in the five years from 2012 onwards, and expects much of the funding in both periods to come from private sources.

But the country has consistently missed its targets for building roads, ports and power plants and private interest has been lukewarm, with bureaucratic red tape and difficulties in acquiring land holding up projects.

Neither will India achieve a road building target of 20 kilometres (12 miles) a day, nor add 78,700 megawatts of power generation capacity in the five years to 2012, targets set and then slashed by the government. [ID:nSGE63P0GA]

India will reach only 12-13 km per day in the current year, and add only 61,000 MW by 2012, ministers have said.

India's underdeveloped bond market, with few takers for long-term debt, and restrictions on pension and insurance funds have further choked the flow of funds for infrastructure.

To help remedy this, India plans to launch an $11 billion infrastructure fund that will go to develop the domestic bond market and refinance high-cost debt. [ID:nDEL002979]

But most critics point out the bigger problem is not availability of funds but of land and little can move forward till the government resolves local resistance and archaic laws that have often stalled building of roads and power plants.

India's economy will grow 8.5 per cent in the fiscal year that began April 1, after probably expanding 7.2 per cent in the previous year, the government has estimated, making it the world's second-fastest growing major economy after China.

The Planning Commission charts the Five-Year-Plans for the economy and is headed by the Prime Minister.