India has a dream plan to improve infrastructure. But big plans need big money. An official study by the Planning Commission has counted every penny that may be available over the next five years and concluded that there just does not seem to be enough.
The study has estimated a funding gap of Rs 1,60,164 crore over the 11th Plan Period to execute plans for expanding roads, railways, ports, airports, telecom and information technology and power generation.
The expected infrastructure investment to achieve the targets is pegged at Rs 20,18,709 crore. This would be 2.45 times higher than the investment ploughed into the infrastructure during the past five years.
But it is going to be a tough job generating hard cash for investment.
The study by the Commission pointed out that budgetary support from Finance Minister P. Chidambaram at the Centre and his counterparts in the states could not exceed 30 per cent of the total requirement.
Chidambaram has his hands tied and cannot raise budgetary support due to competing claims from politically sensitive sectors like health, education and agriculture.
“What is available will be directed largely towards rural infrastructure and the Northeast, leaving little room for funding other infrastructure project,” the Planning Commission said in its paper.
The panel also doubles up as the secretariat of the Committee on Infrastructure headed by Prime Minister Manmohan Singh.
The remaining 70 per cent — Rs 14,08,144 crore — would have to be funded through a combination of equity, internal resources and debt instruments.
The Commission suggested that a little less than one-third of this amount — Rs 5,96,533 crore — could be generated through equity, internal resources and other non-debt sources.
Debt funds to be generated by private and government-owned firms would thus have to raise the remaining Rs 9,85,702 crore.
“But the total availability of debt funds for financing infrastructure is only estimated at Rs 8,25,539 crore, leaving a funding gap of Rs 160,164 crore,” said a spokesperson at the Planning Commission.
The usual option — curtailing investment — is hardly an option that the government can look at, an official said.
The Prime Minister is no less keen on rural infrastructure than he is on economic infrastructure, both closely linked to the potential they hold for improving economic activity and the lives of the people.
Besides going for measures to enhance bank credit and external commercial borrowings, the paper suggested providing infrastructure services, especially in the power sector, on commercial principles was the only way to ensure viability of investment targets in the public and private sectors.