Infrascape 2013 | PPP is the way forward

Lalit Jalan, CEO & Whole time Director, Reliance Infrastructure Limited

Realising the importance of nation building, our planners and policy makers are targeting a whopping US$ 1 trillion of infrastructure investments dur­ing the XII Plan period.

With the combined Central and State deficit at over ~11 per cent of GDP, and national debt at close to 90 per cent of GDP, government finances are seve­rely constrained.

Progress: In recent times, driven by government initiatives and private sectorÂ’s enthusiasm, investment in infrastructure has made significant strides from a mere 5 per cent of GDP a decade ago, to a projected 10 per cent level during the X11 plan period. During the same period, private component (in total infrastructure spend) has moved up from 25 per cent to 50 per cent range (XII plan estimates).

Worrying signs: There are serious worrying signs that have emerged lately from a host of reasons. While on one hand here have been serious impediments to timely project execution due to land acquisition issues and also delay in getting various government clearances and on the other unanticipated risks to the business / PPP model has often cropped up due to various uncert­ainties.

Investments in Thousands of MW of power plants are at risk either because of lack of fuel linkages or for reasons like captive coal mines that were allocated have not yet been given environment clearances.

Private sector enthusiasm has been seriously dented and is evidenced in not only poor response to the recent NHAI (road) bids, but also can be seen in the fact that companies are preferring to walk off from awarded projects even if it means encashment of their bank guarantees.

Clearly IndiaÂ’s growth story needs to be driven by Infrastructure investments and the planners and policy makers need to align themselves to this. As serious bottlenecks have emerged, the need of the hour is to identify and implement solution with utmost urgency. It is a welcome sign that the government has recently shown some resolve in this direction.