Interventions needed to remove roadblocks

Divakar Marri, Head, Programme Management (PMO), Ramky Infrastructure

Recognising the adverse implications of poor development in some of the infrastructure segments, the Indian government has significantly increased its infrastructure spending over the last 10 years and as was evident from the 12th Five Year Plan that has called for $1 trillion in infrastructure spending.

Electricity – The government has liberalised its policies to facilitate 100 per cent FDI in all segments of the power sector, including power trading. This is expected to increase private sector investments next year.

Roads – The government has taken various initiatives to boost development of infrastructure in the country. These include setting infrastructure targets for various sectors, putting in place an institutional mechanism to monitor the progress of PPP projects at the central and state levels and facilitating land transfer between government agencies for PPP projects.

Railways – The growth in rail infrastructure has not matched the demand, with many projects running behind schedule, leading to time and cost overruns. Some of the major issues affecting the sector include insufficient funds, misplaced investment priorities, lack of timely reforms in organisations and inability to attract private investments.

Telecommunications – The telecom sector has been facing issues like high debt, pressurised margins and huge spectrum costs. The sector expected revisions in taxes and levies from this Budget. However, the consistent tax structure is a disappointment for the sector and is expected to have a negative impact.

Airports and ports – Investment in the airports sector has marginally exceeded expectations, with the private sector investments. The main issues faced by ports include the level of containerisation, custom procedures and insufficient connectivity to their hinterlands. Actual investment is less than the expected investment, primarily because there were few PPP projects in the sector.

India's infrastructure sector is in dire need of immediate interventions to remove roadblocks and accelerate infrastructure development and implementation of projects. These interventions would need to range from policy actions, regulatory changes and pushing the reforms agenda, which would create an encouraging environment for attracting investments to the sector.