India needs Rs 13.7 Lakh crores for infrastructure annually

New Delhi: India needs to almost double its annual spending on infrastructure at $200 billion and the real challenge lies in harnessing private investment, said the Economic Survey 2018-19 tabled in Parliament on Thursday.

To achieve the target of $10 trillion economy size by 2032, a robust and resilient infrastructure system is required, supported by adequate private investments, the survey document noted.

As the country has only been able to put $100 to 110 billion annually into infrastructure development, this huge investment gaps of about $90 billion in the space needs funding through "innovative approaches", it said underlining the strong relations between the economy and infra as "the correlation of investments in inland, road, rail and airport infrastructure to GDP are higher than 0.90".

Given the fiscal constraints that leave less room for expanding public investment at the scale required, there is an urgent need to accelerate the flow of private capital into infrastructure, the survey document said.

"India needs to spend 7-8 per cent of its GDP on infrastructure annually, which translates into annual infrastructure investment of $200 billion currently.

However, India has been able to spend only about $100-110 billion annually on infrastructure, leaving a deficit of around $90 billion per annum," it said.

With the aim of boosting investment in infrastructure, "the National Investment and Infrastructure Fund has been created with a capital of approximately Rs 400 billion to provide investment opportunities to commercially viable projects", it said adding that a Credit Enhancement Fund for projects for increasing the credit rating of bonds floated by infra companies is going to be launched in the country.

A new credit rating system for infrastructure projects, based on expected loss approach, has also been launched besides measures like infrastructure investment trusts and Real Estate Investment Trusts have been formulated to pool investment in infrastructure.

Also stressing the need for creating "next generation infra", it said physical infrastructure attained a rapid pace with more than 20 per cent of the existing highway length of 132,000 km being constructed in the last four years, creation of additional 40 lakh seating capacity under UDAAN and expansion of key bridges.

"In order to create a $10 trillion economy by 2032, India needs a robust and resilient infrastructure. Public investment cannot fund the entire infrastructure investment requirements of the country," the survey said.

Private players are usually eager to bring their capital only into developed Indian states and therefore, the real challenge lies in bringing adequate private investment across the country with the collaboration of public sector, it said.

Sustainable Development Goal (SDG) number 9 aims to "develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure to support economic development and human well-being, with a focus on affordable and equitable access for all, it said.