Beijing: India needs over USD 1.5 trillion in investment in the next 10 years to bridge infrastructure gap as the government intends to connect seven hundred thousand villages with roads by 2019 as part of a massive modernisation plan, Finance Minister Arun Jaitley said.
"We have been able to sustain growth in the phase of global slowdown essentially on the strength of the infrastructure creation in India where the gap is huge," Jaitley, who is in China to attend the Board of Governors of AIIB, said. "Over the next decade, we require over USD 1.5 trillion in India alone to fill up the infrastructure gap. We also use the additional resource which is available with us as a result of falling prices because that regime helps us. In investing large public finance into infrastructure, for instance, we have seventeen hundred thousand villages in India. We intend to connect each of them by 2019," he said while addressing a seminar on "Infrastructure and Global Economic Growth" organised by China sponsored Asia Infrastructure Investment Bank (AIIB) along with Finance Ministers of many countries.
He also spoke of massive rural sanitation programme as part of India's current infrastructure programme. "In terms of highway construction this year alone our target is 10,000 kms. Our railway system is over 100 years old. We are going in for a massive modernisation," he said. He added that the government is seeking private sector participation in converting railway stations into commercial hubs.
The government plans to build more airports, sea ports and generate more power, particularly renewable energy which is ecologically also better from all points view, he said. "These are all the emphasis areas we have under taken," he said. About arranging funding for the massive development, he said "we realise that starting point is public finances. It is only when the public finances are put into it, you start attracting and the activity begins a lot of private funds". At the same time there are a large number of developmental institutions like World Bank, ADB which put in lot of money because infrastructure funding also brings in long time returns on a sustainable basis, Jaitley said.
Jaitley added that the infrastructure development is key to halt the slowdown of the global economic slowdown. Infrastructure is where inequalities exist and the requirement of large number of economies world over is to fill up this infrastructure gap, he said. "Over the next decade the world needs trillions of dollars to fill up this gap. I think it is extremely important if the world is pulled from the present slowdown phase, infrastructure development holds the key. We have been able sustain growth in the phase of global slowdown essentially on the strength of the infrastructure creation in India where the gap is huge," he said.
Jaitley said infrastructure development is key to halt the slowdown of the global economic slowdown. Infrastructure is where inequalities exist and the requirement of large number of economies world over is to fill up this infrastructure gap, he said.
"Over the next decade the world needs trillions of dollars to fill up this gap. I think it is extremely important if the world is to pulled from the present slowdown phase, infrastructure development holds the key," he added. "We have been able sustain growth in the phase of global slowdown essentially on the strength of the infrastructure creation in India where the gap is huge," he further said.
Projects succeed when risks for investment in projects reduced and eliminated, Jaitley told the seminar. He said "the risk element (for investments) has to be minimised and virtually eliminated. It is only then the infrastructure creation can take place at a faster pace," he said. "The projects have to be bankable, there has to social acceptability of the fact that users must pay for infrastructure. Infrastructure does not come for free," he said. "So if it is a road, those who use it have to pay for. If it is an airport or sea port users must pay for it," Jaitley said.
"Those who use power must pay the actual tariff. Concessional tariffs do not work beyond a particular point," he said. "They make infrastructure creation itself difficult. Therefore reduction and finally elimination of risk element will involve the social acceptability, where the society accepts the principle that the funding of infrastructure, eventually has to come from users themselves. That is how the projects becomes bankable," he said. "Otherwise the risk element will remain and projects will stop halfway, be incomplete," he said.
