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ISSUES IN INFRASTRUCTURE
DEVELOPMENT IN INDIA
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WHAT IS INFRASTRUCTURE?
Infrastructure is generally defined as the physical framewfacilities through which goods and services are providedpublic.
A strong correlation exists between per capita GDP andavailability of certain services such as telecommunicatipower, roads, and access to safe drinking water etc. Wrise in per capita GDP, composition of infrastructure cha
significantly.
Basic infrastructure such as water and irrigation are morimportant in less developed countries whereas power atelecommunication play a vital role in highly developedcountries.
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INFRASTRUCTURE REQUIREMENT
World Economic Forum has noted that Indiasannual investments in infrastructure between1998 and 2005 averaged 4% of GDP comparedto 8.2% for China
Government of India is addressing theinfrastructure requirements
11th Five Year Plan (2007-2012) calls for more thandoubling the financial outlay for infrastructure
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PROGRESS IN INFRASTRUCTURE
0 100000 200000 300000 400000 500000 600000
Electricity
Roads and Bridges
Ports
Airports
Chart Title
11th Plan Target( Crores) 10th Plan Actual( Crores) 10th Plan Target( Crores)
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CHALLENGES BEFORE INDIA
India growth story likely to continue Strong economic growth will fuel further deman
infrastructure
India should absorb the large investments ininfrastructure sector to sustain growth momentu
Indian rupee has appreciated against the dolla5% over the past year and 20% in the past five y
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WHAT IS INDIA DOING ABOUT INFRASTRUCTU
Actions taken in the 11th 5 year plan - 2007- 2011. The amount of money spent on infrastructure will be
to 8% of GDP (earlier, infrastructure spending was onof GDP)
2. One Half of all new investments in the 11th plan will binfrastructure
3. The planning Commission has estimated that a totalinvestment of $450 Billion in infrastructure is required othe next 5 years to meet Indias infrastructure needs years
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TRANSPORT SECTORTHE POTENTIAL ININDIA
Aviation infrastructure
100% foreign direct investment allowed
$ 9 billion programme to upgrade 25 airports
Delhi and Mumbai International airportstwo
PPP projects with estimated investment of $3.8billion
19 greenfield airport locations identified
Airport Economic Regulatory Authority being sup
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AIR TRANSPORTATION - GROWTH
Passenger traffic is projected to cross 100 millionpassengers p.a. by 2010
Cargo traffic to grow at over 20% p.a. over thenext five years- To cross 3.3 million tonnes by 2010
Maintenance, Repair and Overhaul (MRO)growing in a big way MRO market expected to grow by 10%
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ROADS AND HIGHWAYS
India has the second longest road network in the world million KMs
Expressways and highways constitute only 2% of the abo
US $54 billion earmarked for the sector
Cargo traffic expected to grow by 15-18% over the next
years
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RAILWAYS
India has one of the largest railway networks in tworld (63,000 route KMs network)
Accounts for 30% of total freight traffic
Traffic volumes set to double by 2012
Potential for rolling stock, locomotives, passengecoaches, track equipment, signalling equipmen
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PORTS
India has coastline of 7500 KMs 12 major ports; 187 minor ports
Traffic has grown by a compounded averof 8.5% Traffic expected to reach 880 million tonnes by
12
95% of Indias exports & imports moved by
India expects to double its exports to $150billion in the next five years
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PORTS
100% FDI under the automatic route ispermitted for port development projects
100% income tax exemption is available foperiod of 10 years
Tariff Authority for Major Ports (TAMP)regulates the ceiling for tariffs charged byMajor ports
Investment needed in the next 5 years $18 billion
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PORTS - OPPORTUNITY
Opportunities exist in Development of greenfield ports
Development of container and bulk terminals
Logistics infrastructure
Dredging services
Port related equipment
Ship building, ship repair, maritime training
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ROLE OF IIFCL
IIFCL is a SPV to provide long term finance toinfrastructure projects Overriding priority to PPP projects
Finance projects in sectors like roads, airports, ports, powerurban infrastructure etc
Since inception in April 2006 Financed 77 projects to the tune of $4.3 billion with a total
project cost of $31 billion
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CONCLUSION
Investment requirements of infrastructure sectohuge
India growth story to continue 50% of the population is below 25 years Huge domestic demand
Need to bridge infrastructure gaps to sustain
economic growth Opportunities for international investors
significant
India can leverage on its vast human capital tosuccessfully adopt the PPP model
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