To meet the increasing need for urban growth, the urban development ministry said on Tuesday it planned to include 28 more cities in the Jawaharlal Nehru National Urban Renewal Mission, the central government's city modernisation scheme.
At present, 63 cities are covered under JNNURM, which was launched in 2005 by Prime Minister Manmohan Singh to improve the quality of life and infrastructure in cities.
"There are 300 million people living in urban areas as of now.
The number is expected to reach 800 million in the next 25 years. In this scenario, an enabling policy environment at both the state and central level is required to match the growing urban need," Union Urban Development Minister S Jaipal Reddy said at the 'Business Standard Infrastructure Meet' in Bengaluru on Tuesday, while delivering the keynote address.
Reddy, however, said there should be more fund allocation for implementing these projects.
Urban development has emerged as one of the focus areas of the government in the last two decades on the back of economic growth, higher disposable income and more migration of rural people to the urban areas.
Indian cities need huge investment in this sector to match the present growth rate.
According to a study by Goldman Sachs, the country needs around $1.1 trillion (over Rs 50 lakh crore) to fund its infrastructure projects, of which $550 billion (over Rs 25 lakh crore) will be required by 2012.
"There is a need for huge investment in the infrastructure sector that can't be funded only by a state or the central government. So, the public-private partnership model is the answer to India's emerging need in infrastructure sector," Reddy added.
He also said the state governments should provide facilitating environment for the smooth execution of infrastructure projects.
"State governments should reduce the stamp duty to 5 per cent as against a national average of 8 per cent, with faster clearance of projects for facilitating speedy growth of this sector," he said.
Planning Commission member Soumitra Chaudhuri, who was also present on the occasion, said spending in infrastructure projects could open many new opportunities for the private sector.
"Infrastructure spending, which is expected to be close to 9 per cent of the gross domestic product by the end of the 11th Five-Year Plan, throws immense opportunities for the private sector for participation in this emerging growth story."
In the energy sector alone, one-third of the power produced in India would be from private players in the country by the end of this Plan period (2007-12), he added.
The Planning Commission member also stressed the need of prudent utilisation of water in infrastructure development.
He, however, said that issues like political interference should be sorted out in implementation of project for providing an assured return on investment to the private parties.
V Madhu, principal secretary (infrastructure development) of the Karnataka government, said the Centre and states should frame an enabling policy and put in place a proper regulatory framework to execute PPP projects.
The Karnataka government has drawn up many PPP projects in infrastructure at an annual spending of Rs 11,000 crore (Rs 110 billion) per annum, he said.
Some of the industry experts also pointed towards the same bottlenecks faced by companies in executing the infrastructure projects.
"Land acquisition, rehabilitation and resettlement issues, water and other raw material linkage are some of the issues that should be taken care of by the government for smooth execution of infrastructure projects," B V N Rao, chairman of GMR Energy, said.
S Ramachandran, managing director of IVRCL Assets and Holding Company, said the government should show more preparedness before implementing projects.
"Bids should be invited after land acquisition, water linkage and other raw material sourcing provisions for smooth execution of any infrastructure project," he said.
