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With infrastructure poised for a major expansion and investment friendly regulations in place, Deputy Chairman of the Planning Commission Montek Singh Ahluwalia told investors that this sector provided attractive opportunities for them.
Addressing the fourth India Investment Forum in New York, Ahluwalia highlighted the steps the Indian government was taking to attract investments in the infrastructure sector, saying it is open to suggestions which they might have to offer to make the investment process smoother.
"The Indian economy is doing well but the dynamism has put the infrastructure under great strain and if the country has to maintain a high level of growth rate, it is imperative that it develops the infrastructure at a fast pace," he said.
The spending on infrastructure sector last year -- the base year for 11th five-year plan -- was 5 per cent of the GDP which would be increased to 9 per cent over the next five years, he said.
This, he said, means India would need $492 billion over five years for this sector. If it was business as usual, the total investments would be around $300 billion.
Thus the country would need to find extra $192 billion.
Pointing out that substantial part of investments would still be made by the public sector, he said that private sector investments too are poised for a major expansion.
He said the private sector contribution in the 5 per cent of GDP spent on infrastructure sector last year was only 0.9 per cent.
"We hope the private sector investments would grow to 2.2 per cent as spending goes up to 9 per of the GDP. The public sector investments are estimated to go up from 4.1 per cent to 6.8 per cent.
He expected the private sector contribution to add up to $145 billion over the five year period which he said is not an "impossible large" number but it is "huge" for India.
Referring to various sectors, he told the investors that power sector expects high level of private money infusion while agriculture the least.
"I do not think that private sector would be interested in investing directly into the agriculture sector because of pricing structure for irrigation but it would have a role in construction of dams and other physical infrastructure," he said.
Ahluwalia said he expects contribution of private sector to power sector at 26 per cent, to airports 76 per cent and for railways only 17 per cent.
The total debt needs for public and private sector is about $240 billion and it would be possible to raise $200 billion from banks, insurance companies and other financial institution, he said.
But, he said, $40 billion would still be needed.
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