India has started talking about the size of the funds needed to bridge the infrastructure deficit. The size, as can be expected, is gargantuan: $350 billion, or Rs 15,75,000 crore, at last count. How has the figure been arrived at? In the approach paper to the 11th Five Year Plan (2007-2011), the Planning Commission has, perhaps, for the first time, outlined the current investment in infrastructure (including everything from roads to rail to power to airports), and noted that it will need to increase from 4.6 per cent of GDP to around 8 per cent in the 11th Plan period.
...There is a limit to the amount of finance one can mobilise from domestic markets. You have no choice but to go to the international markets," says Ramesh C. Bawa of IL&FS. But as Sanjay Reddy of GVK Group points out, infrastructure finance has become less of an issue especially for ready projects. "We sewed up the funding for Mumbai airport modernisation in 45 days," he adds.
The absence of a steady stream of ready-to-invest bankable projects, or 'cooked projects' as Feedback's Chairman Vinayak Chatterjee likes to call them, is going to be more of an issue. Finance Ministry's Arvind Mayaram, who looks after infrastructure, agrees. "The key issue here is the capacity of the public sector to conceive, develop, process engineer and bid out the public private partnership projects."
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.