India May Fall Short of Spending on Roads, Ports, Ahluwalia Says
India may fall short of its target for spending on roads, ports and power projects in the five years through March 2012 after failing to complete planned projects, the prime minister’s top economic aide said.
“Total investment will probably fall short of the $500 billion that we talked about,” Montek Singh Ahluwalia, deputy chairman of India’s Planning Commission, said at a conference in New Delhi today. “I would not be surprised if it is 10 percent or even 12 percent short.”
Missing the investment target may hamper Prime Minister Manmohan Singh’s aim of boosting economic growth to 10 percent, which is needed to lift 828 million Indians, living on less than $2 a day, out of poverty. India is ranked 86 out of 142 nations for its infrastructure, according to the World Economic Forum’s Global Competitiveness Index.
“There is a need to do more to attract investment,” said N.R. Bhanumurthy, a New Delhi-based economist at the National Institute of Public Finance and Policy. “If funding is a problem, more institutions should be created to cater to this segment.”
At least two financial institutions with a corpus of $10 billion each to lend to infrastructure projects may start operations this year, Ahluwalia said. The government has doubled the target for infrastructure spending to $1 trillion for the five years to March 2017, even as it is expected to fall short in the current five-year period.
The government cut projected investment in docks, cranes and wharves last year to 407 billion rupees ($8.5 billion) for the five years ending March 2012, half the original goal. Funding for road and bridges was lowered to 2.79 trillion rupees because of fewer available assignments, according to a planning document.
To contact the reporter on this story: Unni Krishnan in New Delhi at ukrishnan2@bloomberg.net.
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
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