India’s notoriously bad transport infrastructure is to be given a welcome boost following the announcement that the government is set up an INR500bn (US$11bn) debt fund to build ports, roads and bridges.
Plans are currently being worked out and the idea is to refinance lending institutions. The Indian government is talking to the World Bank and other multilateral agencies
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Roads, which account for 65% of India’s cargo movements, are largely single lane and with irregular surfaces, slowing trucks to an average speed of about 20 km/h, according to a 2009 study by Transport Corp of India and the Indian Institute of Management.
The average time taken by ships to unload and load at Indian ports is almost 96 hours, about 10 times longer than in Hong Kong, the government said in its latest annual economic survey.
India has doubled its target for infrastructure spending to $1 trillion in the five years starting 2012 to narrow the gap with China, the world’s fastest growing major economy.
The fund is the latest attempt by the government to raise capital from overseas after a $5bn fund planned in 2007 with Citigroup and Blackstone Group was shelved.
Priority is been given to improving highway links from north to south and east to west in the country as well as constructing a quadrilateral route to link the major cities of Delhi, Mumbai, Kolkata and Chennai.
Bloomberg News noted that India spent 6.5% of its gross domestic product in 2009 on infrastructure, compared with about 11% by China, according to an Ernst & Young India report.
A report published in March said that India may need as much as $1 trillion in infrastructure investment between 2012 and 2017.
In February, Finance Minister Pranab Mukherjee offered tax breaks to individuals and companies to encourage infrastructure investments. The country is ranked 89 out of 133 nations for its infrastructure, according to the World Economic Forum’s Global Competitiveness Index.
