India: Infrastructure investment gains momentum
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India: Infrastructure investment gains momentum

Private sector spend up 12-fold; IDFC plans to triple loans

Private investment in Indian infrastructure has risen almost 12-fold as a share of GDP over the past seven years, raising the prospect that the country is making headway in upgrading its power-generation capacity, roads, ports and railways.

Private promoters’ share of investment has risen from 0.3% to about 4% of GDP since 2003, accounting for nearly half of India’s total average annual infrastructure spend since that time. Overall infrastructure investment in India over the same period has doubled from 4% to 8% of GDP.

"The reality is that India has come much further than people realize in a much shorter period of time," says Rajiv Lall, chief executive of state-run lender Infrastructure Development Finance Company, referring to the country’s investments in infrastructure.

"There’s an ugly underbelly to this investment momentum. Entrepreneurs need government to do things for them, which can lead to corruption. That can’t be overcome just like that"

Rajiv Lall, Infrastructure Development Finance Company

"To the naked eye it doesn’t seem as though much has happened, as the bulk of the spending has gone into greenfield projects, but the impact will be noticeable over the next three years," he adds.

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