Infrastructure has a pivotal role in India’s economic progress. In order to sustain this rate of economic growth, policy planners predict, investment in infrastructure needs to rise from 4.6 per cent of GDP to between 7-8 per cent during the Eleventh Plan period (2007-2012), which would entail an outlay of almost US$ 320 billion over the Plan period. The sector is attracting investments both from Government and the private sector.
The 11th Five Year Plan has prepared an ambitious target for the infrastructure sector. Of the total investment requirement of Rs 20,18,709 crore ($492 billion), 70% investment is expected to come from the public sector while remaining 30% from the private sector. This is a big jump from the previous Plan when public-private investment share revolved at 83% and 17% respectively.
The private sector investment, by a broader definition, includes PPP projects as well as pure private sector projects. PPP projects are based on a concession agreement with the government such as for toll roads, ports, and airports. While private sector projects are market-based such as in telephony and merchant power stations.
During the Eleventh Plan period, private investment is expected to constitute more than 65 per cent of total investment in telecom, ports and airport sectors during the Eleventh Plan. For the power sector, it would rise to 26 per cent and for the road sector to 36 per cent. Cumulative share of public and private investment in total infrastructure investment during the Eleventh Plan is pegged at 70 per cent and 30 per cent respectively; in contrast with 83 per cent and 17 per cent respectively, during the Tenth Plan.