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India Needs Double Spending to Improve Creaking Infrastructure

  • Anjana Pasricha

India's prime minister has called for a doubling of spending, in the next five years, to fix its creaking infrastructure. Lack of adequate infrastructure has turned into one of India's most pressing problems, as everything from roads to power supplies fail to keep pace with an expanding economy.

Prime Minister Manmohan Singh says India must spend one trillion dollars to build new highways, airports, ports and other infrastructure, between 2012 and 2017, to accelerate economic growth.

That is double of what India planned to spend in the previous five years.

Speaking at an economic conference in New Delhi Tuesday, the prime minister called for a partnership between the government and private companies to create the new infrastructure.

"Our experience shows that private participation in infrastructure development is indeed a feasible proposition and can help expand infrastructure much faster than it would have relying only on public resources," Mr. Singh said.

In recent years, India has been building new roads, widening its rail network and increasing power generation to cater to the needs of a rapid economic growth. But transport bottlenecks, choked ports and a massive power deficit continue to trouble Asia's third largest economy.

And, the global recession has slowed spending on infrastructure, as funds from both domestic and foreign investors dried up in the last year and a half.

However, as it beats back the recession and resumes high growth, India is once again wooing foreign investors to help build world-class infrastructure. Because Asia is recovering faster than many Western countries, it hopes to attract some of the investment from this region.

On Monday, Indian Road Minister Kamal Nath told investors in Hong Kong that, in the next six months, the government plans to seek bids for nine new road projects valued at more than one billion dollar each. The government has set a target of building 20 kilometers of highways a day.

Economists have warned that failure to improve India's aging infrastructure could drag down growth, which the prime minister hopes will reach nine percent in the next fiscal year.

However, Prime Minister Singh stresses the need to aim for even higher economic growth in the coming years.

"I believe that we need to do even better for eliminating poverty and providing productive employment for our young population, in the near future," Mr. Singh said. "We must aim at accelerating the pace of economic growth to about ten percent per annum."

Economists say better infrastructure will give impetus to growth and help India close the gap with China -- the Asian giant with which India is often compared.