Overcoming the Deficit

The consensus among experts today is that one element that has the potential to stall India's growth momentum is its woefully inadequate infrastructure. This realisation has also dawned on the government which has decided to scale up infrastructure investment drastically. During the 11th Five-Year Plan (2007-2012) the government plans to spend US $514 billion on infrastructure, which is 2.3 times higher than its spending on this sector during the 10th Five-Year Plan. What is interesting is that for the 12th Five-Year Plan it once again plans to double the outlay on infrastructure to US $1,025 billion. Thus from 7.55 per cent of GDP in the 11th Five-Year Plan infrastructure spending is expected to rise to 9.95 per cent of GDP in the 12th. Further, the government expects a lot of this spending to come from the private sector. If the private sector is expected to spend around US $186 billion (36.2 per cent of total spend) in the 11th Five-Year Plan, it is expected to spend US $512 billion (50 per cent of total spend) during the 12th Five-Year Plan. Thus the government wants increased private participation in infrastructure development via Public Private Partnerships (PPP) and through models such as Build Operate Transfer (BOT), Build Own Operate Transfer (BOOT) and Build Own Lease Transfer (BOLT). The boom in infrastructure development means tha