Chidambaram said though the Indian economy is likely to expand at close to 9% by the end of the current fiscal, investment in infrastructure is lagging behind, at just 5% of GDP. The country has set a target of increasing investments to 9% of GDP, translating to around $500 billion, between 2007 and 2012. Chidambaram was speaking at the US-India CEO Forums Infrastructure Investment Conference.
Of the proposed $500 billion investment, nearly 70% would come from the public sector and the balance 30% from the private sector. Financing such investment is critical, said the finance minister, adding, India has adopted various models to increase investments, wherein (the) railways have opened up container traffic for the private sector. Similarly, the investments in ports and power are liberalised. Besides, private sector investment is allowed in greenfield airports projects while the public-private participation model is adopted for the upgradation of airports of Mumbai and Delhi. The Airports Authority of India has also chalked out a plan for the upgradation of 25 non-metro airports.
Chidambaram urged US firms to invest in the power sector as the government plans to add 78,000 mw of additional capacity by 2012. The minister said that the country plans nine ultra mega power projects (UMPPs) with a capacity of 4,000 mw each. Of these, the Sasan and Mundra projects have already been handed over to project developers.
However, the finance minister noted there were hardly any US companies participating in the bidding for the UMPPs. He suggested that US companies, though not keen to take part in the engineering and construction of UMPPs, could tap opportunities in financing such projects.