Need to boost investments in core sector: Montek

New Delhi, May 25 | Updated: May 26 2007, 05:30am hrs
With the economy showing signs of clocking more than 9% growth in the 11th Plan, Planning Commission deputy chairman Montek Singh Ahluwalia said on Friday that investments in infrastructure sector will have to be spurred to at least 9% of GDP from the current level of 5%.

The revised investment estimate for the sector provided by the Committee on Infrastructure is $450 billion, an additional $100 billion over the earlier projection of $350 billion.

Investment requirement in infrastructure would be higher than thought earlier. To achieve an over 9% growth, we need to scale up our investment in the infrastructure sector to 9% during the terminal year of the Plan from the present 5%, Ahluwalia said addressing a conference on state highways.

Ahluwalia said with the government has already committed to funding mega social sector development programmes, it will not be possible for the public sector alone to provide for such huge amount of funds for development of roads including state and national highways and the private sector has too pitch in and play a crucial role in it through public private partnerships (PPPs).

If public sector has to go alone then we better scale down our expectations, he said.

Ahluwalia also said there is a need to do lot more to create an environment for PPP and the UPA government will ensure all policy changes necessary for to magnetise private sector. Ahluwalia said that tolling alone cannot ensure the money required for funding road programmes and the government will have to provide capital subsidy.

He said the Model Concession Agreement clearly lays down the framework for safeguarding the interests of both the contractual parties. The dispute resolution mechanism has also been put in place. Member Secretary Planning Commission R R Shah said a whopping Rs 1,30,000 crore will be needed for upgrading the state highways. He said this money was being routed through Viability Gap Funding and India Infrastructure Finance Company Limited. Pointing out that Rs 43,000 crore were required to give a facelift to rural roads.