Transcript by Slide 2

India :
Perspective On
Infrastructure Investments
by
Vinayak Chatterjee
Tokyo
May, 2007
Indian Prime Minister, Dr. Manmohan Singh on
Infrastructure
“Many of my ministerial colleagues
must have spoken to you about the
challenges posed by the so called
'infrastructure deficit'. This area, apart
from agriculture, is the one, which has
been gaining our attention most. We
have set up a Special Purpose Vehicle
for raising dedicated long-term funds
for financing infrastructure. We have
moved away from a governmentcentered approach to a public-private
partnership approach…
[From the speech at the India Economic Summit, 2005]
Slide 2
Indian Prime Minister, Dr. Manmohan Singh on
Infrastructure (Contd..)
…We have developed transparent,
competitive procedures for such
partnerships, which would function
on commercial lines. We have
established a viability gap funding
mechanism for making these
projects commercially viable. I am
certain that we are now at the
take-off point in infrastructure.”
[From the speech at the India Economic Summit, 2005]
Slide 3
Vision For Next 5 Years (2007-2012)
Approach Paper to the 11th
Five Year Plan provides a
‘vision’ for the period 200708 to 2011-12.
On
18th
October’06,
Chairing a meeting of the
Planning Commission, the
Prime Minister set a target
of 9% average economic
growth for the 11th Plan.
Slide 4
Gross Capital Formation in Infrastructure (GCFI)
The Planning Commission
suggests that “investments
will need to increase from
4.6% of GDP to between
7% and 8% in the 11th
Plan period”.
This would entail an outlay of
US$ 350 Billion across the
11th Plan Period (2007-2012).
Slide 5
Investments Required in Infra in Next 5 Years :
A Scenario
(US$ Billion)
Last
Year
This
Year
NEXT 5 YEARS(11TH PLAN)
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Total : 5
Years
GDP* Growing
@ 9% p.a.
718
783
853
930
1014
1105
1204
GCFI** Required
as % of GDP
5%
5.5%
5.5%
6.5%
7%
7%
8%
47
60
70
77
96
GCFI Required
* GDP 2005-06 (Market Prices) was Rs.3231,000 Crores = US$ 718 Billion
** GCFI = Gross Capital Formation in Infrastructure
Slide 6
350
Size of the Opportunity
Japanese Yen 40,000 Billion
is thus the size of the
investment opportunity for
next 5 years in Indian
infrastructure.
Slide 7
General Pattern of Funding
World Bank sources tell us
that in the 1990s:
70% of infrastructure
investment in developing
countries came from
governments or public
utilities
22% came from
private sector
the
8%
from
official
development assistance
Slide 8
Perspective on Indian Infra Funding Sources
(US$ Billion)
Slide 9
Amount
%
Resources to be organized for
infra investments in 11th Plan
Period
350
100%
From Private Capital (Domestic
and FDI)
70
20%
From World Bank, ADB, JBIC
and other multilateral/bilateral
agencies
35
10%
From Public Expenditure
245
70%
Sectoral Requirement of Funds
(US$ Billion)
Sector
Amount
%
Energy
120
34
Railways
67
19
Nat Highways
49
14
Irrigation
18
5
Airports
9
3
Ports
11
3
274
78
76
22
350
100
Envisaged
Others*
Total
PPP Possibilities
* Telecom, Tourism, SEZs & Townships, Supporting
Urban Infrastructure, Water & Sanitation, State &
Rural Roads, Logistics etc.
Slide 10
Key Imperative ONE : Private Sector
• PPP initiatives leading to a
large pool of bankable
projects.
• Establishment of really
“independent” Economic
Regulators.
Slide 11
Key Imperatives TWO : Overseas Development
Assistance (ODA)
Engage
aggressively
multilateral agencies like
with
• World Bank
• Asian Development Bank and
• Japan Bank for International
Cooperation
to secure commitments totaling
not less than US$ 39 Billion for
the 11th Plan period.
Slide 12
Key Imperatives THREE : Public Expenditure
• Structure large-scale projects
(like Rail Freight Corridor,
NHDP and Bharat Nirman)
involving substantive public
expenditure
• Implement fresh ‘out-of-thebox’ initiatives to raise savings
and resources for this purpose
to a level of US$ 234 Billion.
Slide 13
Key Imperatives Four : Long Term Financing
Create vibrant equity and longterm
debt
markets
for
infrastructure financing.
Consider innovative means to
use forex reserves.
Slide 14
Moving Forward
Project pipe-line creation
Inter-sectoral co-ordination
Project implementation monitoring
GCFI as key performance indicator
Creation of ‘independent economic
regulators’
PPP policies and dedicated PPP cells
Long-term debt markets
Political will and public mind-set to
implement user-pay charges
Slide 15
Mr. P. Chidabaram, Finance Minister
“There is enough private capital
jostling around the world. We will
have to change our thinking to tap
these resources. …………We will have
to think out of the box. We will have
to accept that we are part of the
global economy. ……….”
[Speaking at the Infrastructure Seminar, Vigyan Bhawan, New Delhi , 7th October’06]
Slide 16
Welcome !
The Indian Infrastructure Sector
welcomes participation across all
areas by Japanese companies:
Advisory
Engineering
Project Management
Project Development
Construction
Financing
Operations & Maintenance
Slide 17