11th Plan infra investment target may fall short by 5%

The global downturn could lead to a shortfall of 5 per cent in investment targets for the infrastructure sector during the 11th Five-Year Plan, according to the Government. The Plan terminates on March 31, 2012.

The Government had initially targeted investments worth 9 per cent of gross domestic product (GDP) in infrastructure during the 11Plan. In absolute terms, this translates into Rs 20,54,205 crore (at constant price of 2006-07).

According to the Planning Commission, storage, ports and Railways have done very badly in terms of meeting targets, while telecommunication, airports and gas pipeline managed to attract more than the target. A senior official said, “If you take out the gas pipeline from the 10 infrastructure areas then the actual picture will be very bad.” 

Storage was the worst performer in not achieving targets. One reason was the lack of clear policy for public private partnership (PPP) in this area, the official said. This, he said, had kept the private sector away from participating in capacity creation. Now, a policy is before the Empowered Group of Ministers, he added.

On the ports front, an assessment by the Planning Commission shows that very few PPP projects had been awarded by various Port Trusts in the first two years of the 11th Plan. The Ministry of Shipping has already revised the original target of capacity addition from 545 million tonnes to 393.27 million tonnes.

The challenge for the Railways was different, according to government sources. It didn't have adequate resources of its own to invest, nor was the private sector encouraged to invest. The private sector also faced problems related to land acquisition and rehabilitation.

Similarly, the road sector performance was also disappointing. The Planning Commission said the Centre's investment in the sector is expected to dip as fewer projects were awarded by the National Highway Authority of India during the first three years of the Plan than projected.

However, the lower-than-expected performance has not deterred the Planning Commission from proposing an ambitious investment target of $1,025 billion for infrastructure in the 12th Five-Year Plan. This again translates into 9 per cent of the GDP. The Commission has remarked that investment in infrastructure would have to be a key priority area in the 12th Plan in order to sustain and support the targeted growth in manufacturing, agriculture and services.