NEW DELHI, July 4 — When Mumbai unveiled a sea bridge meant to cut travel time to the downtown area by more than 30 minutes this week, public enthusiasm was so high that commuters instantly clogged the US$400 million (RM1.4 billion) facility spanning Mahim Bay.
The bridge itself is a mere 5.6km long but the popular response underscores the demand for quality infrastructure in India, whose US$1.2 trillion economy is projected to grow at least 6.25 per cent this year, despite the global downturn.
Economists say India loses as much as two percentage points of growth each year because of its creaky railways, clogged ports, poor roads and inadequate power supplies.
On Monday, Finance Minister Pranab Mukherjee will unveil the government's budget for the fiscal year that ends next March 31. While he will probably announce new social spending, a road map for stake sales in government companies and measures to simplify taxation, the bet here is that infrastructure will be high on his list of priorities.
Indeed, not too long ago, government ministers routinely spoke of the need to spend US$150 billion on fixing the country's infrastructure. But national ambitions have soared since then.
“The government said it planned to spend about US$500 billion on infrastructure in the five years to 2012,” noted a senior finance ministry official. “We estimate that figure will be a trillion dollars in the next five-year period.”
Every successful new project adds to the aspiration levels of a nation whose major growth driver is domestic consumption.
When glittering new airports opened in the southern cities of Hyderabad and Bangalore last year, Indians had a taste of world-class aviation facilities.
Next year, national capital New Delhi will get an international airport with some 80 aircraft bays. It currently has nine.
Power generation is the biggest of India's infrastructure priorities and will probably get significant attention from Mukherjee.
Without cheap power to fuel industry and business, much of the benefits the country stands to reap from its young population risks being wasted if adequate employment is not assured for the millions graduating from schools and colleges.
Besides, power problems are one of the biggest grouses of the foreign investors now pouring into India in ever-larger numbers. The government's Economic Survey, citing a study by the United Nations Conference on Trade and Development, said India received US$46.5 billion in foreign direct investments last year, an 85 per cent jump from the previous year.
President Pratibha Patil, laying out the new government's agenda on behalf of the Cabinet, said last month that India would add 13,000MW of power every year with a greater focus on implementation. But even that is not sufficient to ease the brownouts that mark most parts of the country.
Likewise, highway construction is another laggard. In the last fiscal year, India's transport ministry awarded just eight highway projects against a target of 60.
“With new minister Kamal Nath at the helm, the odds favour faster progress as some systemic issues could be resolved,” said Citibank economist Rohini Malkani.
To be sure, many reform measures the world expects to see in India may well come outside the budget.
This week, the government raised pump prices, partly to ensure no dilution of attention from the social programmes it plans to unveil on Monday.
Announcements on enhanced foreign participation in India's insurance sector, for instance, require parliamentary approval. Later this year, New Delhi will also probably have significant announcements on aviation, and on allowing foreign universities to open campuses here. — Straits Times
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