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India is often been criticised for its lack of sufficient infrastructure - a big deterrent to the growth of any developing country. But this lacking has in fact thrown open new opportunities for sectors like roads, power, aviation, ports and railways. These sectors are set to witness seachange in years to come.
The government has realised the role infrastructure can play in country’s GDP growth. And that is very much reflected in its budgetary allocation of Rs1,73,552 crore for infrastructure. But that wouldn’t be enough for the kind of construction exercise we are planning to take in coming years. That’s the reason government is heavily banking on private participation. The Planning Commission in its mid-term appraisal for Eleventh Plan (2007-12) has predicted that investment from private sector will increase to 36% from its previous 25% in Tenth Plan. In Twelfth Plan (2012-17), it expects the contribution to reach 50%. Following are the sectors to watch out for:
Power: One of the most underserved sectors in India which is expected to receive maximum contribution from private sector.
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Roads & Highways: This is the most important component for a country’s growth. Thankfully, the sector has started to receive the kind of attention it deserves. Under the leadership of the Roads and Highways Minister Kamal Nath, the sector offers great opportunities for private players. The minister has a very ambitious plan for the road sector. It has managed to achieve 2008.93 km against its target of constructing 3165.55 km in 2009-10. The government plans to construct 2,500.00 km in 2010-11.
Airports: There is every research to support that India and China are going to drive the aviation industry in years to come. India badly lacks in airport infrastructure and it has to speed up its pace to accommodate expected air traffic growth. All the green-field airports are expected to come through the PPP model. In addition to that, the existing airports are being redeveloped and renovated either through private players or parts of works being outsourced to private infrastructure companies. With successful implementation of Hyderabad and Bangalore airports; and ongoing redevelopment of Mumbai and Delhi airports, the sector offers lots of promise to private players.
Ports: With growing multilateral trade and commerce, the port sector is expected see huge development in years to come. The government is opening up the sector gradually for the private sector through the PPP model. There are a number of PPP minor ports which are functioning quite successfully. The sector saw investment of Rs17425.05 crore for PPP projects which are operational, under implementation/construction and awarded up to till date. This includes cost of Rs2653.41 crore for 13 projects awarded in 2009-10. The government expects Rs13891.19 crore investments from private players for PPP projects in 2010-11.
The Planning Commission projections suggest that the economy will enter the Twelfth Plan in a much stronger position as far as infrastructure is concerned. The investment in infrastructure will be around 8.37% of GDP in the base year of the Twelfth Plan. It is estimated that the investment in the infrastructure sector during the Twelfth Plan would be of the order of Rs40,99,240 core. At least 50% of this is expected to come from the private sector.
Construction Week will carry in-depth stories on each sector in its coming issues under the ‘Sector Focus’.
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