27 July 2017 09:38:31 IST

India is underperforming in infra spends, says report

Within its peer group, country is the lowest performer in road, water, airports

India is underperforming in terms of spending needs (in relation to GDP) in several infrastructure segments, within its peer group (low- and middle-income countries) that comprises Bangladesh, Cambodia, Indonesia, Myanmar, Pakistan, Philippines and Vietnam.

According to Global Infrastructure Outlook report released on Tuesday by Global Infrastructure Hub (GI Hub), a G20 initiative, India is the lowest performer in the road and water sectors and airports, and is the second-lowest performer in the ports and telecom sectors. At the same time, the country is also the best performer in the rail sector and the second best in the electricity sector.

‘Poor quality’

“What it shows is that the quality of infrastructure is lower than the average within the group, given the level of population, the country’s geography dynamics,” Chris Heathcote, CEO, Global Infrastructure Hub, told BusinessLine over the telephone from London.

Apart from rail, airports and ports segments, India requires to invest more in other areas of infrastructure, too, he adds. The biggest gaps between current investments and those the country needs to do to be the top performer among its GDP peers are in the road ($79 billion), telecom ($167 billion) as well as electricity and water segments. In the last two segments, the gaps are $163 billion and $117 billion, respectively, and that is without considering the required additional investments that India needs to make to reach the UN Sustainable Development Goals (SDGs) by 2030.

Considering the total infrastructure requirement investments, India is the second-largest infrastructure market in Asia after China, GI Hub notes. The report estimates the country will need to invest $3.9 trillion till 2040, under current investment trends that take into account the actual rates at which the country is investing in infrastructure.

Under the “investment need” scenario (when the country will be able to improve its performance among its GDP group peers), this increases to $4.5 trillion.

Heathcote believes the gap between current trends and investment need is not the largest in case of India compared with other countries, although the requirement for meeting SDGs is very large and difficult.

Role of private sector

When asked about the role of private sector in “closing” those gaps, Heathcote suggests that for India to meet the needs, the private sector will have to play a strong role. “What is most important is, how to empower the private sector to help India do this,” he said, adding that despite India making good steps towards involving private businesses in the infrastructure sectors, the ease-of-doing-business is still not as good as in other countries.