India's infrastructure growth to be driven by equity funds: experts

Mumbai, Mar 20 (UNI) The proposed capital account convertibility of the Indian rupee would provide immense encourgement for funding the growth of the country's infrastructure projects, according to noted experts from the infrastructure segment.

Participating in discussions on energy and transportation infrastructure in India at the 16th Asia Society's corporate conference here today, they said such liberalisation on the currency front would encourage several international private funds to invest in good quality infrastructure projects, particularly in the power and aviation segments.

At least one-third of the total investment of an estimated US dollar 50 billion by Infrastructure Development Finance Corporation (IDFC) alone in the infrastructure might will come from foreign funds in the coming 2-3 years, IDFC CEO Rajiv Lall said.

Presently, IDFC's exposure to various infrastructure projects is around USD 25 billion.

Asked about political resistance to getting private investment in core sectors of the economy, Mr Lall said the growing expectations of the middle class in India would force political resistance to make way for private sector investors to develop infrastructure facilities much faster, coupled with good quality of management of those facilities.

In this context, he cited the tremendrous growth in the telecom and aviation sectors in the last few years. Last year, the aviation sector grew over 25 per cent in India with the entry of several low cost airlines.

Boeing company (India) senior vice president (sales) Dinesh Keskar said there would be consolidation in the aviation industry as the people are becoming more demanding in improving the efficiency and timing of air travel at an affordable cost.

As the country is moving towards a free maket economy, there would be severe pressure on the companies engaged in the construction and maintenance of facilities to optimum satisfaction of users and customers.

Mr Lall said the power sector would pick up the reform process in the next 2-3 years, since the Centre has started liberalising the process of setting up captive power projects and alternative energy sources are being promoted by the private sector to give tough competition to the State-owned power generating and distributing companies.

''We will see lot of activities both in generation and distribution of electricity in the coming years,'' he said, adding that the growth would be driven by private sector participation, inducing competition at the pricing level to the consumers.

These improvements are bound to take place not only to sustain the present growth rate, but also to scale up the growth upto 9-10 per cent annually from the present level of 7-8 per cent, he added.

UNI GC GK AG1424 BT