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Infrastructre needs USD 300bn to sustain GDP at 7 pc: Report

Written by: Staff
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Mumbai, May 18 (UNI) Indian infrastructure sector would require an investment to the tune of USD 300 billion over the next six years to sustain annual GDP growth rate to at least 7 per cent, revealed Mr S S Kohli, chairman and managing director, India Infrastructure Finance Company Ltd (IIFCL) today at the release of an infrastructure report 'The Grey Revolution... From Blue Print To Structure' prepared by Edelweiss, a financial services firm.

However, the infrastructure sector is currently at a nascent stage in terms of creation of market capitalisation, Mr Kohli said.

The report has assessed that without any expansion in valuation multiples, the sheer growth in topline and bottomline of infrastructure companies should help triple market capitalisation to around US Dollar 190 billion by FY10 from the current levels of about US Dollar 64 billion.

The government is acting as a facilitator/policy maker for attracting investments in the infrastructure sector, even as the development and funding of infrastructure is moving away from government control to public-private partnership, it said. Mr Naresh Kothari, Head, Institutional equities, Edelweiss, said that based on the money supply in the system. 87 per cent of the infrastructure spend would come from household and corporate savings and the balance would come from foreign direct investment and public savings.

Edelweiss Managing Director and CEO Rashesh Shah pointed out that despite only one-fifth the infrastructure spend, the Indian economic growth rate is soon expected to paralel that of China. Mr Shah averred that India's all-country approach to reforms would yield better economic dividends in future than China's cluster approach.

''Infrastructure development is now a national priority. In the last few years there has been an unprecedented political consensus on the need for broad-based infrastructure creation. With adequate demand, bold and an ever-liberalising economy, we see the India infrastrurcture story as a once in a lifetime inflection point,'' he added .

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