'Infrastructure funding underestimated, promote PPP projects'

New Delhi, May 25 (UNI) Planning Commission Deputy Chairman Montek Singh Ahluwalia today placed the figure for projects under the public-pPrivate partnership at three per cent of GDP in 2011 admitting that the Plan panel had underestimated the resource requirement for development of the infrastructure sector.

''With public sector resources being committed largely for the development of rural infrastructure and social sectors, the solution lies in promoting public private partnership in a much bigger way to meet the much bigger funding requirements of infrastructure,'' Dr Ahluwalia said inaugurating a conference on 'Public Private Partnership (PPP) in State Highways.' The day-long event has been organised by the Planning Commission and CII.

Dr Ahluwalia said the response of state governments for building state roadways has been encouraging and the Chief Ministers were keen to build state road highways using the PPP model.

He said he had been able to establish this in his meetings with various Chief Ministers during the Annual Plan fixation exercise.

The Plan Panel Deputy Chief, however, said that for the PPP model to succeed, it was essential to have a robust competitive bidding process.

Dr Ahluwalia said while deals of public sector enterprises regarding building of road projects were not open to scrutiny, this was not the case with projects under the PPP model. Thus, there was always a higher risk involved in such projects.

The well known economist said according to the Approach papaer to the Eleventh Plan (2007-11) it was estimated that spending on infrastructure would have to be stepped up from five per cent of GDP in the base year to eight per cent in the terminal year. This requirement was necesssary to have the targeted nine to ten per cent GDP growth in the next plan.

But this was an underestimate and the minimum resources required for this sector should not be less than nine per cent of GDP during the terminal year of the Eleventh Plan (2011).

Assuming that four per cent of the resources come from the public sector and more than one per cent from the private sector, then the quatum of resources under the PPP model would have to be three per cent of the GDP, he said.

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