Report: India faces infrastructure funds shortfall
Consultant McKinsey and Co. on Wednesday released a report detailing the consequences of infrastructure delays for India's economy.
The report said India's spending on infrastructure, as a proportion of gross domestic product, has steadily fallen the past two decades, resulting in an archaic tangle of poorly built and maintained roads and ports. The report said the dilapidated state of Indian infrastructure threatens to stifle the country's entrepreneurial spirit — a spirit that McKinsey projects could help GDP grow at China-like levels if sounder infrastructure was in place.
The report suggests that India reshape its financing policies for large-scale projects, including allowing banks to raise resources through long-term bonds, and easing regulations on insurance companies and pension funds to compel them to invest in infrastructure projects.
McKinsey's analysis indicates there will be a $150 billion to $190 billion shortfall in financing India's proposed $500 billion in needed projects, unless reforms are made.
The report came the same day as developers of a private greenfield port in the same state as Mumbai said the multipurpose port would open early next year.
The port is being developed by Indian conglomerate Reliance, and will have bulk, breakbulk, gas and container terminals. The container terminal is designed to provide an alternative to the state-run Jawaharlal Nehru Port on the outskirts of Mumbai, with free trade zone, and logistics hub linking to a freight rail corridor (currently under construction) that will connect Mumbai with Delhi.
The executive summary of the McKinsey report is available here.
