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From the desk of Chairman Emeritus
THE INFRASTRUCTURE SECTOR HAS AN IMPORTANT ROLE TO PLAY IN COUNTERING THE GLOBAL ECONOMIC SLOWDOWN.THIS IS ESPECIALLY TRUE IN INDIA WHERE THE INFRASTRUCTURE SECTOR ACCOUNTS FOR 26% OF THE COUNTRY'S INDUSTRIAL OUTPUT.
Infrastructure investment represents a unique win–win proposition, creating jobs in the short–term and enhancing economic productivity in the long run. It has been estimated that an increase in infrastructure investment equivalent to 1% of GDP can translate into an additional 3.4 million direct and indirect jobs in India (source: McKinsey Global Institute).
In addition to supporting growth and job creation, infrastructure investment can lead to improved health, education and social outcomes. For instance, upgrading water and sanitations systems in a slum in Ahmedabad reduced health insurance claims by more than 50%; in Assam, a one percentage point increase in electrification resulted in a 0.17 percentage point improvement in literacy rate.
The key takeaways of what we achieved during the Eleventh Plan and what we expect to achieve in the future comprise the following:
Eleventh plan target met 93% success:
Despite systemic shocks in the Eleventh Plan, the infrastructure target of Rs.20.56 lakh cr (USD 514 billion) for 2007–08 to 2011–12 were achieved at an admirable 93% and now there is a corporate priority to use this momentum to our advantage.
Gross capital formation (GCF): The
gross capital formation in infrastructure as a percentage of the GDP was targeted at 7.6% for the Eleventh Plan period but India achieved only 7.2% even as a country like China achieved 11–12% half a decade ago. The expectation for the Twelfth Plan has been pegged at 8.3% and, if achieved, will widen construction opportunities from power plants to water distribution networks to railway lines to airports and ports.
Public–private partnerships (ppp):
The participation of private capital was negligible in the mid–90s. Following the growth of the telecom and power sectors, PPP hit 22%; the target was revised to 30% during the Eleventh Plan but the country achieved 37%. The target now is 48%, (almost half the nation's infrastructure spending) to be built by private capital in the Twelfth Plan, strengthening execution schedules and accountability.
Emerging sector focus: Two sunrise sectors gained traction in the Twelfth Plan – mass rapid transit systems and renewable energy – and they constitute 8% of the Twelfth Plan target.
Overall, the Twelfth Plan envisages a Rs. 60 lakh cr infrastructure outlay at current prices (at 2006–07 prices, a 137% increase over the Eleventh Plan achievement, which was itself a 108% jump over the Tenth Plan). Finally, all these need to take place within the ambit of an enabling socio–economic–political framework covering the availability of land, coal and environment clearances, independence of regulatory authorities and long–term finance availability
At NCC, we have strengthened our capabilities with the objective to achieve 10–15% revenue growth in our topline for 2013–14 and enhance sustainable value.
My very best regards,
Dr. A.V.S. Raju