ADB helping India promote PPP in infrastructure
MANILA, PHILIPPINES – The Asian Development Bank (ADB) is providing a $2 million grant to help the government of India increase cooperation between the public and private sectors in infrastructure development.
The government is exploring the synergies that a partnership with India’s private sector can bring in the area of infrastructure, especially since public financing is not sufficient to generate the levels of investment needed to improve infrastructure facilities.
“India is still at the first stage of public-private partnership development,” said Syed Ali-Mumtaz H. Shah, financial sector specialist of ADB’s South Asia Department. “The government realizes the capacity of federal ministries needs to be enhanced to mainstream public-private partnerships.”
The ADB assistance will help these ministries develop the capacity to prepare, evaluate and appraise public-private partnerships in infrastructure and improve monitoring the progress of the partnerships through comprehensive databases. The assistance will also integrate best practices garnered from such partnerships.
Public financing is not sufficient to generate the levels of investment needed to improve infrastructure facilities. This project will help improve access to basic infrastructure services and increase efficiency in providing such services, which are critical in promoting economic growth and poverty reduction.
“A widening infrastructure gap lowers productivity, raises transport and logistics costs, reduces competitiveness, and slows growth,” said Mr. Shah.
India achieved a 9% growth in gross domestic product in 2006-2007, and over the past five years, the GDP growth rate has averaged 7.2%. A mid-term review of the country’s 10th Five-Year Plan showed that inadequate infrastructure is a major factor impeding India’s economic growth.
Weak infrastructure is costing India about three to four percentage points of GDP growth annually. Under the 11th Five-Year Plan (2007-2012), the government estimates that the country needs to increase infrastructure spending to 8% of GDP from 4.6% to accelerate average GDP growth from 7% to the targeted 9% over the next five years.