Rural infrastructure potential

India has recorded GDP growth of more than 8 per cent on average for the past five years, but the Government estimates that the country will need the equivalent of £160 billion in infrastructure investment in the next five years to sustain that rate.

Two thirds of infrastructure projects are publicly funded but, constrained by resources, India is increasingly seeking additional public-private partnerships.

“If we want to increase our rate of growth, we need more investments, and some of this has to come from foreign sources.”

Last year Japan was made a partner in a £25 billion project to link the cities of Delhi and Bombay by 2015.

India pledged 480 billion rupees (£6 billion)  to upgrade its rural road network in an effort to attract more foreign investment and include agriculture in the country’s economic growth. The money would be spent before 2009 to link 66,000 villages. The publicly funded project is part of a four-year, 1.74 trillion rupee plan to improve infrastructure and raise rural incomes by connecting villages with good roads, electricity, telephones and drinking water.

Crumbling infrastructure is often cited by foreign companies as a big deterrent to investing in India. It is also blamed for shaving as much as two percentage points off economic growth.