Nath: $48bn of private capital needed for Indian roads

Kamal Nath, India's minister of Road Transport and Highways, said at a forum today the Indian government will be offering 12,000 kilometres of road contracts over the next 12 months. 

Nath, delivering the keynote speech at the India-Singapore Trade & Investment Business Forum in Singapore, said the ministry has awarded road contracts of about 7,800 kilometres over the last year. 

India is aiming to lay out 20 kilometres of roads each day, and in order to meet its ambitious target, the country needs 7,000 kilometres of roads built each year. To do that, India needs 20,000 kilometres of roads as work-in-progress at any given time, Nath said. He added that this translates into an investment of about $50 billion.

Nath emphasised the need for an effective road network in India, calling roads the “most important determinant of inclusive growth”. In his view, “the challenge for India is not maintaining or attaining growth, but managing growth”. In his view, building roads is the most essential ingredient in bringing about such growth.

“Roads in our most backward states are a vehicle for inclusive growth,” Nath said.

 

Highlighting the need for investments in India’s roads, Nath said the country has a total of 3.4 million kilometres of roads carrying 70 percent of the country’s goods and 80 percent of its passengers. However, of this sum, national highways only comprise 70,500 kilometres and, of that, 16,000 kilometres of roads are in the form of single lane highways. 

He said the government expects $80 billion worth of investments in India’s roads in the next five years, of which, the private sector is expected to contribute 60 percent ($48 billion). The country is seeing much interest from foreign infrastructure companies who want to bring funds into India as well as from foreign pension funds, Nath said, adding that India is confident of raising the amount of money required.

Separately, the Indian government recently announced plans to set up an $11 billion growth fund to invest in its infrastructure. The fund is to be set up by the Planning Commission of India under a special arrangement that will see it owned by banks and financial institutions. Of the $11 billion, the government plans to raise at least 40 percent from international pension funds, insurance funds, sovereign wealth funds and multilateral agencies, and the rest from domestic sources.