Overall investment in the infrastructure sector is projected to fall sharply during the Twelfth Five Year Plan (2012-17) due to the slowdown in the economy during these years and financing challenges faced by companies, according to an appraisal report of the Plan released by the Niti Aayog on Monday.
As against the earlier projection of Rs 55.74 lakh crore of total investment in the sector during 2012-2017, the projection has now been revised to Rs 37.24 lakh crore or about 67 per cent of the original Plan projections. While the government spending on various infrastructure projects is now pegged to be slightly lower, it is the sharp slide in private sector investment that is mainly contributing to the overall slack.
Private sector is now projected to invest Rs 12.81 lakh crore in infrastructure sectors during the 2012-2017 plan period, which is 48 per cent of the original Plan estimate of Rs 26.83 lakh crore. “Thus, the shortfall in realising the projected private sector investment largely accounts for the downward projections of the infrastructure investment in the Twelfth Plan…One of the principal reasons for shortfall in private investment across sectors relates to issues in financing of infrastructure projects,” the Aayog said in its 296-page appraisal report.
While the Central government is expected to spend Rs 12.89 lakh crore on infrastructure creation during the Twelfth plan, the states are projected to pitch in with Rs 11.53 lakh crore of infrastructure spend. The Centre and states’ investment put together is estimated at 88 per cent of their original Plan estimates. “The revised projected investment is still 1.6 times the investment of Rs 23.77 lakh crore achieved in the Eleventh Plan at current prices. The revised share of private investment in Twelfth Plan is now projected at about 34 per cent, compared with 48 per cent in the original projection and is less than the 37 per cent achieved in the Eleventh Plan,” the Aayog said.
Investment in the electricity sector, which comprises the biggest chunk in the infrastructure space, is now projected at Rs 10.99 lakh crore, compared with the earlier estimate of Rs 15.01 lakh crore. Ports and airports have recorded the steepest fall in investments. While ports are now projected to attract investment of Rs 67,016 crore as against the original projection of Rs 1.97 lakh crore, investment in airports is pegged at Rs 27,832 crore in contrast to the earlier estimate of Rs 87,714 crore.
Investment projections for telecommunications have revised downward to Rs 4.53 lakh crore — a steep decline from the original Plan projection of Rs 9.43 lakh crore.
Apart from the demand slowdown during the Plan period, sector-specific problems in telecom, ports and airports sector resulted in lower investments.
Infrastructure investment as a percentage of gross domestic product (GDP) is now estimated at 5.84 per cent during the Twelfth plan period, much lower than 8.18 per cent as per the initial projections. The revised projection is even lower than the 7.02 per cent actual infrastructure investment done in the Eleventh Five Year plan that ended in 2012.
However, investments anticipated in 2015-16 and 2016-17 of Rs 8.92 lakh crore and Rs 10.38 lakh crore, respectively, are significantly higher that previous two years due to a series of steps taken by government to push up investment.
“Further, higher budgetary allocations in the years 2015-16 and 2016-17 to infrastructure sectors have the potential to crowd in greater private investment. The total outlay for infrastructure in Budget Estimates 2016-17 stands at Rs 2,21,246 crore,” the Aayog said.