infrastucture development need and availability

8/14/2019 Infrastucture Development Need and Availability

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Jamia Millia Islamia University

Department of Economics

B.A (H) Economics IIIrd year

Presentation

Infrastructure Development

Need and Availability

By:

Group-III

Jamaluddin Fayyaz Manouchiher Roshangar Ghulam Abbas Ehsani Sumit Wadhwa Abdul Samad Wani


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1 | I n f r a s t r u c t u r e d e v e l o p m e n t n e e d a n d a v a i l a b i l i t y

Infrastructure Development Need and

Availability

introduction and definition of infrastructure What is the need for infrastructure development? Availability of infrastructure in India Plans and Policies of Indian government toward the infrastructure development Conclusion

Introduction:

The term infrastructure has been used since 1927 to refer collectively to the roads, bridges, rail lines,and similar public works that are required for an industrial economy to function. This term has also

been used for the permanent military installations necessary for the defense of a country.

Infrastructure typically refers to the technical structures that support a society, such as roads, water

supply, wastewater, power grids, flood management systems, communications (internet, phone

lines, broadcasting), and so forth.

Economically, infrastructure could be seen to be the structural elements of an economy which allow

for production of goods and services without themselves being part of the production process, e.g.

roads allow the transport of raw materials and finished products.

According to Romers model(1987), Infrastructure is a cost reducing technology (Paul Michael

Romer is an economistand professor atStanford University. He is considered as an expert on

economic growth). According to him infrastructure can promote specialization and long-run growth.

The Romers model predicted that the degree of specialization is directly or positively correlatedwith

the core infrastructure.

An asset can be considered to be part of the infrastructure when it is an integral part of a total

system, i.e. if the asset is removed the system is incomplete, or the particular asset is necessary for

the system to deliver the required standard of service.

Infrastructure assets generally have the following attributes:

They are large networks constructed over generations which are not often replaced as awhole system

The system or network has a long and indefinite life because its service capacity ismaintained in perpetuity (by continual refurbishment or replacement of components as they

wear out).

The system components are interdependent and not usually capable of subdivision orseparate disposal, and consequently are not readily disposable within the commercial

marketplace.
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The system interdependency may limit a component life to a lesser period than the expectedlife of the component itself.

The assets have a high initial cost and a value which is difficult to determine.A region cannot be so easily termed having inadequate infrastructure. There are various facets of

infrastructure services availability and a region, while lacking in one or more, may possess adequatesupply of others. Consequently Infrastructure can be subdivided into constituent components.

Infrastructure is composed of 3 broad areas as follow:

I. Physical Infrastructure;II. Financial Infrastructure; and

III. Social Infrastructure.Further subdivided, the following components of Infrastructure are identified:-

a) Agro-specific Infrastructure - consisting of irrigation infrastructure and agricultural credit;b) Transport & Communication Infrastructure - consisting mainly of Roads and Railways;c) Power Infrastructure;d) Financial Infrastructure - consisting mainly of Banking Services;e) Education infrastructure; andf) Health infrastructure.

(a), (b) & (c) constitute Physical Infrastructure, and, (e) & (f) constitute Social Infrastructure.

Infrastructure

Physical Infrastructure

Agro-specific Infrastructure

Transport Infrastructure

Communication Infrastructure

Power Infrastructure

Financial Infrastructure

Banking Services

Life insurance corporations

Social Infrastructure.

Education infrastructure

Health infrastructure

Thephysical infrastructure covering transportation, power and communication;social infrastructure

including water supply, sanitation, sewage disposal, education and health, which are in the nature of

primary services andfinancial infrastructure has a direct impact on the quality of life. The visible

signs of shortfall in capacity and inefficiencies include increasingly congested roads, power failures,

long-waiting lists for installation of telephones and shortages of drinking water illustrate gap

between demand and supply of infrastructure and also raises questions concerning the sustainability

of economic growth in future.

A high transaction costs arising from inadequate and inefficient infrastructure can prevent theeconomy for realizing its full growth potential. Thus, infrastructure is very important in sustaining the


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economic development.

Need for the Infrastructure Development:

Social infrastructure deals with the provisioning of drinking water and sanitation,

education, and health which defines the quality of life of citizens. These services affect day-to-day lifeof people and have long-term impact in terms of longevity and earning capacity.

Development of social infrastructure comprising education, health and medical care, nutrition,

housing and water supply which is instrumental in contributing to substantial improvements in

human resources development which, in turn, initiate and accelerate economic development with

increased Telesis. Physical quality of life and human well being are pivotal on the enhanced

availability of these social services. These services are key to overall increased productivity.

Investment in human development programme, enable the poor to help themselves and try to give a

fair chance of getting those rewards.

Talking about operations Management (Operations management is an area of business

that is concerned with the production of goods and services, and involves the responsibility ofensuring thatbusiness operations are efficientandeffective. It is the management of resources, the

distribution of goods and services to customers, and the analysis of queue systems) which has 3

major aspects namely;

Quality Cost and Time

That is to produce and deliver product and services at the right time with the right quality and right

cost. These objectives can only be achieved when all the players involved from extraction to

consumption work in a synchronized way. Infrastructure plays a major role in order to obtain these

objectives. These can be achieved by following:

Traffic management at the ports (Capacity Management), i.e., maximum utilization of theports

Modernization of the airports (in India) and Scheduling of the air planes at the airports Good environmental management practices through recycling, waste management

Inventory or logistics management to better utilize the transportation facilities

Maximum utilization of the resources (Manufacturing machines) through a continuous andregulated supply of electricity
http://en.wikipedia.org/wiki/Business_operationshttp://en.wikipedia.org/wiki/Efficienthttp://en.wikipedia.org/wiki/Effectivehttp://en.wikipedia.org/wiki/Effectivehttp://en.wikipedia.org/wiki/Efficienthttp://en.wikipedia.org/wiki/Business_operations


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The above figure shows the influence of various infrastructural factors on operations of an

organization or a project. We see the input and output is shown in the figure. So what should be theinputs or requirements which in turn would give us the output at the right time with a high quality

and a low cost of production. The infrastructures required by people are: Sanitation, Water Supply,

Electricity Supply and Environmental Safety. In the same way the infrastructure required for

information are; telecommunication and IT Infrastructure. Infrastructure required in supply chain

management are; Aviation, Ports, Roads and Railways and Plants and machinery. If the above

mentioned requirements are fulfilled then the output achieved would be delivered at right time with

high quality and low cost. In the same way the customer Satisfaction would be high and we would be

able to deal with environmental management problems which are a very serious problem in this

modern age that includes Waste minimization, Reverse logistics (Reverse logistics stands for all

operations related to the reuse of products and materials) and Recycling. The output of the well

managed operations creates better services and products which are the assets of any country.

Manufacturing of the products adds value to the Nation's economy and delivering of high quality

service raises the standard of living of the country contributing to its development.

Therefore Economic development is a consequence of infrastructural development. For instance,

development of agriculture depends, to a considerable extent, on adequate expansion and

development of irrigation facilities. Industrial progress depends on the development of power and

electricity generation, transport, and communications. Obviously if proper attention is not paid to the

development of infrastructure, it is likely to act as a major constraint on the economic development

process in the country.


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A revisitAlong with Independence, India inherited famine and poverty from its colonial rulers. There was dire

need for housing, health facilities, education, roads, power, irrigation projects and drinking water

facilities for millions of underprivileged people. This called for proper economic planning.

Unfortunately, the task of planning fell into the hands of those who were sympathetic to the feudallobbies. These rich and powerful people had less concern for the social uplift of the poverty stricken

masses. The outcome was that they lost sight of the main objective of planning the economy by

keeping the overall national interest in view. It created economic inequalities among the States and

erected roadblocks on the path of building infrastructure. Even today the people in power tend to fall

victims to this skewed vision.

The rural/urban scenarioIt is 61 years after Independence. Today, the rural population accounts for nearly 68-70 per cent of

the total population and nearly half of them still live in poverty and illiteracy.

How good is the rural infrastructure?

The latest report of the National Sample Survey Organization on village facilities is a revelation in

itself. To quote from the report, One fourth of our villages do not have electricity; only 18 per cent of

them get tap water; 54 per cent of them are more than 5 km away from the nearest health centre;

one third of them do not have pre-primary schools and 78 per cent do not have post offices!

Yes, India still lives in its villages.

India's economic growth and development is predicated to a large extent upon the development of

its 700-million strong rural population. Majority of the population lives in about 600,000 small

villages and are engaged primarily in agriculture, directly or indirectly. A substantial portion of India's

current agricultural labor force has to move to non-agriculture sectors for incomes in all sectors to go

up. The challenge is to manage the transition of 80% of the rural population from a village-centric

agricultural-based economy to a industry based economy.

Grey areas of India Rural Infrastructure -

A set of basic facts define the constraints within which the economic growth anddevelopment of India's rural population must be addressed. Fundamentally, they relate to

resource constraints, the nature of infrastructure, and the future trajectory of the

geographical distribution of the population.

These services includes, at a minimum market access, educational, health, financial,entertainment, transportation, and communications. Further, services depend on the

availability of infrastructure.

Infrastructure investment is irregular and inadequate to support 600,000 villages and theaverage cost of providing infrastructure is inversely related to the scale of the operation.

Limitations on the financial and other resources available for providing infrastructure made itimpossible to provide infrastructure at every village in India. Even if they were provided at

every village, it will not be commercially sustainable.

The basic geographical structure of population distribution will change once India shifts frombeing agriculture based country to industry based nation.


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The Government has launched Bharat Nirman" for the development of rural infrastructure. Plans

proposed for the development of India Rural Infrastructure are -

Irrigation, Roads, Housing, Water Supply, Electrification, Telecommunication Connectivity.

The task ahead for the development of India Rural Infrastructure are :

To connect 66,800 habitations with population over 1000 with all weather roads. To construct 1, 46,000Km of new rural roads. To upgrade and modernize 1, 94,000Km of existing rural roads. Total investment of Rs. 1,74,000 crore envisaged under "Bharat Nirman", investment on rural

roads estimated to be at Rs. 48,000 crore.

To provide corpus of Rs. 8000 crore to Rural Infrastructure Development Fund (RIDF).The cities shelter around 30 per cent of the population who contribute to the economic growth.

However, the most vital part of economic growth, which is infrastructure, hardly matched the

demands of even this 30 per cent of urban dwellers, spreading chaos at the slightest provocation

with the danger of turning the clock backwards. This mismatch has been seen in the Mumbai deluge

in September 2005 and a little later in Bangalore, shattering the Shanghai dreams that so many

harbor.

India being the seventh-largest country in the world has maintained an infrastructure management

that has enabled India to reach new heights.

Indian infrastructure report suggests a fairly good state of infrastructure planning in India. The

infrastructure building and engineering in certain spheres like power, telecommunications,

information technology, transport etc. needs more infrastructure resource solutions.

Indian infrastructure companies manage the infrastructure requirement in these areas. The

infrastructure companies in India also look after the infrastructure construction and development.

India also has many infrastructure finance companies that provide funding and financing for

infrastructure development projects in India. One of them is Infrastructure Development Finance

Corporation or the India Infrastructure Finance Company Limited.

Coming to infrastructure management services, these include services from:

Infrastructure Architect- He helps in designing the basic blocks of infrastructure utilities Infrastructure Analyst- His job is to analyze the infrastructure business works in India. Infrastructure Advisory- He advises about the infrastructure solutions to a particular

problem and also evaluates and reports the risk involved in any particular infrastructure

development.

Infrastructure Bank- It provides the infrastructure finance and asset management forinfrastructure assets in India.


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The Indian infrastructure sector involves prolonged infrastructure research for the infrastructure

technologies to be updated. For the infrastructure optimization and reaching a level of a

standardized infrastructure outsourcing the bottlenecks in the system need to be smoothened. The

infrastructure requirements list the need for technology designed for the infrastructure today. These

are being provided through coordination among the developed countries like USA, UK etc. and theGovernment of India.

The Chinese talesThe Chinese success stories are told and retold by many. Can India set her standards by looking at

China? Can one draw a parallel between those mega cities with the Indian ones, or its infrastructure

development for that matter? It is debatable. However, what can be compared is the Chinese

commitment. Look at their endeavours in making the Expressways. According to a recent newspaper

report, when India completed 6000 km of her Expressways in six years, China had done 40,000 km

within that time. Even today the Indian government endlessly debates the privatisation of airports. At

least some of the analysts perceive a damaging drag on the economy due to problems connected toinfrastructure. Growth potential is dependent on the quality of performance of infrastructure to a

great extent - a fact the Chinese realised much earlier than us.

Infrastructure SpendingInfrastructure has continued to be one of the most important issues gaining the attention of

policymakers over the past two years. The Planning Commission of India, which is becoming a

powerful institution for key economic policy decisions, appears to be determined to push public

infrastructure investment. There seems to be a consensus among policymakers that the issue ofinfrastructure needs immediate attention. After several years of hiatus, infrastructure investment is

witnessing a pickup - albeit at a gradual pace. A set of measures is being introduced by the

government for different sectors to accelerate infrastructure spending growth. It is expected

infrastructure investment to pick up to US$47 billion (4.7% of GDP) by F2009 from US$24 billion 3.5%

of GDP) currently. Although this is a relatively moderate pick-up, it should provide some push to the

overall investment cycle, including the manufacturing sector.

India's Infrastructure Spending Is One-Seventh of China. We believe that the single most important

macro constraint on the Indian economy, holding back its average growth, is the low spending on

infrastructure. India is currently spending a miniscule amount compared with its needs, according toour estimates. Our analysis indicates that China is spending seven times as much as India on

infrastructure (excluding real estate) in absolute terms. In 2003, total capital spending on electricity,

roads, airports, seaports and telecom was US$150 billion in China (10.6% of GDP) compared with

US$21 billion in India (3.5% of GDP). It is believed that there is a need for a national plan to increase

infrastructure spending gradually to US$100 billion p.a. (8% of GDP) by 2010, from an estimated

US$24 billion (3.5% of GDP) in 2004, to push India on to a sustained growth path of 8-9%.

Public Expenditure:Recognizing the importance of social capital the Government has placed social services as the centre

stage of the development strategy. Social sector expenditure enhanced to Rs.972178.99 Lakhs in


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2004-05 works out to 33.83 per cent of the total budgetary expenditure of over Rs.859776.91 Lakhs

in 2003-04, showing an increase of 13.07 per cent. Among the social sector 47 per cent of the total

allocation goes in favour of education followed by health sector (21%), water supply (2%) and

housing (1.0%). This indicates the seriousness of the Governments' commitment to promotion of

social infrastructure, which is the greatest resource in the growth process.

Public Expenditure on Social Sector (Rs. in lakhs)

Year Education Health WaterSupply

Housing Others Total SocialSector

TotalBudgetary

Expenditure

1999-00 434871.82 166536.52 26108.15 2266.99 134599.59 764383.07 2072783.122000-01 439599.87 170852.57 18069.85 2639.11 148059.44 779220.84 2175244.262001-02 429286.88 164743.42 16292.43 2844.60 154538.32 767705.65 2155697.252002-03 414532.71 171551.03 21630.10 6173.06 183517.63 797404.53 2568769.742003-04 417506.11 188193.92 25284.19 12128.52 216664.17 859776.91 2527095.132004-05 455619.78 203554.56 20179.79 9998.03 282828.83 972178.99 2873678.99

Source: Budgetary Documents of various years.

India is passing through the phase of population explosion. According to the theory of demographictransition India is experiencing the second stage of demographic transition from past half decade.

The population of India as on 1900 was 23.83 Crores and it was increasing at an average rate of 1.96.

In August of 1999 India became the second country to have its population reach the one billion. The

increase in population to such an extent was as a consequence of the increase in the birth rate. In the

year 2004-05 it reached 1.087billion from one billion in 1999. Thus, the population during the period

1999-2005 has increased by 8.7 per cent. The public expenditure on education as recorded in 1999-00

was 434871.82 while it is increased to 455619.78 in 2004-05. Thus the public expenditure on

education has increased by 4.77 per cent. Therefore we can clearly conclude that there was a gap

between the available infrastructure development and the need for it.

Private investment infrastructure:The government of India has increasing realized that infrastructure need not be a public

sector monopoly. In the past, the responsibility for providing infrastructure services was

vested with the government-the reason being: heavy capital investment, long gestation

periods, externalities, high risks and low rates of return on investment. The infrastructure

under government ownership has however proved thoroughly inefficient and corrupt. The

demand for infrastructure facilities and services has always outpaced supply; besides the

quality of existing supply is very poor. The consequent of shortfall in the capacity andinefficiencies in infrastructure facilities are patent in the increasingly congested roads,

chronic transport, bottleneck, frequent power failure and load shedding, long waiting lists

or installation of telephones and shortage of drinking water. The widening gap between

demand and supply of infrastructure and the extremely poor quality of the existing supply

raises important questions concerning the sustainability of economic growth of the country

in the coming years.In order to sustain an annual GDP growth rate of 8-9 per cent, it is imperative to accelerate

the rate of investment in infrastructure. According to finance ministry expert group on

commercialization of infrastructure projects (June 1996) the total infrastructure investmentwas required to be about US$ 88 billion to US$ 99 billion during 1996-2001 and another US$


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165 billion during 10th planning period (2001-06).

And now, according to the GOI the country needs US$ 320 billion (at 20056 prices) in

infrastructure spending over the next five years (2007-12). Like the previous planning period

this massive investment is clearly beyond the capacity of the government. Since the financial

resource available to government are very limited and recently the government of India is

passing through the challenging era, close to half of US$ 320 billion will need to come from

the private sector to maintain the current growth rate and to bring millions of Indians out of

poverty.

Government investment and private investment move in opposite directions. For example,

during the 1969-1987 period, when government investment is growing private investment is

stagnant, shown in following Figure given below. Meanwhile, during the period of 1987-

2005, government investment remains relatively stable, allowing private investment to

grow. Given these graphs, it appears likely that crowding out has played a major role in theIndian economy.


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What will be the future role of public sector enterprises in the field of infrastructure, after

the entry of private sector?

The public sector enterprises will continue to shoulder the major burden of providing criticalinfrastructure services but public sector reforms would be necessary to broad-base their

management, to upgrade their technology, to improve their performance and quality of

services and generate adequate investable resources through rationalization of service

charges and better recovery of costs.

Infrastructure Is Key for Job CreationIndia's strengths of a huge skilled and semi-skilled work force, entrepreneurial expertise and

natural resources are currently being inadequately utilized because of lack ofinfrastructure. According to UN estimates, the working-age population (15-64 years of age)

in India will increase by 71 million to 762 million in 2010. India is set to be the largest

contributor to the additional working-age population globally over the next five years,

accounting for 23% of the worldwide increase, according to UN estimates.

India already has an unemployed population of 36 million, based on official estimates (we

think actual unemployment could be double this). India is undergoing a transition, in which

the working-age population is likely to keep rising faster than the non-working-age

population

(i.e. its age dependency ratio should improve further). With improving dependency, Indiawill have the opportunity to create a virtuous cycle of more productive job opportunities,

greater savings, increased investment and higher GDP growth. However, this will require

the implementation of a well-thought-out macro - as well as micro - strategy by the

government.

Infrastructure is, in many ways, the key to unlocking underutilized manpower. Efficient and

low-cost infrastructure is the key facilitator of globalization and labor arbitrage. India has

been able to make big inroads in software services and business process outsourcing due to

the availability of high-quality telecom facilities, the infrastructure backbone for IT and ITES,

at a reasonable cost.

However, the manufacturing sector is constrained by relatively inefficient and high-cost

infrastructure - namely roads, railways, airports, seaports and electricity. It is believed that

the lack of adequate infrastructure is becoming a constraint on inter-state as well

as global trade. This is evident in India's share of global goods exports, at just 0.8% in 2004,

compared with China's 6.5%. With the exception of a select few, Indian companies that

have globally competitive cost structures are not able to scale up their operations.

Low government spending on infrastructure hurts high-employment-generating, labour-

intensive small enterprises the most.

While large companies can draw on their own resources for basic infrastructure services,


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such as a captive electricity plant or a diesel generator set, small enterprises suffer when

public infrastructure support is lacking. In many cases, it is not cost per se but the sheer lack

of infrastructure that holds back small enterprises. In addition to attracting domestic

investors for aggressive capex, improved infrastructure should also pull in foreign

direct investment in manufacturing and augment a sustainable recovery in the investment

cycle and growth.

Growth PotentialAccording to the consultation paper circulated by the planning commission, a massive US$

494 billion of investment is proposed for the eleventh plan period (2007-12), which would

increase the share of infrastructure investment to 9 per cent of GDP from 5 per cent in 2006-

07. This translates roughly into US$ 40 billion annual additional investment.

The projected sector-wise shares are: 30.4 per cent in electricity, 15.4 per cent in roads andbridges, 13.7 percent in telecommunications and 12.4 per cent in railways among others.

Significantly, 30 per cent of the total investment is expected to come from the private sector

(including public-private partnership). Indian officials have invited foreign entrepreneurs to

invest in the sector which would require investments worth US$ 500 billion to sustain India's

ast-growing economy.

For this, the government has already enacted many proactive measures like opening up a

number of infrastructure sectors to private players, permitting FDI into various sectors,

introducing model concession agreements, taking up new projects like the National Highway

Development Project, National Maritime Development Programme among others. Some ofthe projects planned for the next five years include:

The government is planning a 40,000-MW hydro power generation capacity duringthe 12th (2012-17) and 13th (2017-22) Plans.

Additional power generation capacity of about 70,000 MW Constructing Dedicated Freight Corridors between Mumbai-Delhi and Ludhiana-

Kolkata

Capacity addition of 485 million MT in Major Ports, 345 million MT in Minor Ports Modernisation and redevelopment of 21 railway stations Developing 16 million hectares through major, medium and minor irrigation works Modernisation and redevelopment of 4 metro and 35 non-metro airports Six-laning 6,500 km of Golden Quadrilateral and selected National Highways Constructing 1,65,244 km of new rural roads, and renewing and upgrading existing

1,92,464 km covering 78,304 rural habitations


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Infrastructure Report Summary (2008)The Indian construction industry comprises close to 300,000 players, employing a totalworkforce in the region of 30mn. Driven by strong demand from the transportation, power,urban infrastructure and irrigation segments, the industry contributed nearly 8.25% to India'sgross domestic product (GDP) in 2006. This report forecasts the Indian construction industryto be valued at US$85.81bn in 2008 and at US$167.14bn by 2012.

In the past few years, the Indian government's focus has been directed towards improvementof road and housing infrastructure. Also, development of airports in accordance withinternational standards has taken off in a big way, with a slew of projects across India. Someof the major projects being undertaken here include the large-scale greenfield development ofairports in Bangalore, Delhi, Hyderabad and other cities at a combined worth of overUS$35bn.The Indian government is set to invest about US$150bn over the next five to sixyears for the development of infrastructure, of which US$60bn will be poured into buildingroads across the country. It has also taken initiatives to strengthen capital inflows by allowing100% foreign-equity participation in the construction industry. But to forestall speculation inreal estate by foreign investors, the sale of undeveloped land has been prohibited.

India has a skilled workforce, but its business environment is crippled by excessivegovernment interference. Foreign investment remains restricted in many sectors, with greater

ConclusionIt is believed that India is on the right track. And they are confident that the public and

private sectors, working in partnership and in collaboration with development agencies, will

be able to bring about significant and sustainable improvements in Indias infrastructure,

which will also help the overall process of growth.

But the country needed double-digit growth in manufacturing and services sectors in the

next five years, and had to double farm output, if it was to meet the target. The Indian

economy has grown at an average eight per cent in the past three years, and a 10 per cent

annual GDP growth is difficult to achieve unless the country improves its infrastructure.

According to the prime minister Mr. Manmohan Singh Infrastructure development is a

major constraint on the industrial growth in India. India is aiming to achieve 10-per cent

annual GDP growth by the year 2011-12, but the country needed over $300 billion to

upgrade its infrastructure over the next five years

Some believes that a key reason for India not being able to even sustain its growth rate of 8-

9% is slow growth in infrastructure spending. They think the biggest hurdle to a vigorous

capex cycle in the private sector is the lack of support from physical infrastructure. Although

we are finally seeing a pickup in infrastructure spend as a percentage of GDP (to 4.7% of

GDP in F2009 from 3.5% of GDP as of F2005), the pace needs to rise more sharply. They

believe that, for GDP growth to accelerate to over 9% on a sustainable basis, infrastructure

spending needs to rise to US$100 billion (around 8% of GDP) by 2010. In turn, to boost this

spending, the government needs to improve the infrastructure investment environment to

ensure greater participation by the private sector, raise public resources by initiating

privatization of public sector companies and reduce the revenue deficit.


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liberalisation opposed by the Left. Hiring and firing procedures are governed by rigid labourlaws under which companies employing more than 100 people need the permission of thestate chief minister to lay off staff. Other concerns include the 670 or so industries reservedfor small-scale producers, high import-tariffs levied on foreign-made goods, failinginfrastructure, especially poor power supplies, and a warped bureaucracy needed to approve

'permits' for even the most routine tasks. But India is fast-tracking the creation of South EastAsian-style SEZs, aimed at overcoming some of these bottlenecks.

Although many international contracting groups do have a presence in India, the market hasbeen difficult to penetrate, with high tariffs for imported building materials and a complexand bureaucratic system of government. There are 27 separate states in the country, all ofthem having their own specific regulations and codes. However, the government now allowsmajority foreign-ownership for joint ventures and actively encourages joint ventures withforeign contractors on major infrastructure projects, as there is a shortage of local firms withsufficient funds to handle such activity.

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