Still a long way to go: Prime Minister Manmohan Singh at an NHAI function

Ask any businessman what is the topmost factor that could stall the India growth story, and he'll tell you that it is infrastructure. The answer has been quite consistent over the last few years. The noise for better infrastructure has now risen to a crescendo. And the impact has been that India has started talking about the size of the funds needed to bridge the infrastructure deficit.

The size, as can be expected, is gargantuan: $350 billion, or Rs 15,75,000 crore, at last count. How has the figure been arrived at? In the approach paper to the 11th Five Year Plan (2007-2011), the Planning Commission has, perhaps, for the first time, outlined the current investment in infrastructure (including everything from roads to rail to power to airports), and noted that it will need to increase from 4.6 per cent of GDP to around 8 per cent in the 11th Plan period.

Hence, if economic growth is to accelerate from 7 per cent to 9 per cent, investment needs to increase by 6 percentage points, then roughly half of it has to be in infrastructure. The $350 billion comes from an extrapolation of increasing spend on infrastructure along with rising economic growth. Infrastructure advisory firm, Feedback Ventures, has worked out the estimates of sectoral investments needed and the sources of funds based on worldwide trends (see Where the Money Will Go...).

Gajendra Haldea, infrastructure advisor to the Planning Commission, says that the numbers are still being worked upon. However, it is clear that a major share of the infrastructure spend would be from the government-either through budgetary support or via corporate investments from public sector units. "There is a limit to the amount of finance one can mobilise from domestic markets. You have no choice but to go to the international markets," says Ramesh C. Bawa of IL&FS. But as Sanjay Reddy of GVK Group points out, infrastructure finance has become less of an issue especially for ready projects. "We sewed up the funding for Mumbai airport modernisation in 45 days," he adds.

The absence of a steady stream of ready-to-invest bankable projects, or 'cooked projects' as Feedback's Chairman Vinayak Chatterjee likes to call them, is going to be more of an issue. Finance Ministry's Arvind Mayaram, who looks after infrastructure, agrees. "The key issue here is the capacity of the public sector to conceive, develop, process engineer and bid out the public private partnership projects."

The government is trying to address these issues by providing assistance to state governments to hire three consultants with the required domain knowledge. The $3-million Asian Development Bank-assisted project makes continued financial aid contingent on the state governments bidding out a minimum value of projects every year. Therefore, what's holding up investment in infrastructure is not money but the lack of an enabling environment.