Infrastructure is the back bone of every economy.

Infrastructure contributes a great deal to sustained

economic development.country with good infrastructure can be classified as a developed country whereas
the other countries have little finance to spend on such luxuries and hence, keep struggling in the
developing class of nations.Indian infrastructure growth started with much delayed but when it started its
journey it made a remarkable growth. If we make a analysis of the 5 years trend of infrastructure growth in
Indian economy we find a remarkable growth prospect led by huge untapped demand.

Growth of the infrastructure is driven primarily by effective demand for projects and
proper usage of funds. Many South-East Asian countries, and even developed
countries such as the UK, have shown impressive progress by following the public-
private-partnership (PPP) model. The 1998-99 Budget announced by the BJP
government has given a major boost to infrastructure development, particularly in
energy and power, transport and communications, by stepping up public expenditure
in these sectors. This also increased government spending on infrastructure which
was expected to boost India's sluggish economy. The journey of the infrastructure
was slow due to the lack of a clear policy frame work for private sector participation
has hampered the badly-needed infrastructure.

If we measure the growth of infrastructure in India with a quick look we find :

• Infrastructure sector grows 3.7% in Aug 2003

• Infrastructure sector growth doubles to 9% in May 2004

• Infrastructure sector grows 10.2% in June 2005

• infrastructure sector grow 8.7% in July 2007.

In the below chart we find the investments made in various infrastructure

segments.
All we get in the above sector a consistency in the growth of the Indian infrastructure
growth. Now we all know that when infrastructure grows all other sectors like banks,
cement, metal etc grows with them. We have seen justification of this that period.
After recession we have found that from November 2008 dark days to shining days
of November 2009 the country's infrastructure sector expanded 5.3%.

In 2009 the growth of 5.3% in infrastructure sector was also driven by the large
loans worth Rs. 20,000-30,000 crore by banks. This money is excluding the funds
raised via QIP and ECB and FCCB etc.

Loans from World Bank and Asian Development Bank were also the prime contributor
of finance to the sector.

• India, which already has $19.57 billion in World Bank loans that are supporting 68
developments, infrastructure and other projects. World bank have even committed
to provide a total loan of $7billion to Indian infrastructure growth.

• The sum is three times the average $2.3 billion the Bank has loaned India annually
over the past four years.

The below chart shows the loans made by World Bank to India in dollar terms.
For the current Fiscal Year the chart shows total commitment amount to date. Total
lending includes IBRD, IDA, GEF/GEF Medium size/Carbon Offset projects.

We find from the above chart that World Bank vault opened from 2006 with a small
pie of loan.In 2007 we find a growth of loans by 164.49% within 1year time
frame.Thats why we got such a new scale of growth return on our investments in
equties and other assest classes during that time period.When recession hit the
Indian shore we find a dramatic fall but yet higher loans compared to 2006 period.In
2009 we also get a similar picture and in 2010 its forecasted to break past all the
historical loan growth.

The below chart shows the number of projects that have attracted loans from
World Bank.
For the current Fiscal Year the chart shows the number of approved projects to date.
Data update frequency : monthly .I hope I dont need to add any words here
of analysis as the chart is beyond of any words.

What is expected in 2010 from policy ends?

• Relaxation in the norms relating to infrastructure lending and 70% of loan loss
coverage ratio are likely to top the agenda when bankers meet Reserve Bank of
India on January 14,This will be held before the quarterly policy review.

• They may also ask for some easing in the guidelines announced for banks

• Public-private partnership (PPP) programme to be developed.

• Significant political, fiscal and institutional hurdles must be overcome to move from
traditional procurement to a public-private sector collaboration.

• A competitive and transparent bidding process, as we have seen in the past

particularly in 2009 that their were number of projects where their were only one
bidder at that point of time due to lack of proper pricing and bidding process.

• Developing skilled professionals within the government

• Developing and training to bring expertise to manage the PPP procurement and
implementation of the project,

• A System designed to balance risk allocation, and

• Effective mechanisms for payment structure.

Where domestic growth is hidden from 2010 to another decade?

• The National Highways Development Project (NHDP) to upgrade major roads in

India to be a higher demand generator.

• NHDP projects would be supplemented by some state level projects like the ring
roads in Andhra Pradesh and village connectivity roads in Rajasthan.

• The Bharat Nirman Programme, in addition, would entail a total investment of Rs.
1,74,000 crore .

Metro Rail projects in Mumbai, Bangalore, Hyderabad and also the second phase
development of Metro Rail in Delhi.

Building of international airports at Bangalore, Chennai and Hyderabad, and

modernisation of airports at Mumbai and Delhi would entail total investment of
around Rs. 40,000 crore.

• Building of international airports at Bangalore, Chennai and Hyderabad, and

modernisation of airports at Mumbai and Delhi would entail total investment of
around Rs. 40,000 crore.

The new decade of Indian economy will witness massive changements in the
infrastructure segment.Followed with growth of other core sectors.The only deciding
factor that will bring the growth is the policy chnagements mentionde earlier followed
with flow of funds expected to come in 2010.if any any of these two goes wrong then
the Indian infrastructure growth will be slower and more time consuming.