Impact of Public Private Partnership in Infrastructure on Inclusive Growth in India

Development of an economy depends on the quantum of investment made on infrastructure. Before economic reforms infrastructure development was considered to be the domain of the government. Since economic reforms of 1991, it was realized that the government alone could not meet the financial requirements of infrastructure and that the participation of private sector is also essential. To have sustained growth, India should avoid the mistake of reducing investment in infrastructure made by many Latin American and East Asian countries in the 1990s when they faced financial crises. Reducing investment in infrastructure turned out to be a short-sighted fiscal solution, making it all the more difficult for these countries to get out of recession. India faces extraordinary challenges in achieving its ambitious medium-term infrastructure investment program, anchored in the Government of India's XI Five-Year Plan (2007–12) document. The plan has estimated that US$492 billion is needed over the next five years in improving roads, railways, ports, power, and water. This would require almost doubling infrastructure spending from its current 5 percent of GDP. In this backdrop, an attempt was made to analyse the impact of public private partnership in infrastructure on inclusive growth in India. The findings of the study show that the increase in the number of projects in infrastructure under public private partnership could bring inclusive growth in the states. The value of the projects was not a matter to contribute to inclusive growth of the states.