Financing of road development in India

Abstract

The growth of the Indian economy is amongst the most frequently discussed topic in both academic and industry circles today. And the million dollar question has been “Will India maintain its current growth rate? And for how long can it do so?” And in the limelight are various factors that can enhance or inhibit this growth rate. And the most prominent factor that has figured in the discussions had been India’s appalling infrastructure. It will be India’s greatest bottleneck. And if India needs to break free of this shackle it will need tremendous amount of investment in airports, roads and ports. This is the primary motivation for the study. The issue of roads is more relevant to us, especially in a city like Bangalore, where the urban road infrastructure is choking. This and a personal interest in road quality is the motivation for the choice of roads. The scope of the project had to be narrowed as the topic of infrastructure is far too wide for a study of this magnitude and nature. There are essentially two major aspects to financing road development: 1. Availability of funds/ Raising the required funds 2. Implementation/ Creating the right atmosphere for the private sector to be interested The first question involves sources of funds. This is beyond the scope of the project. The intent of the project is to study the softer issues associated with road development. A brief look at the road development over the years shows very poor implementation. It has not been that there has been a shortage of funds, but there has been utter lack of implementation and maintenance. This brings about the question of whether there is a lack of will on the political side and whether there is sufficient competence in the government bodies.

The private sector, especially the large, efficient corporations with financing muscle and project management expertise, had till date not played any significant role in the development of road infrastructure. They have however suddenly shown very keen interest in participating in this sector. Thus, it is the aim of the project to analyze the current system and identify potential reasons for the private sector to not to continue its current enthusiasm and interest in raising money and participation in the road development.