India to narrowly miss '07-12 infrastructure target

India is likely to narrowly miss its target of investing $500 billion in infrastructure under the five-year plan ending in 2012, a senior official at the country's Planning Commission said on Friday.

"Provisional estimates suggest we will be in the region of $480 billion, which will be more than a doubling of investment compared to the previous plan," Gajendra Haldea, Advisor to the Deputy Chairman of the Planning Commission, told an infrastructure conference in London.

Don't worry! Pranabda knows why the markets are falling

India's 11th five-year plan had raised infrastructure investment targets to $500 billion from $216 billion during the previous plan. The next plan envisages investment of $1 trillion to push annual growth to 10 percent.

India's choked ports, congested roads, chronic power and water shortages and ageing railways are estimated to shave 2 percentage points a year off economic growth and contribute to runaway inflation. Infrastructure in India, Asia's third-biggest economy, ranks 89th out of 133 nations, according to a World Economic Forum report.

"During the 10th plan (investment) was around 4.7 percent of GDP but the average for the 11th plan is likely to be about 7 percent. Given GDP has been growing 7-9 percent a year, that is a huge ...jump," Haldea said.

Haldea and other Indian officials said advances had been made, highlighting the introduction of infrastructure debt funds (IDF) aimed at raising debt capital from more private investors at home and abroad.

Five families, five stories: In Middle Europe, life gets tougher

Haldea cited the increase in private sector participation in infrastructure financing, noting private companies had accounted for 36 percent of the financing during the 2007-2012 period, up from 18 percent in the previous five years.

In the period to 2017, the aim is for half the funding to come from the private sector.

He said he did not expect a huge impact from the euro zone's problems and new bank capital regulations in Europe, which are seeing many banks pull back funding from overseas projects.

"At the margins it may have an effect but in infrastructure no more than 4-5 percent of coverage is coming from abroad. Foreign equity could be about 5 percent and we may take it to 6-8 percent," Haldea told Reuters.

India to narrowly miss '07-12 infrastructure target - official