9 per cent of gdp. it envisaged an investment requirement of over us $ 500 billion ( rs. 20, 11, 521 crore ). it is estimated that traditional sources of infrastructure financing can raise a little more than half of the requirement ( mckinsey, 2009 ). financial shortfall is one of the reasons for the slow pace of transition towards creating world class infrastructure facilities in india through private initiatives. there is an urgent need to create enabling conditions, e. g., a vibrant debt market, easy exit rout for equity capital and appropriate instruments for credit institutions to lend infrastructure while hedging the associated risks, etc. estimated investment flow in various infrastructure sectors during the tenth and eleventh five year plan is outlined in table 1. it can be seen from the table that the investment requirements in various sectors had gone up substantially in the eleventh plan. table 1 estimated investment flows to various sectors 8. apart from the direct investment route, public private partnerships ( ppps ) models have grown in popularity around the world in recent years, with governments around the world finding it difficult to finance infrastructure investments through conventional route. despite the emphasis placed on ppp in the plan documents, the private sector response to infrastructure development in india has been lukewarm for a number of reasons, e. g., overlapping regulatory jurisdiction, improper design, appraisal and risk allocation mechanism under ppp, bidding transparency issues, project costs and time overruns considerations, etc. probably a centralised ppp mechanism and a single window clearance of the project under direct investment route is called for at this juncture. with inadequate financial market developments, ppps in india typically rely on commercial banks for funding exposing them to risk concentration, maturity mismatches and related exposures to the rising interest rates and tightening credit conditions over the life of the project. issues relating to the financing of infrastructure investments in india 9. the importance of long - term debt financing can hardly be overstated owing to the longer pay - back period of infrastructure projects and delays due to complexities in the design, safety and environmental aspects, etc. the development of a mature and vibrant corporate debt market is eminently suited for long - term committed funding to match the investment requirements of a long term risk - averse investors seeking regular returns after a lock - in period. greater deepening in the non - government debt market with sound financial, legal, and regulatory framework would enhance the benefit of price discovery and risk diversification. the ppp model

is the highest ever recorded after independence second only to china in the contemporary world. this has emanated from an upsurge in the domestic savings rate ( 23. 5 per cent in 2001 – 02 to 37. 7 per cent in 2007 – 08 ) supported by the step up in investment rate ( from 22. 8 per cent to 39. 1 per cent ) in an environment of moderate inflation and macro - economic stability. although the contagion from the global economic crisis had brought the growth down to 6. 7 per cent in 2008 – 09, large fiscal stimulus and accommodative monetary policy ensured that the economy performed better than expected in 2009 – 10. the planning commission in the eleventh five year plan document ( 2007 – 12 ) identified a number of priorities to hasten an inclusive growth process so that the economy can grow at a rate of around 9 per cent during the plan period. while the success of the same revolves around a number of wide ranging issues adequately flagged in the plan document, certain basic problems need to be addressed first. these are agriculture reforms, governance reforms and infrastructure reforms. in today ’ s address, i would confine myself to the third issue – that is infrastructure – finance as well as the beyond. role of infrastructure and the traditional constraints as regards finance 3. if we have to maintain high growth rate, we require better infrastructure ; as simple as that. infrastructure is also a key driver of inclusive growth. it is already identified as one of the serious impediments to high growth in india in the coming years. with fast pace of economic growth and urbanisation, availability of adequate facilities as well as upgrading the quality of existing infrastructure would assume paramount importance. infrastructure development in new townships is a priority to redistribute the influx of growing population. attention is to be paid to the rural infrastructure provision such as irrigation, electrification, roads, drinking water, sanitation, housing, community it service, etc. financial issues are often cited as the key constraint to the availability of provisions in an emerging economy like india. the infrastructure projects are characterised by non - recourse or limited recourse 4. financing, i. e., lender can only be repaid from the revenues generated by the projects requiring to the large scale of investments. the share of high initial capital and low operating cost in infrastructure projects explains why financing infrastructure involves a mix of complex and varied contractual arrangements. wrong projections, collection risks of the payables and