India needs to reform policies concerning project execution and long term funding to fix its creaky infrastructure, which is a major roadblock to its target of achieving a 9-9.5 percent annual growth during 2012-2017, Standard & Poor's (S&P) Ratings Services said in a report.
The government has stepped up spending in recent years but the slow pace of reforms and a lack of long-term funding options constrain the infrastructure growth, the report titled, Can India's developing infrastructure keep pace with economic growth? added.
We believe reforms to create a robust framework with transparent policies for project execution and funding will be critical to keep up the pace of infrastructure development in India, said S&P analyst Rajiv Vishwanathan.
The country's twelfth five-year plan for the period 2012-2017, focuses on removing some of these roadblocks and creating a framework for private-sector participation, but it depends on the ability of India's leaders to execute these plans, it added.
In its draft twelfth five-year plan for 2012-2017, the government proposes to invest $1 trillion to upgrade infrastructure-almost double that in the earlier plan, which ends in March 2012.
India's road, railway, and port expansions are falling far short of targets while the power projects are facing major fuel risks, while the delays in government and regulatory decision-making have caused several infrastructure projects to fall way behind schedule, it added.
However, the rating agency's outlook for the infrastructure sector in India is stable and covers a variety of subsectors, including power, airports, tollroads, railways, and ports, it said.