India Needs $840 Billion Investment In Infra By 2036: World Bank

As India is urbanizing, by 2036, its towns and cities will be home to 600 million people, or 40 per cent of the population, up from 31 per cent in 2011. Urban areas will contribute almost 70 per cent to the GDP and building the necessary infrastructure will be key for creating livable, climate-resilient, and inclusive cities, said the World Bank.

Since nearly 70 per cent of the urban infrastructure needed by 2047 is yet to be built, sizeable investments will be required. By 2036, India will need to invest $840 billion in infrastructure - an average of $55 billion or 1.2 per cent of GDP per annum. However, estimates suggest that between 2011 and 2018, the country’s total capital expenditure on urban infrastructure averaged only 0.6 per cent of GDP, half the required quantum of investment.

Though more than 160 Indian cities have been classified as investment grade, reliance on government funding remains high. Central and state governments finance 72 per cent of urban infrastructure, with commercial financing providing a meagre 5 per cent. Private financing will need to play a significant role.

In order to tap into private capital, urban local bodies will need to comprehensively build their capacity and focus on executing bankable projects. It will also be important for the country to develop the municipal bond market and introduce innovative financing structures. Private sector will also play an important role in developing human capital by improving access to health care and upgrading skills.

Providing efficient public transportation is another factor that adds to people’s productive potential. Ensuring that transportation is safe and accessible for women can also help bring more women into the work force, a key opportunity for development. World Bank calculations suggest that over the next 10 years, India can probably add 1.2 percentage points per year to potential growth if female labour force participation gradually increases from the current 31.6 per cent to more than 50 per cent.

Given that India is a water-stressed country, creating the infrastructure needed for water security is also another imperative.