An Ernst & Young study says that unlike China, India does not have enough cash to self-finance its considerable infrastructure wish-list.
NEW DELHI: India lacks sufficient cash reserves to finance its infrastructure wish-list while high corruption levels and bureaucratic hurdles have made international financing hard to come by, a study says.
"Unlike China, India does not have enough cash to self-finance its considerable infrastructure wish-list, although the country boasts of $190 billion in foreign exchange reserves to leverage project funding," global professional services firm Ernst and Young (E&Y) said in its latest report.
The report, which examines trends in infrastructure and finance, said these hurdles could block India's transformation from a third world country into a 'global powerhouse'.
Prime Minister Manmohan Singh had last year pegged the investment requirement for the infrastructure sector at $320 billion for the next few years.
Though India welcomes private investments through public-private partnerships allowing up to 100 per cent of foreign equity in projects, loopholes like weak regulatory controls and bureaucracy create delays and uncertainties besides adding to costs.
"Corruption in India has made international financing for infrastructure hard to come by; without it, India's infrastructure will remain stuck in the previous era," the report titled 'Infrastructure 2007:A Global Perspective' said.
However, the country's capitalist environment and strong legal tradition provide a solid foundation for growth and gives confidence to investors despite the evident impediments.
Besides tax exemption have also been enacted for infrastructure investments, it said.
The World Bank forecasts Asia's infrastructure needs at one trillion dollar over the next five years, led by emerging economic powers China and India.
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