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The States PPP projects totaling close to a whopping Rs 2 lakh crore in infrastructure sector are likely to arrest the free fall in GDP growth rate in FY 2009-10 as projects under construction and pipeline projects would stimulate industrial growth, boost up job creation and speed up economic recovery, according to an ASSOCHAM Eco Pulse (AEP) Study.

The analysis carried out by the ASSOCHAM Study on PPP projects in various States revealed that the State infrastructure projects mainly in roads, real estate, power, ports and transport have tremendous potential to unleash higher growth rate in Gross State Domestic Product (GSDP) in a phased manner if the investment outlays are utilized and implemented effectively.

The Chamber President . Sajjan Jindal said, State PPP projects under construction and in pipeline for infrastructure sector totaling to Rs 1,33,604.12 crores would stem a steep downfall in India’s GDP growth rate in FY 2009-10; which is expected to slowdown in FY 2008-09 by a minimum of 200 basis points as against the previous year’s growth rate of 9.0 per cent.

The State PPP infrastructure projects supplemented by the stimulus packages announced by the government are capable of averting a downfall of such severe magnitude in FY 2009-10. If effectively implemented, State level PPP projects could fuel high growth rates in Gross State Domestic Product that would resultantly trickle down into robust growth of Indian GDP, stated the ASSOCHAM Study.

More than one-fourth projects under effective implementation totaling to Rs 51,604.83 crore holds the key to jolt the below par GDP growth rate in the near term while the government also needs to ensure that the pipelined projects do not face political hurdles and projects worth nearly Rs 82,000 crore gets rolled into the under construction mode smoothly.

S.No.	Sector	Estimated Project Cost (in Rs Crore)	% Share (in total)
1	Road	43453.84	22.58
2	Real Estate	42610.52	22.14
3	Power	30922	16.07
4	Port	21759	11.31
5	Transport	21020.69	10.92
	TOTAL	159766.05	83.02

 Source: ASSOCHAM Research Bureau

“State level PPP infrastructure projects by all means are a significant stimulant for domestic economy. The thrust area to bolster the Gross State Domestic Product (GSDP) lies with the swift pace in implementation of under construction and pipeline projects” said ASSOCHAM President,  Sajjan Jindal.

Among others, state PPP projects under bidding process - Rs 45,176.13 crores, Operational projects - Rs 13,136.36 crores and Ongoing projects worth Rs 500 crores would also add significantly to the GDP growth rate.

States have been allowed to borrow more in 2009-10 for investing in infrastructure and help spur employment generation. Accordingly, States would not lose their debt relief facility in 2009-10 even if they were to exceed their fiscal deficit target by upto 0.5 per cent of Gross State Domestic Product (GSDP).

According to the Chamber, policy measures announced by the government, including around Rs 5,00,000 lakh crore (in fiscal stimulus) and monetary steps taken by the Reserve Bank to boost liquidity by nearly Rs 4,00,000 crores since the crisis hit India’s shore in September 2008, require expeditious action in implementation of measures to apply brakes to fast decelerating economic growth.

PPP PROJECTS IN INDIA - WHERE IS GROWTH GOING TO COME FROM?
Out of the total estimated cost of projects amounting to Rs 1,92,437.71 crores, the top five infrastructure sectors, namely, roads, real-estate, power, ports and transport would together contribute more than 83 per cent to the investment outlays.

Road and real estate sector encapsulates a major chunk of infrastructure projects under PPP mode at the States level. The PPP projects in these two segment together adds to more than Rs 86,000 crores. The construction activity in these sectors would also lead to greater job creation.

STATE-WISE LIST OF PPP PROJECTS

S.No.	State	Estimated Project Cost (in Rs Crore)
1	Karnataka	105090.20
2	Gujarat	36207.90
3	Orissa	15143.63
4	Punjab	14616.00
5	Madhya Pradesh	8004.07
6	Andhra Pradesh	5807.92
7	Rajasthan	3488.72
8	Assam	2677.00
9	Uttarakhand	1402.24
	Grand Total	192437.70

 
State PPP power projects amounting to Rs 30,922 crores needs to assume an important role to play in generating higher growth rates in States’ GDP. Ensuring greater efficiency in power projects should be given a high priority so as to supplement the government’s efforts toward economic recovery.

Ports and the transport infrastructure forms an integral part of a services led economy. Huge investments under the PPP mode must be translated into higher economic efficiency of the States that would resultantly flow into Indian GDP.

The State PPP projects under these two segment totalling Rs 1,33,625.22 crores can prove out to be a real advantage for India to achieve a healthy growth rate in GDP for FY 2009-10. If implemented timely, they would serve as an economic stimulant in every respect as the earlier announced fiscal stimulus by the government.

Source: ASSOCHAM

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