Monday, November 29, 1999

India sets new power addn goals; misses old targets

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India plans to boost its power generation capacity by over 12 percent in the fiscal year that began in April, a top adviser said on Monday, even as the country yet again missed its targets for the previous year.India's rattling infrastructure is a drag on achieving a growth pace similar to peer China's double-digit expansion, and the country has consistently fallen short of building the roads, power plants and ports it had planned for.Critics blame bureaucratic red tape and difficulties in acquiring land for the shortfalls.Data released by Planning Commission deputy chairman Montek Singh Ahluwalia showed India added only 9,585 megawatt of power capacity in the year to end-March 2010, down a third from its target of 14,507 MW for the year.The Planning Commission charts the Five-Year-Plans for the economy and is headed by the prime minister.The country plans to add 20,359 megawatt of power capacity during the 2010/11 fiscal year to its existing 160,000 MW capacity, the data showed. In comparison, China adds about 100,000 MW of power every year.India aims to spend $500 billion in the five years to end-March 2012 and plans to double this figure in the five years ahead, with private investment expected to finance up to half.Critics have said the ambitious plans would continue to be missed unless fundamental issues such as easier land acquisition, developing a long-term debt market and creating a transparent policy framework were resolved.Ahluwalia said the government's targets would likely be missed, and he would be happy if a greater proportion was met in the current period than in previous years."The purpose of planning is to stretch your capability, he told a news conference.Analysts said it was more likely the current year's target would also be missed."Without policy and financing reforms, the targets can only be motivational. In order for them to be facilitational, there needs to be reforms," Jai Mavani, head of infrastructure practice at consultancy KPMG, said.India's underdeveloped bond market, with few takers for long-term debt, and restrictions on pension and insurance funds have further choked the flow of funds for infrastructure.To help remedy this, India plans to launch an $11 billion infrastructure fund that will go to develop the domestic bond market and refinance high-cost debt.The Planning Commission also said India would build 2,500 kilometres of roads in the 2010/11 fiscal year, or 6.8 km each day, below the promise of 12-13 km a day in the year made by Transport Minister Kamal Nath.Both figures are far below Nath's original target for 20 km each day. Data showed India added 2,008 km of roads in 2009/10 missing by a third of its target for 3,165 km.India's economy will grow 8.5 percent in the fiscal year that began April 1, after probably expanding 7.2 percent in the previous year, the government has estimated, making it the world's second-fastest growing major economy after China.(Editing by Surojit Gupta and Jason Webb)(For more business news on Reuters Money visit http://www.reutersmoney.in)
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