India needs $1.7 trn over 10 yrs for infra: Goldman

India will need about $1.7 trillion (roughly Rs 82 lakh crore) for a decade beginning 2010 to finance its infrastructure needs, said global investment bank Goldman Sachs in a report on Wednesday. The estimate is much higher than the $620 billion that Goldman Sachs said in 2008 India would need over 10 years for infrastructure financing.

Tushar Poddar, chief economist at Goldman Sachs India and author of the report, said the latest report covered roads, ports, power, airports, telecom, water & sanitation, irrigation and railways. The last three sectors were not part of the earlier report. The current report said India’s rising domestic savings and robust balance sheets should help the country meet its infrastructure financing needs without depending much on external capital.

Poddar said the domestic savings rate should reach 40% by 2016 and will continue to stay above that level for a decade. In 2007-08, the rate was 37.7% and is expected to fall dramatically for 2008-09.

Talking of the sources of funds, Poddar said, “Out of $1.7 trillion, about $1.1 trillion will come from the government and about $550 billion from private capital, and the government will continue to spend 5% of GDP on infrastructure.” He, however, cautioned that government spending was riddled with inefficiencies and should therefore be focused only on areas which the private sector can’t enter.

“It would be more efficient for household savings to be channeled directly to infrastructure through pension & insurance funds,” the report said.