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Infrastructure deficiencies, which are reflected in the growth rate of the economy, led the FM to urge states to avail benefits from the PPP. The most visible indicators of overstretched infrastructure are India`s congested highways, airports and ports. He added that traffic at ports have grown over 2005-06 at 13%; Air passenger movement (25%) and air cargo (10%) growth over the last 2 years has exceeded expectations; Railways clocked a growth of 9% in freight, 8% in passenger traffic over the last 3 years.

Gross capital formation in infrastructure, as a proportion of GDP, remained at around 4% from 1997-98 to 2003-04. To sustain 9% GDP growth, investment in infrastructure should be increased from 4.6% to around 8% of GDP over the Eleventh Plan period.

In addition to that, the Planning Commission estimated that investment in infrastructure - defined broadly to include road, rail, air and water transport, electric power, telecommunications, water supply and irrigation - will need to be of the order of about Rs 1.45 billion or USD 320 billion during the Eleventh Plan period.

Enormous investment requirements cannot be met from the public sector alone. It is imperative to explore avenues for increasing investment in infrastructure through a combination of pu blic investment, public private partnerships and occasionally, exclusive private investments wherever feasible.

Government is actively pursuing PPPs to bring in private sector expertise and efficiencies in operation and maintenance leading to increase in quality of public services delivered.

Several initiatives like viability gap funding (VGF), public private partnership appraisal committee (PPPAC) and India Infrastructure Finance Company (IIFCL) have been taken during the last few years to promote the PPPs in sector like power, ports, highways, airports, tourism and urban infrastructure.

In addition to that finance minister will provide for quality project devel opment activities to the states and the central ministries a corpus fund titled `India Infrastructure Project Development Fund,` (IIPDF) with initial contribution of Rs. 1 billion is being set up. It would be a revolving fund that would get replenished through the refund of `investment` through success fee earned from successful bid projects.