As India's economy soars, its airports and roads can't keep up

The Indian jet set are about to get more jets. Last week, Indian Airlines, the state-owned domestic carrier, announced a new deal to replace its entire fleet in one go by ordering 43 new aircraft from the European plane-maker, Airbus.

This $2.3 billion plane-buying spree is just one sign of an increasing appetite for travel from India's middle class - 330 million and growing - who suddenly have more cash to spend and willingness to spend it. Passenger numbers are expected to triple to around 50 million from 14 million over the next five years.

But this same spree has put Indian airport authorities in a pinch. There's nowhere to put the planes: Indian airports are already bottlenecked, and aviation planners are having difficulty keeping pace with the growth.

"I've worked in a lot of countries, and India has a rule for everything, and then some," says George Tharakan, the lead transport expert at the World Bank in New Delhi. "That tends to have restraints on the expansion of infrastructure to keep pace with the booming economy."

Welcome to the bittersweet reality of India's economic boom. The Indian economy is growing at an average 6.5 percent annual rate - closer to China's 10 percent growth rate than to America's 4 percent. But while the private sector is moving quickly to develop the country, it is being hampered by sluggish government decisions about expanding roads, electric power plants, and water systems.

The implications are stark. In a globalized economy, where investors can go wherever the prospects are best, India can hardly afford to postpone expensive infrastructure work.

According to a recent World Bank report, nearly a third of business owners in India said that infrastructure - from unreliable electricity to potholed roads to airports - was a major or severe obstacle to the growth of their businesses.

The World Bank is promising some funds for infrastructure development. And this month, the Asian Development Bank offered to double its assistance to India to $3 billion annually. It also expressed its keenness to invest in the infrastructure sector, including energy, urban development, rail freight corridor, roads and airways.

"Money has not been the problem," says Mr. Tharakan, referring to a slew of delayed World Bank-funded road and infrastructure projects, including a refurbished highway from Delhi to Calcutta. "There's enough money. It's the administrative arrangements that have to get done, the number of agencies that have to be dealt with. It's quite mind-boggling."

The economic reforms of the early 1990s were supposed to have taken care of some of this.

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