The Hindu Business Line : Poor infrastructure dampens growth of firms: Survey

Mumbai, March 12 A global infrastructure survey indicates that 77 per cent business executives fear there will not be enough infrastructure investment to support the long-term growth of their organisations. Further, 80 per cent of them want governments to partner the private sector to finance major infrastructure projects.

The survey, commissioned by KPMG International in association with the Economist Intelligence Unit, said roads and power generation infrastructure were the most in need of an upgrade as companies try to control their operating costs.

Sixty six per cent of the executives indicated that existing road transportation infrastructure increased operating costs for their companies. Safety is another issue. For example, India witnesses 10 per cent of the world’s road deaths with just 1 per cent of its automobiles.

Power generation

On infrastructure for power generation, 26 per cent of executives felt that the current state of affairs was adding to their operating costs, while another 40 per cent claimed at least some negative financial effect. The issue was most starkly expressed in India and South Africa where about 90 per cent say poor energy infrastructure burdens their organisations with additional costs.

About 328 executives or board members from 21 countries, 47 per cent of them CEOs, were surveyed. In India, over 30 per cent of the respondents felt that infrastructure was inadequate to support their businesses, compared with only 5 per cent in China.

“These findings highlight widespread concern among global business leaders that governments need long-term strategies for infrastructure, adequately funded and backed by political will,” said Mr Nick Chism, Head of KPMG’s Global Infrastructure Practice.

Nine in 10 respondents in the emerging markets of India (95 per cent), Poland (93 per cent), Russia (86 per cent) and South Africa (86 per cent) felt that current infrastructure investment was insufficient to support the long-term growth of their organisations.

Respondents in India pointed out that the rapid growth the country has witnessed over the past few years has considerably strained its infrastructure. India has not adequately considered building infrastructure ahead of demand.

On social infrastructure, 56 per cent respondents at the global level felt that lack of it impacted their operational costs. Education and health are the biggest concerns, while social infrastructure affected the ability of companies to attract qualified employees, their competitiveness and ability to expand.

Mr Jai Mavani, Head of Infrastructure and Government, KPMG, India, said, “The interesting observation is that social infrastructure like education and healthcare also finds place as a growth imperative. With our highly cerebral, educated, English speaking workforce, with a strong service orientation, there is no reason why we should not aspire to be the world leaders in education and healthcare … just like we succeeded with IT and computer services a decade ago.”

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