Even if you can identify viable projects, cutting through India's red tape and negotiating its labyrinthine politics would deter most infrastructure bankers. Far easier to go to can-do China. But Rajiv Lall sees such a bright future for privately funded transport and power projects that he has voted with his feet: Lall has swapped a New York partnership with private-equity firm Warburg Pincus for the chief executive officer's desk at Infrastructure Development Finance Co Ltd in Bombay, an eight-year-old project lender 35 percent-owned by the government.
"I could give you hundreds of examples of how reform in India continues to move in the right direction. Obviously, if you're a pessimist you could say things could move of lot faster. But the fact is there is not much loss of momentum despite changes of government. Reform, change, is all unidirectional," Lall said.
"For a country that is as large and complex as India, that gives me abiding comfort and confidence to argue to investors to come in now and take advantage of this for the next decade."
Lall is not alone in his optimism. But there are also plenty of sceptics, who despair at how hard it is to do business in India and how little money the cash-strapped government can afford to jump-start development spending.
One investment banker grumbled that, 14 years since India embarked on market reforms, the government was still struggling to devise workable models for public-private partnerships.
How, he asked, can the government expect to farm out the financing of more and more roads to the private sector when most projects don't make money for 5-10 years and many people, with no alternative route, have to be exempted from tolls?
"You will not get the private sector to invest because they will not have the means to collect revenue from everybody," he said. "It's like making people pay for breathing air."
Confidence also has to withstand a comparison between India's potholed roads and decrepit airports and China's first-world superhighways and magnetic levitation rail lines.
J.P. Morgan Stanley estimates that China spent $325 billion on infrastructure in 2003, while India spent just $35 billion.
Only in a few nations does the private sector play a big role in infrastructure development, J.P. Morgan Stanley economist Chetan Ahya says. He urges the government to spend an extra $20-$25 billion a year at least, to be financed by privatisation.
The China comparison makes Indian officials grumpy. They say India can be proud of its recent growth of 6-7 percent a year given that its gross investment is only about 26 percent of GDP.
"We're going about improving infrastructure with a fairly conservative fiscal model. We're not breaking any banking rules. We're not suggesting anyone take undue risks," said Pradeep Deb, joint secretary at the finance ministry in New Delhi.
"I think we are looking at a more sustainable long-term model of development by letting the institutions and the markets grow in a natural way," he said.
Yet the same implied criticism that China is wasting money can also be levelled at India, where politicians put greater emphasis on the size of budget allocations than the actual services or investments that are delivered.
"There's no link between the end product - the public services that the expenditure is supposed to create - and the money that has been spent. Clearly this is a link that we need to close. This is a terrible hole," said Saumitra Chaudhuri, economic adviser with ratings agency ICRA Ltd in New Delhi.
As well as widespread corruption, economists blame the breakdown on a lack of incentives for local officials and a fragmented political system that invests a lot of power in provincial and local governments.
"The problem is the policy framework. When the policies are right, you can boom," said Vijay Kelkar, a former senior official who now chairs the India Development Foundation, a think-tank.
Kelkar cites the fast-growing telecommunications sector as an example of what can be achieved: "We did a lot of learning by doing and I think we finally got the regulatory framework right."
Lall, the infrastructure banker, agreed and said India's ambitious national highways plan was advancing well. But progress in sorting out the troubled power sector was minimal - not least because state-run electricity boards, though deeply indebted, are encouraged by politicians to give away power or ignore its theft.
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