Poor infra­struc­ture con­tin­ues to be an Achilles heel for India—if it were bet­ter, ana­lysts say, the coun­try could add 1–2 per­cent­age points to its annual eco­nomic growth rate of around 8 percent.

India spends $17 per capita annu­ally on infra­struc­ture and cap­i­tal investment—by com­par­i­son, China spends $116. With mil­lions of peo­ple mov­ing to India’s cities each year, McK­in­sey says the coun­try will have to spend $1.2 tril­lion on infra­struc­ture just to meet basic needs. This works out to $134 per per­son, or about eight times cur­rent levels.

The Delhi gov­ern­ment has a plan to spend $500 bil­lion on infra­struc­ture by 2012 and twice that amount in the sub­se­quent five years. But there’s a big dif­fer­ence between plans and execution—India is sched­uled to host the Com­mon­wealth Games in just a few weeks, but many of the venues are still not ready due to cor­rup­tion and inefficiencies.

Eight miles of new roads are being built each day, but the offi­cial tar­get is 12 miles per day. Des­per­ate for more elec­tric­ity, the Indian gov­ern­ment turned to a failed Enron project that had been dor­mant for a decade.

One rea­son for lag­ging infra­struc­ture is a lack of qual­i­fied engi­neers. A New York Times arti­cle this week said many of the best and bright­est are going into the high-tech sec­tor rather than the less glam­orous (and less lucra­tive) world of roads and bridges.

Despite the chal­lenges, Mor­gan Stan­ley ana­lysts think India’s econ­omy could begin grow­ing faster than China’s as early as 2013. MS says this is because India’s ratio of work­ing age pop­u­la­tion to depen­dents is improv­ing while China’s is declin­ing. Their gov­ern­ment has been suc­cess­ful at cre­at­ing jobs and the coun­try has a strong foot­ing in the lucra­tive global ser­vices export market.

But for India to over­take China’s growth pace, it’s vital that the coun­try get bet­ter at exe­cut­ing on its ambi­tious infra­struc­ture vision.

Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., and a Toronto, Canada native, which manages a diversified family of mutual funds and hedge funds specializing in natural resources, emerging markets and infrastructure. The company’s funds have earned more than two dozen Lipper Fund Awards and certificates since 2000. The Global Resources Fund (PSPFX) was Lipper’s top-performing global natural resources fund in 2010. In 2009, the World Precious Minerals Fund (UNWPX) was Lipper’s top-performing gold fund, the second time in four years for that achievement. In addition, both funds received 2007 and 2008 Lipper Fund Awards as the best overall funds in their respective categories. Mr. Holmes was 2006 mining fund manager of the year for Mining Journal, a leading publication for the global resources industry, and he is co-author of “The Goldwatcher: Demystifying Gold Investing.” He is also an advisor to the International Crisis Group, which works to resolve global conflict, and the William J. Clinton Foundation on sustainable development in nations with resource-based economies. Mr. Holmes is a much-sought-after conference speaker and a regular commentator on financial television. He has been profiled by Fortune, Barron’s, The Financial Times and other publications. Read more from the author/contributor here.

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