India needs to raise infrastructure spending to 10 per cent of GDP to achieve and sustain 9 per cent economic growth target in the coming years.
“In order to sustain growth targets, this (investment in infrastructure) would need to increase further to over 10 per cent of GDP by 2017,” IDFC Projects Ltd Managing Director, Mr Pradeep Singh, said here during a presentation at the Asian Development Bank annual meeting.
India’s infrastructure spending is 8 per cent of the gross domestic product against China’s 9 per cent. The country’s GDP was $1.4 trillion at the end of March 2011.
Acknowledging that India has a long way to go in terms of meeting its infrastructure requirements, Mr Singh said the 12th Five-Year Plan (2012-17) envisages $1-trillion investment in the sector.
Of the total targeted investment, private sector is expected to invest $500 billion — with around $350 billion through debt and $150 billion of equity over the next five years.
Domestic funding sources, he said, will not be sufficient to meet these needs.
However, during the 11th Plan period ended in March, investment in infrastructure sector fell short of its target of $500 billion. Total investments during the past five years were about $425 billion.
Despite the aggressive growth in the last five years, India’s basic infrastructure ranked 86th in Global Competitive Report-2010 by World Economic Forum, he pointed.
Investment destination
Projecting India as investment destination, State Bank of India Chairman, Mr Pratip Chaudhuri, said in a separate presentation that qualified foreign investors were allowed to directly invest in Indian equity market in January.
Besides, he said, the overall FII investment limit in government securities and corporate bonds has been enhanced to $60 billion.
Mr Chaudhuri also said India has a well regulated banking system, with 98 per cent of the banks fully computerised.