Poor infrastructure eroding growth: Indian Finance Minister
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India's deficient infrastructure, including roads, power plants and ports, cuts economic growth by as much as two percentage points each year, Finance Minister Palaniappan Chidambaram said.
``There is a clear infrastructure gap in the country and it must be narrowed,'' Chidambaram told bureaucrats from India's 28 state governments in New Delhi today. ``The time has come to take the message of improving infrastructure to the states.'' Prime Minister Manmohan Singh's government wants $150 billion of overseas investment in the next 10 years to build new roads, airports and power plants to attract foreign manufacturers. That may help accelerate growth to 10 percent a year from 8 percent averaged since 2003 and reduce poverty in a country where a third of 1.1 billion people live on less than $1 a day, according to the World Bank. Manufacturing accounts for 16 percent of India's $775 billion economy, Asia's fourth biggest, compared with 39 percent in China, the second biggest. Production at India's factories has been hampered electricity shortfalls and inadequate roads and bridges that cause supply bottlenecks. India's highways, which move almost 80 percent of the goods transported in the country, account for only about 2 percent of the country's 3.32 million kilometers (2.1 million miles) of roads. India, plans to step up spending on roads, ports and telecommunication in the financial year that ends in March 2007 by 24 percent to 992 billion rupees ($22 billion) to attract manufacturers and spur industrial production. The government plans to add 40,000 megawatts of power generation over the next three years, a 37 percent increase from the capacity installed since independence in 1947. ``India's infrastructure needs cannot be funded by government's budgetary resources alone,'' Chidambaram said. ``One has to reach out to private sector, private savings to fund such ambitious projects.'' Chidambaram said India needs 2.2 trillion rupees ($48 billion) by 2012 to build new highways and widen existing ones. Airport modernization would require 400 billion rupees by 2010 while another 500 billion rupees need to be invested to improve the country's sea ports by 2012. India's economy may grow between 7.5 percent and 8 percent in the year ending March 41, the central bank said on April 18. Bloomberg |
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