Higher Indian Growth Depends on Improving Infrastructure

Dec. 4, 2007
Dilapidated ports, roads and power supplies are critical constraints to growth says government.

Billions of dollars must be spent to improve India's creaking infrastructure to achieve the economic growth needed to lift millions out of poverty, Montek Singh Ahluwalia, deputy chairman of the government's key Planning Commission, said Dec. 4 at the India Economic Summit.

India's dilapidated ports, roads, power supplies and other infrastructure are a "critical constraint" to stronger growth, said Ahluwalia, "Investment in infrastructure in 2006-07 was five percent of gross domestic product and was inadequate. We need to increase it to about nine percent" by the financial year 2011-12 to around five billion dollars."

India's goal of attaining 10% growth by the 2011-2012 financial year would be unachievable unless infrastructure spending moves into much higher gear, said Ahluwalia. India has logged 8.6% average annual growth in the last four years and economists say expansion must shift to double digits to make a significant dent in deep poverty afflicting millions.

The Indian government will pick up the tab for 70% of the infrastructure spending but the rest -- around $150 billion -- must come from private sources, Ahluwalia told the summit.

The meeting of financial players from around the world eager to learn about India's rapidly expanding economy has heard a litany of complaints from business leaders about the disastrous state of India's infrastructure.

Copyright Agence France-Presse, 2007

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