PM urges for a 10 percent economic growth

By siliconindia   |   Monday, 09 October 2006, 19:30 IST
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New Delhi: After beign branded as the main concern for Indian IT companies, the country's infrastructure problems are being cited yet again as reason for Indian's slow econmic growth. So far, India's economy has averaged 8.1 percent annual growth over the past three years, and expanded at an annual rate of 8.9 percent in the April-June period, the first quarter of the current fiscal year. While Prime Minister Manmohan Singh urged policymakers to look for 10 percent economic growth, he admitted that the country’s poor infrastructure has to be improved and worked on. Addressing a meeting top officials and business leaders held to discuss ways to boost infrastructure development, Singh said “A growth rate in the vicinity of 10 percent is not impossible to achieve, '' adding that India needed $320 billion (euro250 billion) in infrastructure investment over the next five years to meet the demands of its booming economy. Although India has opened up its economy considerably since switching from socialist-style policies in the early 1990s, foreign capital inflows have been slow. Not lacking in potential, yet the country was able to attract only $8.5 billion (euro6.7 billion) in foreign direct investment last year, a tenth of what China gets annually. Poor airport facilities, patchy roads and unpredictable power supply were cited by many foreign companies as reasons for this slow flow of foreign investment into India. "Supply-side constraints will start biting once the economy gathers pace and infrastructure is one a key constraint," says D.K. Joshi, economist at New Delhi-based credit rating agency CRISIL Ltd. Finance Minister P. Chidambaram quoted liberalizing rules for investment in pension funds and insurance business as key factors to raise resources for infrastructure projects. "We are part of the global economy whether we like it or not ... there is enough private capital moving around the world. What we need to do is to be imaginative and take our share," he said adding that the Government was working with coalition partners to ensure these bills were passed in Parliament.