By IANS
New Delhi : India should step up its investments in infrastructure, from the current 5 percent of GDP to 9 percent, to achieve higher growth, Planning Commission deputy chairman Montek Singh Ahluwalia said Tuesday.
“Investment in infrastructure in 2006-07 was 5 percent of the GDP (gross domestic product), which is inadequate. We now need to increase it to about 9 percent of the GDP by 2011-12,” Ahluwalia said at the India Economic Summit underway here.
“India needs about $500 billion of investment over the next five years (in infrastructure), 30 percent of which, about $150 billion, should come from the private sector,” Ahluwalia added.
He also said that increasing the investment from 5 to 9 percent of the GDP would be a “difficult task”.
“We need to be realistic but if we do increase the investment, we will be able to chug the economy towards 9 percent growth.”
Ahluwalia pointed out that although investments are pouring in all sectors in India for the last five years, not much has been invested in infrastructure due to corruption and state governments’ inability to distribute them effectively.
“Funds need to flow from higher to lower levels of the government. The state governments do not devolve enough and subsequently, it gives rise to a financial mess.”
Comparing the method China has followed in improving its infrastructure, Ahluwalia said: “We do not need to emulate the Chinese savings rate of investing in infrastructure, which is 55 percent of GDP.
“For India we are aiming at 9 or maximum 10 percent of the GDP, which is enough.”