By IANS
London : India's Finance Minister P. Chidambaram Friday said he was confident of raising $450 billion required for infrastructure development in the country over the next five years.
"India requires $450 billion for infrastructure and I am confident that over the five years the required funds can be raised," he said, sharing his vision for the future at a close door meeting of the Commonwealth Business Council.
"We are a trillion dollar economy. An economy this size can do it," he told the meeting attended among others by Mohan Kaul, director general of CBC, and a group comprising heads of leading banks, private equities and hedge funds.
According to Chidambaram, if the government spent 8 percent of GDP a year ($80 billion) on infrastructure, it should be able to finance the development. It would be able to do so with efficient tax utilisation, overseas aid and with the use of private equity funds.
He gave the example of the $5 billion fund jointly raised by the Infrastructure Development Finance Co Ltd (IDFC), Citigroup, India Infrastructure Finance Co Ltd (IIFCL) and Blackstone Group to finance infrastructure projects.
Chidambaram mentioned the CDC and 3i Group, Europe's biggest publicly traded buyout and venture capital firm, which were investing in India's infrastructure projects, and added that multilateral organisations including World Bank and the Asian Development Bank were supporting infrastructure projects.
Bilateral deals with Japan would provide technological and financial support for the Delhi-Mumbai and Delhi-Calcutta freight corridor projects, he said.
"By means of tax revenue, borrowing, risk-capital, multilateral and bilateral deals, India will be able to raise the necessary funds. We are confident of that but our main challenge will be implementation of viable projects," he revealed.
Chidambaram said the government had plans to provide subsidies for infrastructure projects that were otherwise "not bankable". He also said that the government had allotted $1.1 billion for urban renewable projects.
He said the banking policy was likely to be further liberalised from April 2009, and added that the 25 percent cap for the insurance sector was not really an entry barrier as India had seen a robust insurance sector with a steady stream of foreign companies entering the domestic market.
Welcoming the gathering, CBC head Kaul noted the strong business links between India and Britain and said: "India is one of the high-priority markets for CBC. It has opened offices in India, some of which are doing the technology work for the banking projects. The Council has major plans for India, particularly in the infrastructure sector.
"It has already given proposals to organisations in India for deployment of funds being raised for the core-infrastructure industries such as power, roads, ports, supply chain, etc. The funds are being raised jointly with its member companies including Euro-IB, a boutique merchant bank."
Among those present at the meeting included Michael Geoghegan, CEO of HSBC, Mark Lewisohn, vice chairman UBS, Sir Tom Harries, vice president, Standard Chartered, Richard Laing, CEO, CDC Group, and John Studzinski, senior managing director Gladstone group.
CBC, which actively builds bridges between developed and emerging markets, and organises high profile, close door meetings to enhance public-private investments, is now taking practical measures to drive investments into various Commonwealth countries.
These include taking on a more hands-on role in developing projects with our member companies in key sectors including micro finance, remittances, science & IT parks and infrastructure, a CBC release here said.