India's economy is likely to expand close to nine per cent in the financial year ending March 2008, but investment in ports, roads and power generation must be urgently stepped up, the country's finance minister said yesterday.
Asia's third-largest economy has averaged growth of 8.6 per cent over the past four years, leaving key roads, ports and airports choked with traffic.
India estimates it needs about $475 billion between 2007 and 2012 to upgrade its roads, expand and modernise its ports, improve rail services and boost power generation.
Many analysts say the country's strong economic expansion could be at risk if infrastructure investment is not substantially raised.
"There is nothing more important to sustain growth than infrastructure," Finance Minister Palaniappan Chidambaram told an Indo-US business conference in India's financial hub, Mumbai.
"Infrastructure investment in India over the 50-year period has been close to five per cent of GDP.
"Growth [this year] is likely to be close to nine per cent. That rate of investment in infrastructure is lagging behind GDP growth."
The minister said overseas borrowing rules for port, road, power and airport projects should be made more flexible so that private entrepreneurs could access cheaper funds.
After a policy change in August, loans of more than $20 million raised by local firms abroad must be spent overseas. ( Reuters )