Indian economy is likely to expand at close to 9 per cent this fiscal and the government may take more steps such as relaxing norms for infrastructure companies to raise funds abroad for sustaining high growth, Finance Minister P Chidambaram said on Monday.
"There is nothing more important to sustain growth than infrastructure... this year growth is likely to be close to 9 per cent. The rate of investment in infrastructure is lagging behind GDP growth," he said at the US-India CEO Forum in Mumbai.
Chidambaram said India needs to raise investment in infrastructure from the current level of five per cent of GDP to nine per cent of GDP over the next five years.
The Planning Commission has estimated an investment of $488 billion in infrastructure, he said. Of this, 70 per cent will be met by the public sector through budgetary resources and retained earnings while the remaining 30 per cent will be funded by the private sector.
"Infrastructure financing is major challenge. We have identified some steps that have to be taken. Firstly, ECB norms for infrastructure must be made more flexible, pension and insurance funds need to invest more in infrastructure and its guidelines would have to be revisited and above all create a broad, deep and active corporate bond market," he said.
The statement assumes significance as the government had recently tightened norms for External Commercial Borrowings to arrest the rise in rupee against the dollar by encouraging capital outflows. There has been speculation that government may relax norms for core sector firms.
Chidambaram also observed that initiatives for dedicated infrastructure funds were stalled due to the lack of projects.
"We are sensitizing state governments to make a shelf of projects for investment," he said.