India aims to create an 11-billion-dollar fund to overhaul its creaking infrastructure, with 40 percent of the money sourced from abroad, a report said Friday.
The government wants to raise 4.4 billion dollars from foreign pension, insurance and sovereign wealth funds and the rest from domestic institutions, the Economic Times newspaper said.
The emerging market giant of 1.2 billion people needs to rapidly boost its urban infrastructure spending to catch up with neighbouring China and other countries and to ease its chronic poverty problems, economists say.
The decision to create the fund was taken at a meeting in New Delhi earlier in the week chaired by Montek Singh Ahluwalia, deputy chairman of India’s powerful Planning Commission, a top government economic body.
A committee will be set up to oversee the fund-raising exercise, which is to be launched next month at an Indo-US forum of chief executives established in 2005 by US president George W. Bush and Prime Minister Manmohan Singh to boost trade and investment ties, the newspaper said.
Deepak Parekh, chairman of Housing Development Finance Corp, India’s largest mortgage lender, will head the committee. India will look at “innovative methods” to raise long-term finance for infrastructure projects, he said.
Lacks of a strong Indian bond market and worries about project delays and returns have long held back private infrastructure development. Improving battered ports and highways is seen as key to raising economic growth to the double-digit levels required to significantly ease Indian poverty.
Power generation, road building, port construction and airport modernisation have fallen behind targets for years. Global Consultancy McKinsey recently warned that in order to avoid “urban chaos”, India needed to spend 2.2 trillion dollars by 2030 on infrastructure in cities, where three-quarters of India’s population are expected to live.
New Delhi, May 14, 2010 (AFP)