Mumbai, Oct 29 (UNI) Union Finance Minister P Chidambaram today said it is imperative to raise the infrastructure spending from 5 per cent to 9 per cent of GDP by 2012.
Addressing the two-day India Infrastructure Investment Conference held under the aegis of the US-India CEO Forum here today, Mr Chidambaram said ''Financing infrastructure is critical. Currently, India needs to raise 488 billion US Dollars for infrastructure over the next five years.'' Expressing confidence in the country's infrastructure capacity, the Minister said the country was capable of absorbing such huge requirement for the infrastructure projects. He encouraged the visiting corporate heads of United States to pass on the positive message to their counterparts on the existing opportunities in India.
Talking about the major challenges in financing infrastructure projects, he recommended that pension funds should be directed to infrastructure projects, saying that External Commercial Borrowings (ECBs) should be more flexible, and a broad, deep and active corporate bond market should be developed.
He said public funds should not be employed in private projects, rather private funds should be deployed in public projects.
''We believe that 70 per cent of this investment must come from the public sector and 30 per cent from the private sector. The drivers of infrastructure investment would be public-private partnership and opening of key sectors to private investment,'' the Minister said.
Meanwhile, talking on improving India's physical infrastructure, US Treasury Secretary Henry Paulson said ''Over 30 US firms represented at this conference are a resource for realising the USD 500 billion estimate for investment in roads, ports, housing, railways, airports, and telecommunication over the next 5 years.
He also talked about taking forward the proposal for developing Mumbai as an International Financial Centre.
Giving an overview of the infrastructure sector in India, Planning Commission's Deputy Chairman Montek Singh Ahluwalia said there are four sets of companies that will be interested in the infrastructure space in India: technical consultants, construction companies, project developers and financiers.
''While a business-as-usual scenario will lead to investment of about USD 330 billion, the participation of all these companies will enable a significant step up,'' he observed.