Prime Minister Manmohan Singh on Saturday said his government was initiating measures to spur investment and to make India more attractive to investors so that the country achieves the target of over 8% annual growth in the 12th Five Year Plan (2012-17).
Speaking at the inaugural session of the 46th annual general meeting of the Asian Development Bank, he said the government has taken steps to fast-track major infrastructure projects, besides introducing strong measures to achieve fiscal consolidation.
To boost investment in big-ticket projects, the government had constituted a Cabinet Committee on Investment (CCI) for approving projects worth over R1,000 crore that have been stalled. As per industry estimates, projects worth over $24 billion have been held up due to delays. The government had also come up with a fiscal consolidation roadmap to reduce fiscal deficit to 3% of GDP by 2016-17.
Singh said the IMF expects advanced developed economies to grow at only 1.2% this year, while developing Asia is expected to grow more than five times faster at 7.1%.
Asia is expected to play a crucial role in driving and stabilising the global recovery process, he said.
Expressing concern over the projected fall in the ADBs annual lending level from $10 billion to $8 billion, as well as its constrained financial position, Singh asked the multilateral financial institution to find innovative ways to channelise global savings into infrastructure projects in Asia to spur growth in the region.
The forecast of a fall in the ADBs lending levels comes at a time when India is looking to tap sources for building world-class infrastructure worth $1 trillion in the next four years, and when Asia needs around $8-10 trillion over the next decade to finance similar core-sector projects.
The Prime Minister said since the level of lending that the ADB can sustain is projected to come down, it should leverage its good rating and technical expertise to raise resources in domestic and international markets through appropriate instruments to propel growth in Asia.
Despite its subscribed capital going up to around $162.5 billion last year from just $55 billion in 2008, ADB had said maintaining even its current annual lending level of $10 billion is a challenge as its income from surplus resources is lower than before due to diminishing interest rates in advanced countries.
Finance minister P Chidambaram said the low-interest environment is expected to continue for some time and so the support that ADB can deliver for economic development in the region will be seriously constrained by the lack of adequate capital. He said in the short-term, countries should consider a mix of options as a package. However, he added that in the medium-term, a capital increase alone can provide a durable solution.
ADB president Takehiko Nakao said, We must step up efforts to leverage external sources of finance, including bilateral official sources particularly from new and emerging donors and private sector finance.