The Hindu Business Line : Tap forex reserves for infrastructure development, says Montek

The Deputy Chairman, Planning Commission, Dr Montek Singh Ahluwalia, flanked by Mr Sunil Kant Munjal (right), President, CII, and Mr Tarun Das, Chief Mentor, at the CII Annual National Conference in the Capital on Friday. — Ramesh Sharma

New Delhi , Oct. 29

THE Planning Commission was working on ways in which methods of financing public investment or public-private partnerships in infrastructure could be evolved, relying on the use of forex reserves to make the expansion of demand non-inflationary.

Speaking to presspersons on the sidelines of a Confederation of Indian Industry (CII) Annual Conference here on Friday, Dr Montek Singh Ahluwalia, Deputy Chairman, Planning Commission, said, "We have reserves of over $120 billion. I would think we should be able to use up at least $ 5 billion a year in the next two-three years. That is equal to about an extra Rs 23,000 crore every year."

Saying that the single biggest constraint inhibiting the ability of the economy to perform up to its potential is the quality of infrastructure, he mooted the idea of utilising the country's forex reserves for infrastructure development.

Dr Ahluwalia added that the country was suffering from massive infrastructure deficit and for investments to materialise in this sector, clear policy would be required to lure in the private sector for investments. He said that reserves are targeted not because they are a problem but because infrastructure was a problem.

"Therefore, we need financing restructuring to make sure that a part of this money goes in infrastructure," he said and added that if the proposal was accepted, it could be made operational by next Budget. In fact, the Planning Commission has had meeting with the Finance Ministry on the proposal. Earlier speaking on a session on `Taking stock: Are we on track?' Dr Ahluwalia said that as part of its mid-term appraisal, the Planning Commission was conducting an exercise to identify weaknesses in the economy, which have to be overcome to achieve an eight per cent annual GDP growth target.

He said that realistically, the country would grow at 6-6.5 per cent this fiscal but the growth will pick up in the last two years of the Tenth Plan to 7-8 per cent. Stating that the country must double its agricultural growth from the present growth of little over two per cent if it has to achieve the envisioned eight per cent growth, Dr Ahluwalia said that agricultural growth has decelerated from the mid-nineties onwards, which was a matter of great concern.

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