India tackles growth obstacles
Infrastructure an economic hurdle, says India Finance Minister
India's infrastructure will equal the best in the world by 2017, predicts the country's Finance Minister P. Chidambaram.
At a special lecture held on 28 June, as part of London Business School's Aditya V Birla India Centre Speaker Series, Mr Chidambaram told participants more investment and better governance were crucial to overcoming India's biggest hurdle of economic growth, but he was confident that in ten years time world-class infrastructure would be in place.
There was no doubt India's rate of infrastructure was "a drag on the economy", he said. Rural infrastructure was poor, urban infrastructure was crumbling and "India fares poorly on social infrastructure as well."
Serious improvement was needed across all areas including railways, seaports, water supply, sanitation, education, healthcare and telecommunications, he said.
While India's economy has recorded a strong rate of growth in the past two fiscal years, the challenge ahead was how to sustain such a fast rate of growth and how to encourage investment.
Mr Chidambaram said hundreds of billions of dollars were needed for infrastructure development, and while financing it was "well within the realm of possibility", there needed to be more public-private partnerships. Investment also posed flow-on issues such as how to rehabilitate and re-settle displaced families.
During the hour-long lecture, Mr Chidambaram answered questions on a range of subjects including education, the convertibility of the rupee and the flow of foreign investment through Mauritius.
On the issue of income disparity he said there was no evidence which proved that the gap between the rich and poor was widening. Mr Chidambaram said India's 36 billionaires, often referred to in the media, were an inaccurate picture of India.
In fact, the middle class was growing every year and wages were rising across the board. India's growth story was benefiting all sections, "maybe not equally, but they're all benefiting".
"Yes, some people have become extremely wealthy but that's inevitable," he said.