News: 'Poor infrastructure costing India growth'

(RTR 21/05/2006) New Delhi - The economy is losing 1.5-2.0 percent in growth annually due to the poor state of the country's infrastructure, Finance Minister Palaniappan Chidambaram said on Saturday.

Foreign firms often cite rickety infrastructure as the biggest challenge to doing business in India, Asia's third-largest economy, and analysts say its congested ports and poor roads are a major obstacle to it achieving double-digit economic expansion.

"The infrastructure gap is costing India 1.5-2.0 percent in gross domestic product growth annually," Chidambaram told a conference of state government officials.

India has grown at an average clip of 8 percent in the past three years, estimating GDP expansion at 8.1 percent for the 2005/06 financial year which ended in March.

The government wants to raise that rate to 10 percent by building better highways, airports and power supplies and Prime Minister Manmohan Singh has said the country needs investment of $150 billion in the next few years to do so.

Chidambaram urged state governments to tap the private sector for infrastructure projects but said the process had to be transparent.

"From bidding to tax concessions, there must be complete transparency. Only then will investors come in," he said.