News: $1.5 tn investment needed to achieve 9.5% Indian growth

(PTI 07/01/2007) New Delhi - India requires a staggering USD 1.5 trillion worth investment to achieve 9.5 per cent average growth in the next five years, according to apex industry chamber CII. "Year 2007 should be the 'Year of Investments' and the required increase should be handled carefully with skillful planning and monitoring," CII President R Sheshasayee said. The chamber expects the Incremental Capital Output Ratio (ICOR) for the plan period to deteriorate to 3.8 per cent from the current level of 3.6 per cent. But this decline will be compensated by an increase in investment to GDP ratio to 36.2 per cent from 30 per cent. The study has identified four broad sources of raising the revenue: Public sector, private sector, households and FDI which contributed 29.6 per cent, 27.7 per cent, 39.8 per cent and 2.9 per cent respectively in 2004-05. Particular emphasis needs to be given to the FDI as there is great potential to increase its magnitude and it also brings the required expertise and technology, chamber said. Favourable global environment should see India targeting about 2.5 per cent of GDP as Foreign Direct Investment as against the current 1 per cent, CII said. CII said infrastructure spending by the end of 11th five year plan should go up to at least 10 per cent of GDP. A cumulative of $ 337.5 billion worth investment is required to be pumped into infrastructure in order to achieve an average of 9.5 per cent GDP growth.