India is eyeing double-digit growth as it pulls out of the worst global financial slump in decades, its finance minister said Sunday, but needs greater foreign investment to speed growth. Pranab Mukherjee's upbeat forecast to the India World Economic Forum, came as industrialised economies struggle to emerge from the financial crisis.
He said India's economy was "on a path to rapid recovery" with the latest quarterly data showing 8.8 percent expansion. "The challenge now is to quickly revert to the high GDP growth path of nine percent plus and even find the means to cross the double-digit growth barrier in the coming year or two," he said.
He avoided direct comment on the outcome of the Group of 20 summit in Seoul that wrapped up with pledges by global leaders to avoid competitive currency devaluation and seek to rebalance trade between surplus and deficit nations. But speaking to around 700 international chief executives Mukherjee noted India's strong performance comes as the "global financial architecture" is transforming with emerging nations player a much bigger role.
"We are all witness to an emerging new world order" that hopefully will usher in "a more equitable arrangement for global prosperity," he said.
The meeting, held for the past 26 years, draws chief executives from around the world looking to invest in India in the face of sluggish returns from developed economies.
For India to expand more strongly, he said the nation needs greater foreign investment, especially in its dilapidated ports, roads and other infrastructure that economists say lops two percentage points off yearly growth. India says it needs nine to 10 percent growth to make any significant reduction in its deeply entrenched poverty and bring about "inclusive growth" for its poorest citizens.
More than 40 percent of Indians still live below the extreme poverty line of 1.25 dollars a day, compared with 16 percent in neighbouring China, according to the World Bank. India aims to double infrastructure investment to one trillion dollars in the country's next five-year economic plan to 2017 and has eased rules to make it easier for foreigners to invest.
Foreign investors have expressed concern about ploughing money into Indian infrastructure because of red-tape in getting projects approved, huge cost overruns and missed deadlines. Right now, India invests six percent of its gross domestic product on infrastructure - just over half the 11 percent spent by rival China. Delegates said the time had come now for India to seek to translate its economic potential into reality.
"We are no longer debating India's growth potential, we've reached a time of implementation and action," said Ellen Kullman, chief executive of Dupont USA.