With a sustained growth of around nine per cent, India is well poised to eradicate poverty in 20 years and emerge as the world's third largest economy, Finance Minister P Chidambaram has said.
The country's fiscal requirement towards infrastructure stood revised to $475 billion at current prices over the next five years as against an earlier estimate of $320 billion, he told foreign diplomats attending the professional course organised by the Foreign Service Institute (FSI) at a valedictory dinner on Friday evening.
"We are growing and continue to grow at around 9 per cent," the minister said.
"Studies show by growing close to 9 per cent, we will become the third largest economy in 20-25 years," he said. "We must produce wealth and then divide it equitably. How can we have a welfare state without wealth?"
Chidambaram said infrastructure was the main constraint to growth and this was pulling the expansion of gross domestic product (GDP) down by as much as one-two per cent.
"The challenge of infrastructure is huge. The requirement of funds is humungous. It had been estimated that between 2007 and 2012 we would need to invest over $320 billion in the infrastructure sector alone," he said.
He said the level of estimated funds required has been revised upward by an official panel on infrastructure financing to $384 billion at 2005-06 prices, and that means $475 billion at current prices.
"But I can say with confidence that no country needs, and no country but India can absorb, such large funds for the infrastructure sector," he said, adding that the increase in savings and investment rates gave him that confidence.
The minister said he was particularly concerned about the performance of India's farm sector, which had seen stagnation in both production and the area under food grain between 1998 and 2007.
While the area under food grain had stagnated at between 120-125 million hectares, the productivity stood virtually frozen at 68-73 million tonnes for wheat and 85-91 million tonnes in the case of rice.
"It is, therefore, necessary that we urgently address the issues relating to both production and productivity," Chidambaram said, adding that the Rs 250 billion package announced recently should reverse the situation.
He was addressing participants of the 43rd batch of FSI's course for professional diplomats who were from countries including Bhutan, Sri Lanka, Mozambique, South Korea, Turkmenistan, Lesotho and Turkmenistan.