India to use forex reserves for infrastructure
With $475 billion required over the next five years to spruce up shaky infrastructure, India will use a part of its foreign exchange reserves to fund such projects, Finance Minister P Chidambaram said on Saturday.
"The government will not be able to meet the growing funding need on its own for infrastructure. The country will need massive private investment," Chidambaram told a conference on infrastructure in New Delhi.
"Private investment need is around $18-20 billion a year," he said, adding the government was discussing steps with the central bank to use some portion of the foreign exchange reserves, estimated at around $220 billion, for infrastructure.
Earlier this year, some leading financial services companies, led by Citigroup, Infrastructure Development Finance Company, Blackstone and India Infrastructure Finance Company (IIFCL) had launched a $5 billion infrastructure fund.
"Similar initiatives are waiting to be launched," the finance minister said.
Chidambaram also disclosed plans for the proposed India Infrastructure Project Development Fund and said up to 75 per cent of the expenses of projects under public-private partnership will be financed by it.
He said the revolving fund with a corpus of Rs 1 billion ($25 million) will be used to assist states and will get replenished not only from successful bid projects but also through budgetary support.