"To sustain a growth rate of 9%, estimates indicate that investment in infrastructure will have to be of the order of $1 trillion over the next five years,” finance minister Pranab Mukherjee said. He hoped that US companies would come forward to help India bridge this gap.
India requires $1 trillion in the next five years to create infrastructure-the key to 9% plus growth-but expects a funding gap of up to 30% that it wants bridged by American investors, reports PTI.
"To sustain a growth rate of 9%, estimates indicate that investment in infrastructure will have to be of the order of $1 trillion over the next five years.
"With a potential funding gap of 25%-30%, needing to be bridged through innovative modes of financing," finance minister Pranab Mukherjee said at separate meetings with the industry shortly after his arrival in Washington on Monday.
He hoped that US companies would come forward to help India bridge this gap.
The Indian economy is expected to grow by 8.5% this fiscal, up from 6.7% in 2008-09 after the 2008 global economic crisis. In the three years preceding 2008-09, the country's economy had expanded by over 9%.
"When I took over as the finance minister, my primary concern was how to prevent the further deterioration of the growth," he said, in identical remarks, at separate meetings organised by the Institute of International Finance (IIF) and the Confederation of Indian Industry (CII).
High inflation has, however, become a cause of concern for the government, which is now betting on good monsoon for the rate of price rise to ease. Headline inflation for May provisionally crossed the double digit level.
He hoped that once it is clear that monsoon is normal, inflationary pressure would start to ease from mid-July.
Monsoon accounts for 80% of rains India receives and 60 per cent of the area under cultivation is rain-fed.
Last year, the country's crop production was hit owing to poor rains, leading to an upward spiral in food prices.
The government has separately been pushing financial sector reforms to sustain high growth, and a bill to increase foreign direct investment cap in insurance sector is awaiting passage. Allowing infrastructure firms access to insurance funds was a key suggestion of a panel headed by Deepak Parekh in 2007.
"We do agree that it (reform) has been delayed," Mr Mukherjee said, attributing the delay to consensus building.
During the last five years, India has initiated reforms in direct and indirect taxes, and is working closely with state governments, he said.
The finance minister said India's economic fundamentals are strong, giving rise to a well grounded optimism for medium and long-term prospects and noted that relatively high savings and investment rates should sustain a high growth momentum in the coming decades.
India's savings and investment rate is a healthy 35% of GDP, second only to China's over 40%.
The central bank demands comprehensive action by the lender to set right all cases of wrongful debit of charges caused by a software anomaly
Reserve Bank of India's customer services department has taken a serious note of the difficulties being caused by a software glitch in IndusInd Bank. While asking the bank to attend to a customer complaint in this regard, it has also demanded that the bank look into all similar cases even if the customers have not complained to the bank or the RBI as yet. It has also advised the bank to confirm whether the problem in the software has been set right in totality as the issue does not just involve one customer's account.
Moneylife had earlier reported (see here: http://www.moneylife.in/article/8/6285.html how a software glitch in the system of IndusInd Bank was causing problems for its account holders, wherein the accounts were being debited with charges for low account balance for no fault of the holder.
The complainant, Amita Mittal, had brought to Moneylife's attention the difficulty she had to face every month due to an irritating anomaly in the bank's software.
The bank has a facility wherein the excess funds in the account (above Rs10,000) are transferred to a fixed deposit. However, the bug in IndusInd Bank's software does not allow funds to be drawn from the fixed deposit wherever any cheque is debited from the account. Instead, the software allows the account to be charged directly. Due to this the balance in the account becomes lesser than Rs10,000 and the software levies unnecessary charges to the customer. This has been happening for the past one year and more, with the software levying penalties every time the account balance goes below the minimum, when actually the account holds substantial funds.
The bank, in its reply to the complainant, has stated that its Flexi Term Deposit Product offers the facility for sweeping funds from current/savings accounts beyond the threshold limit selected by the customer into term deposits with selected tenor. The product also has thefeature of sweeping the funds from the deposits for meeting current account requirement when a particular debit results in a negative balance. This ensures that the customer can avail the benefit of flexibility up to the amount of Flexi Deposits for his requirements.
The bank goes on to explain that while both the above features are offered, this product currently does not offer the facility for restoring minimum balance in the account from thefixed deposit. Hence, the balance in the customer's account was not restored and minimum balance charges were applied to the account. However, the bank has reversed the non-maintenance charges levied to the account.
However, Kaza Sudhakar, the chief general manager of the RBI customer services department has made it clear to the bank that the issue does not involve reversal of just one customer's account charges and that it needs to put in place a comprehensive solution to redress similar grievances of all affected customers.
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