India needs more foreign investments to supplement domestic resources to ensure higher growth rate of 8 to 10 per cent to achieve the Millennium Development Goals by 2015, said Union Finance Minister P Chidambaram.
Speaking at the 39th Annual Meeting of Board of Governors of Asian Development Bank, Chidambaram said India has achieved an average growth rate of nearly eight per cent in the last three years - a robust demonstration of its nascent strengths.
"Our economic reforms over the past 15 years, the role played by the private sector and rising domestic consumption have been the drivers of this growth," he pointed out.
"We are aware of the challenges before us. We will continually work to address these challenges by deepening the reforms. Our aim is to put the country on a trend of eight to 10 per cent growth in order to eliminate poverty and achieve the Millennium Development Goals by 2015," he said, making a presentation on behalf of India.
"The investment rate in India is around 30 per cent of the GDP, and has been largely funded by domestic savings. As the country moves to a higher growth rate, there is a need to supplement domestic resources with foreign investments," he said and added that
international institutions like the ADB can play a catalytic role through investments in public sector infrastructure and also through support for private sector activities in the developing member countries."
Commending the ADB for its forward-looking medium term strategy to assist DMCs (developing member countries) in the development endeavour, he said that emerging Asia faced the challenge of maintaining high and inclusive growth, leading to sustainable development.
"ADB's strategic priorities can help address this challenge if they are fine-tuned with DMCs' development priorities," he suggested.
The resurgence of Asia has been largely due to economic reforms that have brought efficiency gains, critical public investments in infrastructure, and human development. Reforms have also enlarged the space for the private sector in economic growth.
"We believe that ADB needs to re-adjust its strategy from focusing largely on public sector lending to becoming a more fleet-floated financial intermediary and knowledge bank that helps DMCs attract more private sector investment.
"The multiplier effect of ADB's assistance through a public-private partnership model would be much higher than the current reliance on public infrastructure projects," he pointed out.
"We meet a year after Istanbul (where ADB held its annual meeting last year). We meet with the confidence that the year promises to be resilient for the world economy. Despite rising oil prices, multiple natural disasters and tight commodity markets, economic growth for the world in general and Asia in particular has been robust. A large part of the increased pace of growth has been contributed by developing Asia," he said.
However, he observed that the downside risks were evident. "They are higher energy prices and the possibility of sharp adjustments in exchange and interest rates induced by widening international payment imbalances, nevertheless, I am optimistic for the outlook for growth for Asia and for a healthy demand for Asian output in the next few years," he