India's spending to drive global growth: Ahluwalia
17 Sep 2010
India's massive current account deficit and the proposed $1.5 trillion infrastructure spending are part of the country's contribution to reviving the sagging global economy, according to Montek Singh Ahluwalia, deputy chairman of the Planning Commission.
He said India planned to showcase the $1.5 trillion infrastructure-spending plan at the next G20 summit as its contribution to reviving global economic demand.
"As far as India is concerned, we are doing exactly what is necessary to stimulate global demand because our internal strategy is based on accelerating domestic investment in infrastructure," he said.
India's current account deficit is expected to reach a record $135 billion this fiscal against last year's $38.4 billion and the level of $28.7 in 2008-09, mainly due to lower income from service exports.
"Investment in infrastructure is more import intensive. So it is our expectation that if we follow that approach, even though exports will be a little depressed compared to what they would have been in a booming situation, the current account deficit may widen," Ahluwalia said.
"We are willing to live with that. We think we'll be able to finance it, so it's not actually a big problem, but the key to financing it is that there should be stability and an element of certainty in the global financial system, especially as far as flows to emerging market countries are concerned."
India's infrastructure-related imports will increase in the coming years as the country sets up some major projects such as airports and power plants, Ahluwalia said.
