Mumbai: India is now open for business, deputy chairman of the Planning Commission Montek Singh Ahluwalia told delegates from 23 countries — including a 200-strong team from China — at the Asia Society Conference in Mumbai on Sunday. He said that foreign direct investment (FDI) was looking up in India compared to earlier, and with the government's continued efforts to improve the investment climate, India could expect a further increase in FDI, private investment and globalisation of Indian industry, especially in the infrastructure sector. Stressing the need for good quality infrastructure, he said there was a large gap between the quality of infrastructure available in East Asia and India.

Ahluwalia said the economy had done well for the past three years and consequently, the Indian people's perceptions about globalisation were rapidly changing. "That has translated into a political consensus that this is the right thing to do," he said, describing India as the second-fastest growing economy in the developing world.

This year, the estimated growth rate is likely to be around 8 per cent while the average growth rate in the last three years has been just a little below 8 per cent, Ahluwalia said. He pointed out that enough structural changes had already taken place, and the Indian economy could now aim for a consistent annual growth rate of more than 8 per cent. The Planning Commission, he said, was presently working on setting a feasible target of 8 per cent growth.

"But the prime minister has said that is not good enough," Alhuwalia told the gathering, "and we find is that up to 9 per cent growth is feasible in the medium term." He cautioned, however, that it was critical that growth should be inclusive. While the rest of the economy has surged, agriculture is lagging and deserves a very high level of priority. "This is crucial for creating an environment where growth will spread to the rural areas," he said.

He said the inclusive approach should extend even to infrastructure. At one end was rural infrastructure — agriculture, telecom, water, health and education — and at the other end was urban infrastructure - state-of-the-art telecommunication systems, airports, ports, roads, modernisation of railways, etc.

He admitted that there were problems in some areas, like power, where it has not been easy to create an environment for private investment to surge ahead. But the investment needed for India's infrastructure was huge; there were areas where only the public sector could provide the investment, and areas where the private sector was capable of contributing, like airports, roads, telecommunications, power and the recent suggestion of bringing private competition into the railways.

"It can't be all done by the private sector; the government will have to play a very big role," Alhuwalia stated, calling for a policy framework where government money and initiative can leverage the biggest possible response from private investment to enter the infrastructure sector.