Alternate avenues for fund raising like insurance and pension funds need to be tapped into to meet India's growing capital requirements and to achieve the growth target of 8 per cent during the 12th Plan period, says a study.
Policy challenge during the 12th Five Year Plan (2012-17) is to reverse deceleration in growth by reviving investment at a fast pace which calls for actions to tackle implementation constraints in infrastructure which are holding up large project, said a joint study by Assocham-CARE Ratings.
The study released today said that there is an urgent need to usher in the next set of reforms and bring together all the key sources of funds including specialised financial institutions, capital markets, foreign direct investment (FDI), external commercial borrowing (ECB) to bridge the widening funding gap.
Banks, the most important funding source for businesses, are unable to provide adequate funding across all segments because of asset-liability management issues beyond five years, it added.
The study said: "Alternate avenues for fund-raising like insurance and pension funds have good potential and need to be tapped into for meeting India's growing capital requirements, It is also pertinent to achieve its target 8 per cent growth in the 12th plan period.
"Steps to revive private investment and also action to stimulate public investment, especially in key areas of infrastructure such as transport, water supply and water resource management must be taken to bring the economy back to nine per cent growth by the end of 12th Plan which also requires fixed investment rate to rise to 35 per cent of GDP by then."