How serious is the problem of infrastructure deficit in India?

The biggest constraint to achieve a higher growth rate in South Asia is infrastructure. Growth in the region could have been higher if more investment in infrastructure would have been made. For example, in India, power is a hindrance to the targeted growth rate of 9-10 per cent. But money is not a major problem. What is more important is the implementation capacity. In the power sector, the supply of high-capacity turbines simply does not exist in India and the global supply is limited.

Does that mean the 11th Plan's target of adding power generation capacity of over 78,000 Mw is simply unachievable?

Some of these targets would be slower than one would desire. This cannot be solved overnight. But if there are investor-friendly reforms then these inputs could be produced in India also.

How important is the issue of forex reserve for infrastructure financing? The Reserve Bank of India is not so willing to part with it.

The RBI and the Ministry of Finance are headed and staffed by very competent people. They do not need our advice. However, we have said that parking entire reserves in the US treasury while the dollar is depreciating and yielding very low interest could ultimately lead to negative returns. We have given them what we have to offer by examples of various countries. I believe they are exploring other options. In India, this need arises out of the fact that the budget has a limit due to the constitutional provision (FRBM Act). If you reach the limit, then the question is what you would do. Do nothing, or are there other ways to do it? India also needs to develop a local debt market.

However, I look at forex reserve and financing infrastructure as separate issues.

Is the lack of many bankable projects in India the real problem?

We have committed to finance 10 per cent of $60 billion to make over Mumbai in the next 10-15 years. Unless we show it at one place, it won't happen at other places. If India has to grow at 9 per cent, it needs to have a modern urban sector. The World Bank can help with critical aspects of modernising Indian cities such as basic needs of the urban poor. We will be taking care of slum development in Mumbai. The city of Shanghai, with which Mumbai is often compared, could not have happened without taking care of the slums.