Montek Singh Ahluwalia, Deputy Chairman of Planning Commission and "the most prominent non-politician liberaliser in the government", gives his views in this Outlook interview:
From the point of view of the government, the critical issue, no doubt, is that of generating resources. Where is the money needed to create this higher level of infrastructure going to come from, FDI?
Resources can be raised in a number of ways. It can come in as foreign direct investment (FDI) or from domestic savings or even through market borrowings. The name of the game is not to focus on FDI but rather to create a policy framework that attracts investment. I do not have any sectoral targets of FDI for the country. If we have the right environment, all the domestic investment can get sucked into infrastructure, which will vacate space for foreign investments in other sectors. And if domestic investments go to other sectors, it will make space for FDI in infrastructure. Hence, we need two kinds of policies: the general policies that will make India an attractive destination for investment and another, more specific, one for infrastructure.