Identifying infrastructure as a major bottleneck impeding higher growth, ADB vice president Liqun Jin favoured FDI in the sector and a "balanced development" with participation from private sector.
"For the Indian economy to maintain 7-8 per cent growth, enhancement of infrastructure is very important," Liqun told PTI. Comparing with China, he said it takes 8 weeks to shift goods to US from India as compared to 4 weeks from China.
"This is because of logistics. India has a huge backlog and a balanced development for infrastructure is needed," he added. Though agriculture and IT can grow faster with existing infrastructure, he said other sectors would lag behind unless infrastructure is improved.
ADB, he said, was willing to lend more for infrastructure and scale up its assistance to $3 billion annually from the present $1.5 billion.
He ruled out any lending to India and China from its soft lending arm Asian Development Fund, but said the bank provided concessional loans in certain situation like Tsunami when it lent $100 million.
However, ADB will offer loans to India under Innovation Efficiency Initiative, under which loans could be taken in tranches and thereby reducing cost of borrowing.
Asking India to open up economy further and go for more Free-trade Agreements, Liquin said, "It was because of vested interests that domestic industries objected to FTAs."
"FTAs encourage competition and improves efficiency. It will be very good for India to open up its economy to increase trade with rest of the region," Liqun said adding there was positive move towards free trade in South Asian region.
The ADB official lauded the United Progressive Alliance for pushing ahead with the reform agenda, although the focus may have shifted to some other sectors.
"I don't see any major deviation in the reform process (under the UPA). I think, the political will seems to stay on course," he said.
With continuation of reforms and higher growth, he said ADB's assistance would be scaled up. ADB was also considering another rupee bond issue to fund private companies.
"The first Rupee bond was issued in February 2004. We stand ready for another bond issue," Liqun said adding the bond would enable ADB to lend more in local currency to private companies and eliminate the forex risks.
Expressing concern at the high global crude prices, he said "oil prices will remain high. A $60-70 a barrel oil price takes away 1.7 per cent of GDP growth."
However, he said the impact of oil will depend on how nations cut down oil consumption, improve energy efficiency and look for clean technology like wind and hydro power.
While asking oil importing countries to withdraw energy subsidies, he said international community should develop technologies to improve energy efficiency.
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