Expressing concerns over low returns from over $178 billion forex reserves of India, World Bank has recommended that a part of these funds should be utilised in the high-return infrastructure sector.
"India can utilise a part of its forex reserves for setting up a fund for the infrastructure sector on the pattern of Singapore," World Bank Vice President, South Asia, Praful Patel told PTI.
Singapore has utilised a part of its forex reserves through publicly held Government Investment Corporation holding diversified portfolio of securities.
After recommendations of the Planning Commission, Finance Minister P Chidambaram has also set up a group headed by finance secretary Ashok Kumar Jha to look in to the partial use of forex reserves for infrastructure.
Patel said the returns in infrastructure sector would be much higher in comparison to low-return investment at present. Currently, RBI invests forex reserves in US and European treasury securities.
World Bank has projected that infrastructure bottlenecks including in ports, roads, railways, airports are affecting the growth of Indian economy by around 1.5 per cent annually.
However, Patel declined to specify how India could utilise foreign exchange reserves for the infrastructure sector.
When asked, Planning Commission Deputy Chairman Montek Singh Ahluwalia said finance secretary has informed him that the government will take steps in this regard in the next few weeks.
