Investments in the country are set to leap-frog this year with top 300 companies lining up projects worth Rs 2,00,000 crore (Rs 2,000 billion).

The surge in investment by corporate India, along with government's public investment and foreign direct investments by multinational companies, is sure to push up demand for credit substantially and absorb the excess liquidity, now at over Rs 40,000 crore (Rs 400 billion), senior bankers said.

If the government sets up an Investment Commission within a few weeks and further streamline procedures, the country will see higher investments in all major sectors.

"The top 300 companies in the country have already lined up investments worth over Rs 200,000 crore. About 60 per cent of these are in infrastructure," ICICI CEO K V Kamath said.

BoB Chairman P S Shenoy said the non-food credit has been higher so far this year as banks have steppped up lending to the manufacturing sector.

In the coming months, some of the infrastructure sectors like airport, sea ports, roads, telecom and textiles are set to witness major investments, he said.

According to the RBI estimates, aggregate bank credit to industy (non-food credit) was growing by 7.2 per cent at Rs 863,043 crore (Rs 8,630.43 billion) till August 20 this fiscal, compared to a meagre 0.8 per cent growth at Rs 685,376 crore (Rs 6,853.76 billion) during the same period last year.

The surge in investments by India Inc could be gauged from the 7.8 per cent growth in industrial production in the first four months of 2004-05.

Although a higher demand for credit is contemplated in the coming months, bankers have ruled out any hike in lending rates in the short term.

Bankers said there was already excess liquidity in the system to the tune of Rs 40,000 crore and so there was no reason to hike rates even after the hike in Cash Reserve Ratio by the RBI.

The Reserve Bank has raised Cash Reserve Ratio of banks by 0.5 per cent to 5 per cent in two tranches effective September 18.

The CRR hike would partially suck off the excess liquidity of about Rs 8,000 crore (Rs 80 billion).

There would still be ample liquidity in the banking system to enable banks to scale up their lending, especially to the manufacturing sector, a banker said.