India eases foreign borrowing rules to aid infrastructure

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NEW DELHI, Sept 23 (AFP): Indian companies building badly needed infrastructure, seen as key to economic growth, can now borrow more abroad, the government announced, to counter a domestic borrowing crunch.
Firms working to improve dilapidated roads, gas, ports and other sectors have found it much harder to raise funds at home as the central bank has aggressively tightened monetary policy to battle inflation at 13-year highs.
"Considering the huge funding requirements... it has been decided to enhance the existing limit of 100 million dollars to 500 million dollars for borrowers in the infrastructure sector," the finance ministry said late Monday.
Billions of dollars must be spent to improve infrastructure to achieve higher economic growth needed to lift millions out of poverty, the government says.
The finance ministry said in a statement it was changing its external commercial borrowing policy "to keep it in tune with the evolving macroeconomic situation," a reference to the difficult borrowing environment.
India's ramshackle infrastructure is a "critical constraint" to stronger growth, said Montek Singh Ahluwalia, deputy chairman of the government's key planning commission, recently.
Under its five-year economic plan to 2012, the government is aiming to draw 500 billion dollars in infrastructure investments to attain average growth of nine per cent annually.