Poor infrastructure, corruption weigh on India

The International Finance Corp has been adding about $1 billion of portfolio exposure a year in India, a pace it aims to maintain in coming years, executive vice president and chief executive Lars Thunell said.

"There are still lots of opportunities for improvement," Thunell said in an interview towards the end of a visit to India.

The IFC is a private-sector lender that also takes direct equity stakes in firms or projects. India is its largest market, and the multilateral agency is increasingly focused on investment in the country's poorest states.

Thunell said poor infrastructure remains perhaps the biggest hurdle facing economic growth in India, and is an area of investment focus, along with efforts related to climate change.

"How can you have an efficient production if you can't get stuff out, or if you have to close down, as they have in many low-income states for a number of hours, because there's no electricity," he said.

He said the IFC hoped to invest in a major road-building initiative unveiled earlier this year by the Indian government, but declined to elaborate.

INCLUSIVENESS

India, whose fast-growing economy is propelled in part by a robust entrepreneurial sector, ranked just 133rd among countries for ease of doing business in a World Bank/IFC report released earlier this year.

"India is surprisingly far down on that ranking," Thunell said.

Fellow emerging market giants China ranked 89th, the Russian Federation ranked 120th, and Brazil came in at 129 in the survey.

Still, India managed to attract more than $15 billion in foreign direct investment and a similar level of portfolio inflows in the first six months of the current fiscal year, as its economic growth trails only China's among large countries.