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The Indian government must spread long-term savings such as insurance and pension funds across the infrastructure sector by lifting curbs on big-ticket investments, according to the Finance Ministrys Economic Survey, an annual assessment of the countrys various economic parameters.
At present, restrictions set by regulators confine the investments of such funds to AAA and AA-rated infrastructure companies and hinder large-scale investments by private insurers, says the survey.
Private insurance companies invested only about Rs17.35 billion (US$379 million) while state-owned insurers invested Rs113.53 billion in infrastructure projects in the 2008-09 fiscal year.
The lack of investments has impeded infrastructure development, especially highways. The government has formulated work plans that seek to award contracts for 12,000 km of roads till March 2011. The plans are to build 20 km of highways a day, but the government is finding it difficult to meet even half the target in recent months.
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