New Delhi: India needs to double its infrastructure spending to $1 trillion in the five years to 2016-17 to achieve 10% annual growth rates and this would require new funding sources, the prime minister said on Tuesday.

The country needs to upgrade its creaky and inadequate infrastructure to support growth that is expected to accelerate to 9% by 2011-12, and has said a bulk of this new investment would be from private firms.

“We must aim at accelerating the pace of growth to about 10% per annum. This is the growth target we must work toward in the 12th five-year plan (2011/12-2016-17),” Prime Minister Manmohan Singh told an infrastructure conference.

“It is not something that would happen automatically. We would need continuous improvements in our policy regime and our implementation process.”

India plans to spend $514 billion in the five years to 2011-12, and finance minister Pranab Mukherjee said this goal was proceeding as per schedule.

Mukherjee said the capacity of banks to fund infrastructure projects was stretched and new sources had to be tapped, including allowing private firms to issue infrastructure bonds.

“We have still not completely succeeded in exploiting the full potential of insurance and pension funds for deployment in the infrastructure projects,” Mukherjee said.

“The availability of equity, both domestic and FDI (foreign direct investment) continue to remain an area of concern.”