lagarde did point out that the euro area is experiencing large economic imbalances. is there a europe - wide agenda to solve this problem? trichet : the aim must be to elevate significantly growth potential in all countries through the structural reforms that are overdue in europe. this will remain strategically important in the next decade. the 2020 agenda will have to be implemented in a more effective way than the 2010 lisbon agenda, as president van rompuy has recommended. more generally let me say that given the nature of monetary union, some countries, because of a rapidly aging population for example, will have to run current account surpluses, while other countries with very significantly fewer pension liabilities will not be called to run such surpluses. similarly, some countries, to regain competitiveness, will have to keep inflation below the eu average. so a certain degree of dispersion of economic parameters might be possible within an integrated economy which has the dimension of the united states, provided this dispersion has economic justification. il sole 24 ore : even accepting a period of deflation, with all the possible social consequences this might have? trichet : yes. we are an immense economy. it is normal that some regions, after growing above the emu average for some time, and after having accumulated high national inflation, experience a correction and therefore a period of negative inflation, as it is currently happening in ireland. il sole 24 ore : the recent eu declaration regarding the greece plan says that member states should push ahead toward a stronger economic governance. what are you expecting : a more coordinated approach or a transfer of competencies from the national to the supranational level? trichet : as citizens we all have personal opinions on this matter. as a citizen, i would call myself when time comes and when people are ready to move towards an accomplished political federation. as of today our aim is to make the current institutional framework work as best as possible. we call for the full respect of the present treaty. emu is politically a bold endeavour : don ’ t forget that with regard to fiscal policies the treaty allows the college of governments to impose decisions on other governments and parliaments. implementing fully the treaty and the stability and growth pact calls for a much stronger governance in the future than what has been experienced in the past years. il sole 24 ore : we are at the very heart of democracy : no taxation without representation. trichet : i repeat : peer surveillance on government and parliament

##ter settlements. unplanned urbanization has also entailed other problems ranging from crime, law and order, pollution, congestion and environmental degradation. 29. expanding urban infrastructure demands huge resources. isher judge ahluwalia and others have estimated that investment requirements for urban infrastructure over the twenty year period 2012 – 2031 would be about 40 trillion which translates to an annual average investment of about $ 100 per capita. mobilizing resources of this order is obviously a big challenge and will call for more effective taxation, efficient project planning and implementation, innovative urban governance and much greater sensitivity to embracing the migrants into the urban ecology. fifth challenge : bridging the infrastructure deficit 30. it is widely acknowledged that infrastructure deficit is by far one of the most binding constraints to accelerating growth. even so, our efforts to bridge the deficit have fallen way short of the task. the eleventh five year plan projected investment in infrastructure of $ 500 billion but the final expenditure is likely to fall well short of that. the twelfth plan doubles the projected investment over the five year period 2012 – 17 to $ 1 trillion which means that annual investment in infrastructure has to increase from the current level of 6 per cent of gdp to over 10 per cent. 31. given its fiscal compulsions, the government will clearly not be able to mobilize resources of this order. the twelfth plan projections call for 50 per cent of the projected investment to come from the private sector and much of the project implementation to happen in the ppp mode. 32. infrastructure investment, therefore, poses three sub - challenges : mobilizing the necessary resources, reforming regulations and contractual arrangements and efficient project planning and execution. 33. let me make a comment here on the reserve bank ’ s efforts to support infrastructure financing. infrastructure requires long - term finance, and it should ideally be funded by long term sources like insurance and pension funds. since these markets in india are still not deep enough, the burden of financing infrastructure is falling on banks. banks cannot expand lending for infrastructure beyond a point because of exposure risks. in financing infrastructure, banks also face an asset - liability mismatch problem since their liabilities are largely short - term whereas infrastructure funding is typically long - term. 34. in order to support infrastructure financing by banks, the reserve bank has relaxed regulatory norms to the extent prudential limits would permit. these include higher exposure norms in respect of single borrowers and borrower groups, permitting banks to invest in infrastructure debt funds ( idfs