FUND VIEW - Power, construction good bets - ICICI Pru

By Nishant Kumar

MUMBAI (Reuters) - Power and construction companies are good bets to make money in India, but their potential success will depend upon speedy reforms by the government, the fund manager of the country's largest infrastructure fund said.

"There is potential for explosive growth in the next five years. All that is required is enabling environment," said Sankaran Naren, chief investment officer for equity at ICICI Prudential Asset Management, who oversees about $2.5 billion.

For this to happen the government needs to remove policy bottlenecks such as land acquisition rules, faster environmental clearances and simplified procedures for project approvals, he said.

India estimates it needs to spend $500 billion to fix its crumbling infrastructure in the five-year period to 2012 with nearly a third of that in the power sector alone.

The federal government has called a meeting of state power ministers in New Delhi on Tuesday to discuss issues related to plans to build 78,700 megawatt new capacity over 2007-2012.

"The opportunity is very big," said Naren, adding that expectations were running high the ruling coalition would focus on growth after it won a stronger mandate in national elections that ended in May.

But the victory also provided momentum to a stock market rally and made shares pricey, making fund managers reticent.

The main stock index has jumped almost a fifth since mid-May after the Congress-led coalition unexpectedly won the election, with shares of capital goods firms rising twice as fast on improving prospects for speedier reforms.