Indian PM highlights economic threat

India's national security is at risk if urgent steps are not taken to boost economic growth, attract new investment in infrastructure and legislate against corruption, Prime Minister Manmohan Singh says.

Singh said on Wednesday that if economic growth remained stagnant and energy security was not ensured, "then it most certainly affects our national security".

Singh's speech marking the 65th anniversary of India's independence from British rule came weeks after large parts of India's power grid collapsed over two days, leaving hundreds of millions of people without electricity.

Singh promised to accelerate infrastructure development and said the government would work to remove barriers to foreign investment.

The government had set ambitious targets to develop roads, airports, railways, electricity generation and coal production for which it would seek help from private companies, he said.

"To attract foreign capital, we will have to create confidence at the international level that there are no barriers to investment in India," he said.

Singh called on political parties to pass legislation to reduce corruption and bring greater accountability to the government. The measure has already passed the lower house but awaits approval from the upper house.

In an effort to curb corruption, Singh said the government would ensure that every household in the nation of 1.2 billion people had a bank account within the next two years.

"We want to create a system in which money from government schemes - pensions for old people, scholarships for students or wages for labourers can be credited directly into people's bank accounts."

In the past year, India has been hit by widespread protests by millions of people who are fed up with the rampant corruption that infests almost every part of government.

Singh's government has faced a slew of corruption allegations involving the murky sale of cellphone licences in 2008 and the hosting of the 2010 Commonwealth Games.

Critics estimate that those two events cost the country as much as $US45 billion ($A43 billion).

A leaked auditor's report in March suggested that up to $US210 billion in potential revenues were lost as coal assets were sold cheaply without a competitive bidding process.

Anti-graft activists say it is not enough for Singh to claim he is honest if he remains oblivious to corruption among his colleagues in government.

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