In this issue:
Can an idea from Hitler lead India to greater prosperity? Well, maybe! We are referring to the Nazi dictator's idea to construct a nationwide road system in West Germany which was meant only for cars and motorcycles and not for pedestrians or horse drawn carts. The idea was also to create jobs and reduced the unemployment rate, though slave labour was used at this time. Called the 'autobahn', this system also served the purpose of making military defense and logistics much more efficient and rapid in response.
» Can an idea from Hitler save India?
» Stephen Roach on India, US
» Let's not pay taxes. Let's not vote.
» Tata Group's woes continue
» ...and more!
As per the last available statistics of 2005, Germany's autobahn network had a total length of 12,200 km, which ranked as the third-longest in the world behind the Interstate Highway System of the US and the National Trunk Highway System (NTHS) of China.
India's NDA government took Hitler's autobahn idea and began implementing the National Highway Development Project (NHDP) in the late 1990s. However, even after a change in government and an almost completion of 5-years of the changed one, we are still far from achieving the plans. Out of 33,000 km of new roads planned, the achievement till now is only 30%. And the project has been often said to be mired in corruption and controversies over project allocation.
NHDP & other NHAI Projects (Status as on 31st October, 2008)
Source: National Highways Authority of India (NHAI)
||NS-EW (Ph. I & II)
||NHDP Ph. III
||NHDP Ph. IV
|Total planned length
|Contracts under implementation
|Balance length for award
The UPA government has recently announced a slew of measures to stimulate the economy using infrastructure investments as the driving force. While talks of stimulus are fine, India now requires urgent implementation of these plans. Specifically, roads are core to a nation's progress by being the harbinger of better supply chain and thereby increased productivity. If India were to move faster on its road to progress, the government needs to be more than willing to add more and more of highways and expressways to the country's extensive road network!
After all, if there's a will, there's a highway!
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Caught on the wrong foot with the recent happenings, policymakers in India urgently need an image makeover to save their positions. They have therefore started seriously dwelling upon a recommendation that was put in the backburner for the past two years. That was - utilising a portion of India's swelling (although quite a bit lost in recent months) forex reserves for infrastructure investments.
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The government is now contemplating to infuse Rs 750 bn (around US$ 15 bn) as a stimulus package comprising of US$ 10 bn of forex reserves and lines of credit to banks, financial institutions and the beleaguered textile and real estate sectors. Thus, around 4.2% of the country's forex reserves would be utilised to form a package that would roughly be equal to 1.3% of the country's GDP.
"The tragedy in Mumbai is certainly a devastating blow to the exceptional characteristic of the Indian economy, but I am hopeful that it will not derail the improved macro performance." These are the words of Stephen Roach, the Chairman of Morgan Stanley's Asian operations spoken in an interview with DNA Money.
He is of the belief that the world will be in a recession till the end of 2009 and will gradually recover in 2010. Mr. Roach, who is also termed as the 'perennial bear' for his long lasting grim views on the US, believes that the US consumer is in for very tough times ahead with unemployment rising and incomes coming under pressure. He has predicted of an 'economic Armageddon' way back in November 2004, in part due to the record US current account, trade and government deficits.
Stocks in India closed strong today as the benchmark BSE-30 Index ended with almost 480 points gain, led by announcement of a lower inflation figure - 8.4% for the week ended November 22 as against 8.84% in the previous week. Other Asian markets closed mixed. While gains were seen in China (up 1.8%) and Singapore (up 1.5%), losses marked trading in Hong Kong (down 0.6%) and Japan (down 1%). Stocks in Europe are currently trading in the positive.
Deepening economic woes worldwide has led to oil prices falling below US$ 46 per barrel, which is almost near the four-year low levels.
Tata Group's list of woes during the current year has just got longer. Trouble has flared up again in what can be possibly called as the jinxed project of group company Tata Motors' small car, Nano. This time around, the controversy relates to the true ownership of the land that has been passed on to the company for the project.
The Gujarat government has maintained that the ownership of the land rests with it. However, a group of farmers has filed a petition in the state High Court arguing that the government has failed to produce documents related to the acquisition of the land and hence, they should be paid adequate compensation for the same as the land belongs to their forefathers.
The ball is now in the Gujarat government's court. They need to provide the necessary documents, failing which the already delayed project might have to face another disruption.
Someone has rightly said, it can turn worse before it starts getting better. Nowhere this could be truer than the domestic passenger car industry, which is having a tough time off late. Dealerships across the country are wearing a deserted look as high interest rates and economic slowdown are keeping prospective buyers away.
Car producers, on their part are leaving no stone unturned in an effort to lure them into purchasing. In their latest attempt to prop up sales, the companies have either announced or are in the process of announcing discount schemes that would be much wider than the ones on offer currently.
In fact, a leading car maker has slashed the prices of one of its products by as much as 15%. More are likely to follow suit. The success of the move is however anybody's guess. A discretionary spend is a discretionary spend and in these uncertain times, wider discounts may not be enough to attract consumers. The sorry state of credit availability could act as another killjoy.
What will be your reaction if you are offered a loan for 100 years with repayment cycle beginning after 50 years? Being an Indian, you probably will not be as excited as accepting such an offer will pass on the repayment responsibility on your descendents. But then, if you are the US Treasury, the idea might sound good considering that you need a great deal of borrowing to fund the bailout of banks and provide stimulus to jump start economic growth.
Well, as reported on Bloomberg, BlackRock Inc.'s Peter Fisher has said that the US Treasury should consider selling 100-year bonds to ease the government's borrowing costs as it faces a budget deficit expected to top US$ 1 trillion (1 trillion = 1,000 billion).
Mr. Fisher says, "If you issued a 100-year bond and had principal and interest pay down smoothly over the last 50 years, you create a great borrowing device for the Treasury that would let us move this hump of borrowing over the generational retirement that's coming up." This is an idea the US government will truly revere!
"Let's not pay taxes." "Let's not vote." These were a couple of banners seen in yesterday's gathering at the Gateway of India that protested political apathy at the terror attacks in Mumbai and paid tribute to the dead.
There has been a lot of flak that our politicians have received over the past few days, both for their apathy and insensibility of speech. The political system has seemingly never felt the heat of an irate populace such as it has in the Mumbai aftermath. The torrent of condemnation has been swift and has been handed out to all political parties. "We do not want the politicians," some have said.
But can we do without our politicians? Not really! Politicians will continue to survive till democracy survives. Asking for their extinction is like asking for the end of democracy. Someone rightly said that politicians are like diapers. They both need changing regularly and for the same reason. In that case, we definitely need change from the dirty politics of today. But how does one guarantee that the next politician will not be as dirty?
As Mr. Ajit Dayal writes in his latest Honest Truth - "You cannot eradicate terrorism, but we can defeat it by continuing to live life normally. And we can help remove the reasons for home-grown or foreign terrorism by eliminating corruption and weeding out the politicians who have debased the political process."
As such, rather than only asking the politician to change, let us be the change we want to see in the country. Let us obey all rules (traffic included). Let us never pay bribe (some call it 'action money'). Let us never accept mediocrity at governance. Let us go out and cast our votes for the candidate we believe in...and hope that this country is better governed for the next five years.
"Wall Street people learn nothing and forget everything." - Benjamin Graham
||Today's investing mantra