Apr 4, 2012|
Does India need this Rs 2,000 cr 'gift'?
If you have ever flown to New York, you must have observed a magnificent sculpture of a torch-bearing female that ascends 93 meters into the sky. In case you haven’t already guessed it, we are talking about the Statue of Liberty. But another statue in-the-making is set to dwarf this colossal structure. In fact, it is planned to be twice as high as the Statue of Liberty. And once it is ready, it is going to be known as the world’s largest statue. The interesting part is that it is going to happen in India.
Statue of Unity
More than a year ago, Chief Minister of Gujarat, Mr Narendra Modi put forth his grand vision of building a 182-meter tall sculpture of Sardar Vallabhbhai Patel, one of the most prominent heroes of India’s freedom struggle. This historical monument which will be erected downstream of Narmada dam, will be called the Statue of Unity. Everything hunky-dory so far, isn’t it?
Rs 2,000 crores for a statue!
When you are living in a country where a substantial population still lives in poverty, you cannot do away with the most important question: how much is the statue going to cost? The answer to that question rang the alarm bell for us. Against earlier estimates of Rs 1,000 cr, the project is now set to cost a whopping Rs 2,000 cr. Given the size of the project and the usual delays involved, it would be hardly surprising if the cost shoots up even further.
We have no objections with the idea of paying tribute to a great person. But we have strong reservations against such extravagances. As a nation that is still developing, we have several other priorities. We need greater investments into education, healthcare and infrastructure. Moreover, these investments have long term benefits for the overall well-being of the economy. On the other hand, a Statue of Unity would just remain a statue. Apart from attracting tourists and creating awareness, the statue would have very little to add to the country’s welfare.
There are no free gifts
As per the Chief Minister, this will be his gift to India and the world. But like there are no free lunches, there are no free gifts. Someone has to pay for it, right? So the next question is- who is going to pay for this statue? The project is being built on a public private partnership model. Most of the money is planned to be raised by public contribution.
But here is the distressing part. We came across a recent news report that the Gujarat government has taken commitment from about a dozen public sector undertakings (PSUs) to contribute an amount of Rs 64 cr. The list includes PSUs like Gujarat State Petroleum Corporation (GSPC), Gujarat Industrial Development Corporation, Gujarat Mineral Development Corporation, Gujarat Alkalies and Chemicals Ltd, Gujarat Narmada Valley Fertilisers Company, Gujarat State Fertilisers and Chemicals, and Gujarat Industrial Power Corporation Ltd. Let us tell you that these PSUs were made to contribute a similar amount last year as well. Each time, despite their reluctance, they have been persuaded to make a contribution.
The ultimate irony
A recent Comptroller and Auditor General (CAG) report has revealed that state PSUs have been making losses worth thousands of crores of rupees. For GSPC alone, CAG has calculated a loss of about Rs 5,000 cr. Moreover, other state PSUs have made losses of about Rs 4,216 cr over the last three years.
This shows the ironical state of the Indian economy. The economy could be facing a slowdown. The fiscal deficit could be going out of hand. Businesses could be reeling under huge losses. But the government will continue to keep its political ambitions above the interests of the economy.
Do you think India can afford to build such expensive monuments?
||Ankit Shah (Research Analyst) is the editor for Equitymaster Insider and Vivek Kaul's Inner Circle. A journalism graduate turned Research Analyst, Ankit joined Equitymaster when he was just 23 years old, right after getting his MBA from NMIMS, Mumbai. Having been an avid reader of Equitymaster's research through his college years, Ankit knew he would fit right in!
In his seven years with Equitymsater, Ankit rose quickly, leaving his mark on almost everything from: Travelling thousands of miles to find the next small cap stock, as part of the Hidden Treasure team... Designing Equitymaster's Secrets, an online value investing course based on the company's 20-year journey... Bringing global investing ideas to Indian readers through Vivek Kaul's Inner Circle... Right to launching his brand-new service, Equitymaster Insider.
Ankit is a firm believer in Charlie Munger's multidisciplinary approach on juggling between various disciplines...He is not just a research analyst, but also a voracious reader and an avid traveler...Born and brought up in Mumbai, he now prefers to keep away from the noisy megapolis as much as possible. In any given month, you could find him exploring the ancient ruins of South America, the beaches of South East Asia, or the organic cafes of Pondicherry.
More Views on News
Jun 10, 2017
Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.
Aug 22, 2017
It's surprising Warren Buffett hasn't warned investors about the expensive stock market? Let us know why.
Aug 22, 2017
Post demonetisation, a cut in bank savings deposits rates was in the offing.
Aug 22, 2017
Today, we are attacked by one preposterous thing after another, each of them even more absurd than the last.
Aug 21, 2017
Most Indians who cannot find jobs, look at becoming self-employed.
More Views on News
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 10, 2017
Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 10, 2017
Bitcoin hits an all-time high, is there more upside left?
Aug 16, 2017
Ensure your financial Independence, and pledge to start the journey towards financial freedom today!
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407