Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Economy: Eyeing irrigation, infrastructure - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Aug 26, 2002

    Economy: Eyeing irrigation, infrastructure

    Among the most disturbing facts of Indian economy has been the lack of infrastructure development in the country. After fifty-five years of independence, Indian agriculture still thirsts for an irrigation system in place. On the other hand, the Indian industry grapples with the issue of infrastructure bottlenecks in electricity and transportation.

    The gross mismanagement in the power sector, the precarious financial health of SEBs and political interference in functioning of the sector is public knowledge. Since the state has been directly regulating most SEB activities, they are prone to political interference of varying degrees as suited to populist objectives. From day-to-day operational matters to tariff setting, all are susceptible to such interventions. Electric power in India has become more of a free ride for a few than a remunerative service by the state. The matter assumes further significance given the fact that several companies with heavy power consumption are now looking to relocate their manufacturing facilities in China, citing substantial arbitrage in power costs. Others, probably have captive units.

    Certain sections of consumers like farmers continue to receive huge subsidies that erode the financial health of SEBs. Domestic and commercial consumers, in connivance with officials, indulge in power theft, further sucking the SEB dry. Subsidies were introduced to reduce the burden on the agricultural sector. At the same time, ensure consumer price of essential items do not escalate. While intentions, originally, might have been honest, the system has degenerated to meet vested interests. The SEB accumulated losses stand at nearly Rs 260 bn, around 1.2% of India’s GDP.

    The situation in the power sector, considering India’s requirement, has reached alarming levels now. Realizing this, power sector reforms are gaining importance despite tremendous political resistance. The Accelerated Power Development program (APDP) inspires some confidence. Under the APDP, the center plans to provide financial assistance to states for undertaking renovation and modernization (R&M) programs of power stations and also for strengthening the transmission and distribution network of the country. The center is willing to write off losses of the SEB in lieu of an undertaking by them that losses/ thefts would be controlled.

    The APDP has met with some success in terms of number of states signing up for the program. However, the actual implementation on the ground level needs to be seen going forward. Since there has been a change at helm in the power ministry recently, the pace of reforms could hit a roadblock.

    Off late, the country is making significant progress in the area of transportation. The Golden Quadrilateral and the North-South, East-West corridor project are expected to create an impressive road infrastructure in the country. The status and progress on this front is pretty encouraging. The government has promised the completion of the Golden Quadrilateral project by end 2003. Considering the progress so far and other factors such as the general election in 2004, the government is likely to achieve its stated target.

    According to one estimate, the country’s GDP could grow by an incremental 2% provided power and road infrastructure are in place. It is high time the country wakes up to the urgency of these reforms to break into the super growth rates of 8% plus.



    Equitymaster requests your view! Post a comment on "Economy: Eyeing irrigation, infrastructure ". Click here!


    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    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.

    Why NOW Is the WORST Time for Index Investing (The 5 Minute Wrapup)

    Aug 18, 2017

    Buying the index now will hardly help make money in stocks even in ten years.

    Trump Takes a Beating (Vivek Kaul's Diary)

    Aug 18, 2017

    Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.

    How To Read Your Mutual Fund Account Statement Correctly (Outside View)

    Aug 17, 2017

    PersonalFN simplifies the mutual fund account statement for you.

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process) (The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    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: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 (Close)