X

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.
Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
Investing in India? Get Equitymaster Research  
Infra to take India from 75th to 73rd! 
(Wed, 24 Nov Pre-Open) 
 
The upcoming 12th 5-year plan period is expected to be a crucial landmark phase in India's growth. It will take the Ministry of Finance, Planning Commission and a to-be-formed special panel to prioritise infrastructure spending during this period. After all, the 12th plan entails doubling the outlay on infrastructure over the 11th plan. At US$ 1 trillion (Rs 4.1 trillion) the spending will move closer to 6% of India's GDP. Closest competitor China already spends 9% of its GDP on building roads and bridges. Nevertheless, a good and ambitious target for an infrastructure starved economy aiming to grow in double digits.

Given these facts it may only seem logical that India could be set to move up the ranks in global infrastructure hierarchy. But that does not seem to be case. The Economist's ranking of global economies pegged India at 75th of 82 nations in terms of infrastructure in 2010. Despite all the hype about India's focus on nation building, this ranking is expected to only marginally improve to 73rd by 2014! And the reasons that Economist has cited for the same can be hardly denied.

Calling it a 'badly mixed concrete' Economist points out to corruption, project delays and red tape as the key road blocks. The Commonwealth Games and telecom scams have to be partly thanked for such impression. Project delays have reasons varying from land acquisition to environmental clearances. Not to mention the cumbersome politics and decision making. But that said India does have the resources to make things work for the better. Urgency in this direction is what seems to be lacking.

Producing foodcrops and leaving them to rot. Producing thousands of unemployable engineering graduates. Building roads and bridges that are ready to cave in. These are some facts that would lead not just global publishers like The Economist but also Indians to distrust India's growth potential. Hence the pitiable ranking does not come as a surprise to us. What does come as a surprise is the reluctance of policymakers to acknowledge the shortcomings.

Road congestions are estimated to cost the economy Rs 265 bn a year. Nearly 6% of technically qualified graduates in India were unemployed in 2009. A McKinsey report estimatedthat only 25% of Indian engineering graduates were equipped to work with multinationals. Indian clogged ports have turnover time 10 times higher than that at their south-east Asian counterparts. But none of these are issues that cannot be resolved.

The Indian capital already has a new airport ready to serve millions of travelers in coming years. Another one near Mumbai has just got the clearance. The highway project, albeit slow, will give India one of the largest road networks in the world. Power projects and telecom networks could provide the last mile infrastructure coverage. Thus, it is not as if the big budgets are all going into the 'badly mixed concrete'. But surely, it will need a little more than good policy making and prioritizing to ensure effective delivery. And then it will not matter what ranking Indian infrastructure brings it to.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives  RSS
Read the latest Market Commentary
 
BSE-30
 

 
Go
 

Equitymaster requests your view! Post a comment on "Infra to take India from 75th to 73rd!". Click here!

  
 

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

S&P BSE SENSEX


Aug 22, 2017 03:36 PM

MARKET STATS