Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 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
  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Will the govt. deliver on infrastructure?
Wed, 30 Nov Pre-Open

India represents much opportunity. However, until it gets its infrastructure in order, that potential will be muted. The Indian government has finally gotten serious about upgrading the roads, electrical grid and waterways, and in that spending, investors can profit. However, India is likely to narrowly miss its target of investing US$ 500 bn in infrastructure under the five year plan ending in 2012. Provisional estimates have indicated that India would have spent around US$ 480 bn in the 11th five year plan which will be more than a doubling of investment compared to the previous plan.

The planning commission of India has set an ambitious target of spending US$ 1 trillion in the 12th five year plan. However there are many problems which need to be addressed before this target can be achieved. India ranks 51st overall in the World Economic Forum competitiveness index, but for infrastructure it fell to 86th this year. Inadequate supply of infrastructure was ranked as the most problematic factor for doing business in the country. India's infrastructure deficit acts as a brake that knocks an estimated 2% points off growth.

In order to hasten the process of infrastructure building the government needs to adopt a holistic approach to infrastructure for sustained development of the economy. Infrastructure related to health, information, water, housing, education, energy and logistics require equal focus to sustain the 8% plus growth in the long run.

Most of the infrastructure projects are held back or delayed due to land acquisition issues, lack of funding and execution delays. The Indian government has stepped up infrastructure spending in recent years, but the slow pace of reforms and a lack of long-term funding options constrain the sector's growth. The government in order to boost funding has also allowed setting up of infrastructure debt funds which are aimed at mobilizing the long term capital needed to improve the country's outdated infrastructure. The Reserve Bank of India (RBI) has also allowed foreign investors to invest in these funds provided they stay invested in them for minimum 3 years. This move by RBI will help raise funds for building infrastructure.

The 12th five-year plan focuses on removing some of these roadblocks and creating a sustainable framework for private-sector participation. Nevertheless, the fate of the infrastructure sector over the next few years will depend on the ability of India's leaders to execute these plans.

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

Read the latest Market Commentary

Equitymaster requests your view! Post a comment on "Will the govt. deliver on infrastructure?". Click here!


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Feb 23, 2018 (Close)