INDIA’S TROUBLES

CASTLES IN THE AIR

No planning, no investment

S N Chary

The Deccan Herald, July 7, 2012

One of the basic requirements is that of power, which has been in short supply for several years.

After the last few years of rapid increase in the GDP, the rate of growth of Indian economy has slowed down to the prospects of a little over 6.5 per cent for the present financial year. Going by the recent behaviour of the stock markets, the marketers seem to think that a change of head of the finance ministry will probably boost the sagging business and industry.

Assuming that despite the tribulations of a ‘coalition dharma,’ the Union government is able to pull off a partial reversal of GAAR and is able to manage some loosening of the retail sector for foreign investment, but these and similar policy changes are not going to push the growth engine to any significant extent. While so-called ‘policy paralysis’ is definitely not good for any economy, it is only one of the problems.

India needs infrastructure development on a massive scale. The Central government itself had indicated a requirement of one trillion US dollars for the next five years.

Economic movement is associated with the movement of products and services. Goods that are made need to reach the market. Raw materials and supplies need to get to the production facilities and in good time. Indian national highways, state highways and network of roads in the hinterland need large-scale improvements in length and quality. There was a plan for investing over 120 billion US dollars in just the highways. The really ‘trillion dollar’ question is: where will the money come from?

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