Indian Growth Story Needs An Energetic Push

As we enter the last year of the 11th Five Year plan (2007-12) of the Indian economy, two tasks are primarily undertaken. One, assessment of the performance during the Five Year plan and setting up goals for the next Five Year plan.

A release by the Planning Commission reveals that India is expected to end the 11th plan period with about 8.2% GDP growth. This is below the target growth of 9%. However,

Infrastructure Gets A Firm Push

Infrastructure development in India faces both financing as well as non-financing constraints. In the Economic Survey for 2010-11, the government has highlighted the need to address the following non-financing constraints that are leading to time and cost over-runs:

India’s Key Economic Indicators

A brilliant summation of economic indicators: http://eaindustry.nic.in/Key_Economic_Indicators/Key_Economic_Indicators.pdf

The indicators included are:

• Agricultural – Foodgrain Production
• Employment & Unemployment Indicators
• Performance of Core industries
• Performance of Index of Industrial Production
• Wholesale price index and inflation
• Food and non-food credit of scheduled commercial banks
• Sectoral deployment of bank credit
• World commodity prices

Growing infrastructure deficit requires innovative solutions

The Economic Survey 2010-11 has called for innovative solutions to address the growing infrastructure deficit that is hurting economic growth. It said financing infrastructure would be a big challenge: India needs to invest $1,025 billion in the Twelfth Plan (2012-17) and half of this should come from the private sector.

Rationalisation of cement duty structure

“As a measure of relief to cement industry, I propose to replace the existing excise duty rates with composite rates having an ad valorem and specific component with some rationalisation. The basic customs duty on two critical raw materials of this industry viz petcoke and gypsum is proposed to be reduced to 2.5 %,” the Finance Minister said in his speech on the Union Budget 2011-12.

Highlights of Union Budget 2011-12

Basic Thrust

Power capacity addition: Targets set, revised and re-revised

Power capacity addition has been a laggard and earlier also targets have been set and revised downwards. This is what I was hinting at in my last post on Ports in India when I said that “Although pace of infrastructure development in India has been slow, the pace of infrastructure target announcement has not restrained.”

But, the government seemed very bullish on its Power Sector expansion for the 11th plan period (2007-12).

Ports in India: Need a better regulatory framework

Although pace of infrastructure development in India has been slow, the pace of infrastructure target announcement has not restrained. In January 2010, the Shipping Ministry announced ‘Maritime Agenda for 2011-20.’

While the agenda has 60 points, there still remains ambiguity on the amount and timelines in certain cases. Also, there are certain structural issues causing hurdles in rapid development of ports in India.

Singapore Port has surpassed the Indian ports by leaps and bounds. A quick comparison of Indian ports vis-a-vis the port in Singapore.

Definition of Infrastructure

While we constantly discuss progress of or issues with infrastructure development in India, there seems to be ambiguity over what all is included as a part of infrastructure.

Secretariat for Infrastructure at the Planning Commission has compiled definitions from various reports of different agencies. Read

Better fuel access to power projects… provided…

Delays in acquiring land has been one of the main roadblocks for Indian infrastructure development. Hence, while fuel was allocated to power projects in advance, delay in land acquisition led to lower use of allocated resources.

Fuel for future thermal power projects — both coal and gas — will be allocated under a new score-card system.