And the infrastructure is being ignored. . .
Possible progress:
0India set to launch infrastructure push
By James Crabtree in Mumbai and James Fontanella-Khan in New Delhi
Financial Times
December 23, 2011 1:58 pm
Manmohan Singh, India’s prime minister, is set to launch a fresh push to restart many of his nation’s most important stalled infrastructure projects.
The decision, taken at a meeting on Thursday of about a dozen big industrialists including Ratan Tata of the Tata Group and Mukesh Ambani of Reliance, follows concern over falling confidence levels in India’s slowing economy.
Deepak Parekh, chairman of HDFC, a leading housing finance organisation, who attended the meeting, said: “It was a very frank discussion. We agreed there was a need to identify key infrastructure projects, particularly in power, to see which are stuck.”
India’s government has made previous commitments to speed-up infrastructure planning, often with little success. Nonetheless analysts agree that the country’s inability to deliver big-ticket projects lies at the heart of its current slowdown.
In recent analysis Rohini Malkani, chief economist at Citigroup in India, suggested that measures to resolve power, mining, and land disputes were the most important steps Mr Singh’s government could take to keep growth levels from falling below their current level of about 7 per cent.
The development comes amid heightened concern over India’s growth, and follows a sharp decline in India’s industrial output, which dropped by about 5 per cent in October.
An adviser to Mr Singh, speaking on condition of anonymity, confirmed that the new push would seek to identify more than a dozen significant delayed or stalled projects.
Although the exact process has yet to be confirmed, the adviser said relevant government departments would be asked to work together to accelerate the projects by removing regulatory and other impediments, with the aim of making “visible progress within a few months”.
“India’s power deficit is staggering and any move towards unleashing the potential of the power sector would have a very positive impact on India’s economic growth,” said Arvind Mahajan, head of natural resources and infrastructure at KPMG India.
Projects to be examined will include road, rail, airports and ports, but will have a particular focus on power and mining. The link between the two areas, in particular where power investments are delayed because of a lack of fuel, has become a big problem in India.
Particular attention is likely to focus on India’s new generation of 4,000mw “ultra mega” power stations. The first two such stations, operated by Tata Power and Reliance Power, have been hit by delays because of problems accessing fuel, heightening financial pressure on their operators.
Mr Mahajan noted that many of India’s power projects had also been blocked as companies struggled to acquire land or regulatory approval to generate energy. “India’s manufacturing sector would be a major beneficiary if things started working in the power sector.”
However, he warned that facilitating infrastructure alone would not be sufficient to deliver growth: “India needs to find ways of boosting the production of coal, which is needed to generate the power. At the moment most of the coal is being imported, adding cost pressure to companies, while state owned companies are failing to produce the amounts that they had promised.”
Copyright The Financial Times Limited 2011.
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