Planning Commission Deputy Chairman Montek Singh Ahluwalia exuded confidence that India's growth rate would soon return to its peak of 9 per cent on the eve of 2011. Given the tardiness in the execution process of major infrastructure projects, where power and roads which are supposed to spearhead the infrastructure revolution, are lagging behind, investments will fall short by nearly $ 100 billion during the Eleventh Five Year Plan. We had witnessed a 9 per cent growth for four consecutive years before the global financial crisis in 2008, after which it slid to 6.7 per cent and 7.4 per cent in the past two years. The challenges that continue to thwart our growth are land acquisition, environment regulation, (despite Jairam Ramesh's assurances of a 95 per cent clearance rate) corruption, and a weakening of the ruling government (and therefore their corresponding increasing inability to make radical reforms) among others.
However, the good news is that we are not starved of funds. FII inflows clocked $ 38 billion or Rs 1,70,000 crore till November. IPOs for 59 companies raised over 36,000 crore. Coal India created a record with an IPO which saw it raise record applications for its appetite of Rs 15,000 crore. Our foreign exchange reserves stood at $ 294.6 billion by mid-December.
Our power targets are way off the mark with only around 25,000 MW capacity achieved against a target of 78,000 MW targeted for the Eleventh Plan upto 2012 and an expected capacity achievement of just over 60,000 MW. One of the main reasons cited for delays in all projects has been land acquisition. This bill, although given a clearance by the government, is being opposed by their alliance partner headed by Mamta Banerjee. The bill was to be tabled in the winter session of the Parliament and has been lost under the onslaught of the 2G scam. Our main growth obstacle is being held hostage by opposition parties, over the misdeeds of a Minister which has caused the nation a loss of over Rs 1,70,000 crore ( the equivalent of our total record FII investment in 2010!). But the holding up of the working of the parliament (which too has caused the nation Rs 140 crore) will now lead to a delay in passing this bill which is the main cause of the deceleration in our growth.
Increasingly the government's focus is narrowing to protecting its turf in the political equation, sometimes at the cost of the reform process. The private sector is the real hope for our future and it is making significant strides in this direction. Containing corruption in tendering projects should be a national priority as we are risking the quality of assets which are to sustain us into the future. This is easier said than done but transparency should not be compromised upon. It is mandatory. The year 2011 will be driven primarily by private sector's ability to surmount obstacles and challenges posed by the political aspirations of marginalised parties. Let us take it head on.