The global gloom turned into panic as the Chinese stock markets tumbled 8.5 per cent on August 24, paving way for speculation that China has lost its stem and is heading for a major slowdown. Its manufacturing index is at a 77-month low and its auto, cement and steel industry growth has turned negative. The Indian stock markets too, caught the cold, as the Chinese markets sneezed. Luckily, it turned out to be a minor ailment and the markets began recovering their losses. The progress of the monsoon, movement of the rupee against the dollar, crude oil prices and auto sales numbers will be key factors determining the trend on the bourses.
Realising that private capital is shy considering a gloomy economic picture, the government has taken upon itself to provide the triggers. It has already spent nearly a quarter of plan funds in the first three months of the fiscal year, the highest pace of spending since 2008-09. The Finance Ministry has already directed ministries and departments to go full speed ahead on budgeted expenditure in line with government thinking. The minister said capital expenditure increased by about 17.8 per cent in the first quarter as the government looks to target 8 per cent growth this year. Public spending has indeed outstripped private investment.
India needs to seize the moment to emerge as a manufacturing hub as China slows. The current outlook just in, indicates a marginally positive report: GDP growth for the first quarter of the current financial year grew at 7 per cent versus 6.7 per cent in the previous year. Manufacturing growth slowed down to 7.2 per cent versus 8.4 per cent. Agricultural growth also slowed down to 1.9 per cent versus 2.6 per cent. However, foreign direct investments are up 30 per cent from a year earlier. Collections of indirect taxes indicate that there are green shoots of recovery. In the words of the finance minister, this has created an ¨enabling situation, wherein we are in a position to spend more. The government will spend Rs 70,000 crore, raised from additional revenue mobilisation measures, towards infrastructure.¨ Public spending is yet to reach the markets through tenders that get converted into orders for building materials and equipment. Mr FM, we are waiting for the green shoots to grow beyond the roots! What´s more, the Ministry of Urban Development recently released the list of 98 nominated cities, with two cities yet to apply. Over the next three years, these 100 cities will take part in a competition to receive funds from the Centre on the path to becoming ´smart cities´. The announcement of these 100 cities – covering 24 capitals, 64 small and medium category cities and at least one city in every state and union territory – has been rolled out under a time-bound plan. Although the impact of this mission will be felt in 2016-17, it is addressing a compelling need to fortify our cities, which are crumbling under the pressure of migration. The return on this investment is high as cities generate 60 per cent of the GDP and take only 0.6 per cent of the GDP. This will lead to opportunities in water management, waste management, mobility management, power-efficient equipment, solar power generation systems, security management, HVAC management, and so on.
The 10th CW Architect & Builder (CWAB) awards were celebrated on August 21, in pomp and splendour with India´s best architects and builders celebrating their glory by walking the ramp and striking a victory pose. A room full of winners has an energy that can send spirits soaring and this is precisely what is needed for our infrastructure industry, which is spending more time and effort with bankers than on sites building assets. In order to get the infrastructure story back on track, while we may have new investors like Canadian realty investor Brookfield, which snapped up Gammon Infra´s road assets, arbitration and dispute resolution should be made into a fast-track programme to secure a better future.