Back to the circus

01 Oct 2012 Editorial Team

Sometimes when wisdom for arriving at a solution is available aplenty, the only things missing are the willingness and ability to act. On Thursday, September 13, the Congress Government finally decided to act. It called the bluff of its allies and went on to save its dignity and the country’s fiscal situation. The next day, it relaxed its norms on FDI in aviation and retail. Since then, the Sensex has been on its stilts and scorching ahead to 19,000; and confidence is finding its way back in Mumbai, India’s financial capital.

Truly speaking, we haven’t even begun. The diesel price hike was a tough call and was the one that breached a sacred wall. FDI in retail is cosmetic for now and will see some impact 18 months from now. But it will get India back into the foreign investors’ circuit. The FM has prepared the ground for the RBI to relax interest rates by demonstrating action on the fiscal front. Once interest rates soften and consumer confidence rises, the index will show some spike and pave the way for revitalising growth.

The power industry has received a pleasant surge in the form of a financial restructuring package designed for State Electricity Boards. This is aimed to help revive their ability to invest in equipment and make fresh efforts to reduce the transmission and distribution losses that have reached gargantuan proportions at Rs 3 trillion, while their banks have a questionable exposure of a staggering Rs 2 trillion. This is a great shot in the arm in the short to medium term to resuscitate power, which caused a major embarrassment for India on Black Tuesday in July as the lives of 600 million were paralysed when grids collapsed for several hours.

Now the Government is likely to train its guns on coal and other fuel-related issues that have brought economic growth to a grinding halt. Next is the primordial resource: land. Land acquisition has been riddled with problems affecting industrial growth. More than half the projects abandoned or shelved by promoters in the past two years were hampered because of their inability to acquire land according to the CMIE. Projects worth Rs 1.8 trillion were shelved during April-August 2012 on top of projects worth Rs 4.5 trillion that were shelved in 2011-12. Renamed “The Right to Fair Compensation, Resettlement, Rehabilitation and Transparency in Land Acquisition”, the Bill has been pending for long, and now has a group of ministers chaired by Sharad Pawar giving it the final touches.

Meanwhile, corporate India has tightened its belt with companies trying to sell off assets bleeding their balance sheets. This consolidation is possible with a mutual win-win for all with an improving foreign investment sentiment. FDI in retail helps in this aspect most as it manages to grab maximum media attention globally and lets everyone know that India is open for business. Fiscal 2011-12 is likely to turn out to be a year of record completion of investment projects, as per the CMIE. As of mid-May, Rs 3.8 trillion worth of projects were commissioned during the year. Projects worth Rs 9.3 trillion are scheduled to get completed this fiscal, and projects worth Rs 9.6 trillion next fiscal. The momentum on the existing pipeline of projects will render the construction industry the required acceleration.

It will undoubtedly take time for this momentum to build up but as long as we are headed in the right direction, we can catch up on lost ground. So even if the PM and FM do not pull any rabbits out of their hats, we have enough of a circus going on! While we are on the subject, read about our India Construction Festival this issue. And keep your eyes peeled for NDTV Profit’s telecast of the 10th CONSTRUCTION WORLD Global Awards, which were held on September 12 in Delhi.

Send us your feedback on Editor@ASAPPmedia.com. Log on to www.IndiaConstructionFestival.com for more details.

Sometimes when wisdom for arriving at a solution is available aplenty, the only things missing are the willingness and ability to act. On Thursday, September 13, the Congress Government finally decided to act. It called the bluff of its allies and went on to save its dignity and the country’s fiscal situation. The next day, it relaxed its norms on FDI in aviation and retail. Since then, the Sensex has been on its stilts and scorching ahead to 19,000; and confidence is finding its way back in Mumbai, India’s financial capital.Truly speaking, we haven’t even begun. The diesel price hike was a tough call and was the one that breached a sacred wall. FDI in retail is cosmetic for now and will see some impact 18 months from now. But it will get India back into the foreign investors’ circuit. The FM has prepared the ground for the RBI to relax interest rates by demonstrating action on the fiscal front. Once interest rates soften and consumer confidence rises, the index will show some spike and pave the way for revitalising growth.The power industry has received a pleasant surge in the form of a financial restructuring package designed for State Electricity Boards. This is aimed to help revive their ability to invest in equipment and make fresh efforts to reduce the transmission and distribution losses that have reached gargantuan proportions at Rs 3 trillion, while their banks have a questionable exposure of a staggering Rs 2 trillion. This is a great shot in the arm in the short to medium term to resuscitate power, which caused a major embarrassment for India on Black Tuesday in July as the lives of 600 million were paralysed when grids collapsed for several hours.Now the Government is likely to train its guns on coal and other fuel-related issues that have brought economic growth to a grinding halt. Next is the primordial resource: land. Land acquisition has been riddled with problems affecting industrial growth. More than half the projects abandoned or shelved by promoters in the past two years were hampered because of their inability to acquire land according to the CMIE. Projects worth Rs 1.8 trillion were shelved during April-August 2012 on top of projects worth Rs 4.5 trillion that were shelved in 2011-12. Renamed “The Right to Fair Compensation, Resettlement, Rehabilitation and Transparency in Land Acquisition”, the Bill has been pending for long, and now has a group of ministers chaired by Sharad Pawar giving it the final touches.Meanwhile, corporate India has tightened its belt with companies trying to sell off assets bleeding their balance sheets. This consolidation is possible with a mutual win-win for all with an improving foreign investment sentiment. FDI in retail helps in this aspect most as it manages to grab maximum media attention globally and lets everyone know that India is open for business. Fiscal 2011-12 is likely to turn out to be a year of record completion of investment projects, as per the CMIE. As of mid-May, Rs 3.8 trillion worth of projects were commissioned during the year. Projects worth Rs 9.3 trillion are scheduled to get completed this fiscal, and projects worth Rs 9.6 trillion next fiscal. The momentum on the existing pipeline of projects will render the construction industry the required acceleration.It will undoubtedly take time for this momentum to build up but as long as we are headed in the right direction, we can catch up on lost ground. So even if the PM and FM do not pull any rabbits out of their hats, we have enough of a circus going on! While we are on the subject, read about our India Construction Festival this issue. And keep your eyes peeled for NDTV Profit’s telecast of the 10th CONSTRUCTION WORLD Global Awards, which were held on September 12 in Delhi.Send us your feedback on Editor@ASAPPmedia.com. Log on to www.IndiaConstructionFestival.com for more details.