#NewAgeIndia
Real Estate

#NewAgeIndia

One of the highlights of Barrack Obama´s recently concluded Indian visit was his recognition of the focus of Prime Minister Modi in upping the ´ease-of-doing-business´ quotient in India. The PM has not only made this his mission but made an international commitment to improving bureaucracy. India currently ranks 142nd out of 189 countries in ease of doing business and, further, 184th in ´dealing with construction permits´. This means only five countries are worse than India in the red tape associated with getting construction permits. It also means Indian construction companies are dealing with the world´s toughest market in obtaining construction permits. India further ranks 186th in ´enforcing construction contracts´. With such a poor business environment, it is no wonder that our developers have experienced a harrowing time and are now laden with crushing debt while they struggle with permissions or are awaiting arbitration awards. The Jaiprakash Gaur Group has been on an asset fire sale with a view to paring debt. Its debt is to the tune of Rs 72,599 crore and its debt to equity ratio stands at 5.16. GMR Infra, meanwhile, has loans worth Rs 45,041 crore with a debt-to-equity ratio of 5.87. Gammon India and Hindustan Construction Company have higher ratios of 19.26 and 15.06, respectively. It is not infrastructure developers alone that need to ease their financial pressure; banks too are saddled with a massive Rs 8.5 lakh crore in stressed assets, which forms about 14 per cent of their total loan book, making it difficult for them to take any initiative in providing any relief.

There are only two ways out: Either FDI comes pouring in or the economy takes off. Both will take time. The PM has put in the greatest efforts in first visiting all the countries from which we can hope for a high FDI inflow and then holding a huge Vibrant Gujarat show and getting the biggest leaders including the US President to India. Having brought the spotlight onto India and pushing our readiness for business, he has set the stage for FDI to flow in. Kick-starting the economy, however, will need public spending or a great incentive for entrepreneurs to pull out all stops for investing in their enterprises. For example, the PM´s ´Make in India´ policy is likely to offer a huge bag of goodies to encourage manufacture of electronics. India imports 65 per cent of its current demand for electronic products, most of it from China. So dire is the situation that the country´s electronics import bill may well surpass its oil import expenses by 2020. While the demand for electronics hardware in India is projected to increase to $400 billion by 2020, estimated domestic production could rise only to $104 billion, creating a gap of $296 billion that has to be met through imports. India imported $31 billion worth of electronic items in 2013-14 of which $10.9 billion was accounted for by cell phones alone.

The economy is showing signs of a consistent improvement as evidenced from the HSBC PM indices. Rail freight by volume has improved by 5 per cent over the previous year. On January 15, RBI cut the policy rate by 25 bps to 7.75 per cent, the first cut since May 2013, before the monetary policy meeting scheduled on February 3. According to a report, the medium and heavy commercial vehicle segment, which signals improvement in the economy, is scheduled to see a volume growth of 13-17 per cent next fiscal and accelerate the CV sector, while LCVs will see only a marginal growth of up to 3 per cent. The forthcoming Budget is likely to be the PM´s big opportunity to propel the economy forward on the back of concrete evidence of a revival. The vision of India is changing and all Indians need to reaffirm their commitment to supporting the rebuilding of #NewAgeIndia.

Also, ASAPP Media (the publisher of Construction World) is launching the 2nd SM@RT CITIES SUMMIT on February 17-18 at India Habitat Centre in Delhi. Register at www.SmartCitiesSummit.in See you @SmartCitiesIn or on www.Facebook.com/SmartCitiesIndia!

One of the highlights of Barrack Obama´s recently concluded Indian visit was his recognition of the focus of Prime Minister Modi in upping the ´ease-of-doing-business´ quotient in India. The PM has not only made this his mission but made an international commitment to improving bureaucracy. India currently ranks 142nd out of 189 countries in ease of doing business and, further, 184th in ´dealing with construction permits´. This means only five countries are worse than India in the red tape associated with getting construction permits. It also means Indian construction companies are dealing with the world´s toughest market in obtaining construction permits. India further ranks 186th in ´enforcing construction contracts´. With such a poor business environment, it is no wonder that our developers have experienced a harrowing time and are now laden with crushing debt while they struggle with permissions or are awaiting arbitration awards. The Jaiprakash Gaur Group has been on an asset fire sale with a view to paring debt. Its debt is to the tune of Rs 72,599 crore and its debt to equity ratio stands at 5.16. GMR Infra, meanwhile, has loans worth Rs 45,041 crore with a debt-to-equity ratio of 5.87. Gammon India and Hindustan Construction Company have higher ratios of 19.26 and 15.06, respectively. It is not infrastructure developers alone that need to ease their financial pressure; banks too are saddled with a massive Rs 8.5 lakh crore in stressed assets, which forms about 14 per cent of their total loan book, making it difficult for them to take any initiative in providing any relief. There are only two ways out: Either FDI comes pouring in or the economy takes off. Both will take time. The PM has put in the greatest efforts in first visiting all the countries from which we can hope for a high FDI inflow and then holding a huge Vibrant Gujarat show and getting the biggest leaders including the US President to India. Having brought the spotlight onto India and pushing our readiness for business, he has set the stage for FDI to flow in. Kick-starting the economy, however, will need public spending or a great incentive for entrepreneurs to pull out all stops for investing in their enterprises. For example, the PM´s ´Make in India´ policy is likely to offer a huge bag of goodies to encourage manufacture of electronics. India imports 65 per cent of its current demand for electronic products, most of it from China. So dire is the situation that the country´s electronics import bill may well surpass its oil import expenses by 2020. While the demand for electronics hardware in India is projected to increase to $400 billion by 2020, estimated domestic production could rise only to $104 billion, creating a gap of $296 billion that has to be met through imports. India imported $31 billion worth of electronic items in 2013-14 of which $10.9 billion was accounted for by cell phones alone. The economy is showing signs of a consistent improvement as evidenced from the HSBC PM indices. Rail freight by volume has improved by 5 per cent over the previous year. On January 15, RBI cut the policy rate by 25 bps to 7.75 per cent, the first cut since May 2013, before the monetary policy meeting scheduled on February 3. According to a report, the medium and heavy commercial vehicle segment, which signals improvement in the economy, is scheduled to see a volume growth of 13-17 per cent next fiscal and accelerate the CV sector, while LCVs will see only a marginal growth of up to 3 per cent. The forthcoming Budget is likely to be the PM´s big opportunity to propel the economy forward on the back of concrete evidence of a revival. The vision of India is changing and all Indians need to reaffirm their commitment to supporting the rebuilding of #NewAgeIndia. Also, ASAPP Media (the publisher of Construction World) is launching the 2nd SM@RT CITIES SUMMIT on February 17-18 at India Habitat Centre in Delhi. Register at www.SmartCitiesSummit.in See you @SmartCitiesIn or on www.Facebook.com/SmartCitiesIndia!

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