Wake up; it’s time to face reality.
Economic growth will at best touch 5 per cent. Government spending will be tepid and only a sharp decline in oil price could give the government more elbow room. The infrastructure spending of Rs.100 trillion in the next five years or the $5 trillion economy in the next five years will all seem increasingly like a Pied Piper’s dream unless the government takes the job of managing economics and finance, seriously and stops meddling with issues that are compounding the obstacles to economic recovery.
Policy interventions can serve to change the sentiment to positive only briefly. What makes the real difference is ‘reform’. The moment the Land Acquisition Act, provided for the government to purchase land from the rightful owners for the purpose of infrastructure projects at a price four times the ready reckoner rates, our fate was sealed. Land, our principal resource, has been guzzling our resources and the real beneficiaries are ‘behind the scenes’. It is time that policymakers take a relook at the act. Land pooling and experiments on making landowners stakeholders in infra projects have been successfully implemented in Navi Mumbai, Pune and Andhra Pradesh. There are lessons and solutions. Considering the very high cost of land, such out-of-the-box solutions are worth exploring further.
Fundraising for critical infrastructure projects is another issue. Informing the nation about the Central Government’s intent to spend Rs.100 trillion on infrastructure over the next five years without how this is going to happen has only made the vital private sector ‘wait and watch’. At the same time, the divestment of public-sector units (PSUs) needs to be accelerated to bring about accountability and unlock value in several such assets. Fair offloading of such large shareholdings will see a surge interest from both domestic and foreign investors.
India gets about 29 million international tourists a year and earns Rs.1.94 trillion from tourism fees, or US$28 billion. The spending of tourists contributing to the economy is an additional benefit. Given the same, our recent spate of politically charged actions have done little to encourage tourists to include India in their itinerary. Even Goa is suffering a 50 per cent decline in tourists in its peak December month! If we nurture tourism well, it will not just add phenomenal international spending into our economy gasping for growth but will also spur infrastructure investment where private investment could be initiated in a big way.
Commercial mining is the silver lining for 2020 as nearly 200 coal blocks are up for auctioning, constituting 400 million tonne of coal at peak capacity over the next five years. The coal ministry is expected to issue bidding rules for commercial coal mine auctions and hold stakeholder consultations in January.
Although Union Minister Nitin Gadkari enthused the EXCON gathering by indicating an expected spending of Rs.2 trillion in the coming year followed by Rs.3 trillion in the following year and Rs.17 trillion over the next five years on the roads sector alone, it is not clear how the government will have access to these funds. To my mind, our only hope is FDI, which is slated to come from Saudi Arabia and Canada currently. However, our PM can use his charisma to secure funds from Japan, USA, Korea and Germany.
Domestic institutional investors (DIIs) and foreign portfolio investors (FPI) together invested Rs.1.43 trillion (around $20 billion) in 2019, the highest in any single year over the past fifteen years. They probably know something we don’t. All eyes on the Budget.
Best wishes for a ‘trouble-mukta’ year ahead!