Desk

Here’s why we need 20 L&Ts

November 2019

While several scoff at the idea of a target of $ 5 trillion economy, I read between the lines. For the first time, the theme of our country’s leadership has changed since 2014.

Not only do I see it in the statement that the aspiration is to build a $ 5 trillion economy in five years but also in the fact that ‘India will invest Rs 100 trillion in infrastructure in the next five years’. A National Infrastructure Pipeline for each of the years from 2019-20 to 2024-25 is to be readied by 31 October 2019. Recently another indication emerged that most missed when our PM Narendra Modi met the Chinese Premier and mentioned that this time his mandate was towards an economic agenda.

Intellectuals are busy pooh-poohing the Government’s failure at recognizing the glaring economic challenges staring India in its face, while it continues its social welfarist agenda. They do not even acknowledge the extraordinary tax reform introduced recently by the Finance Minister as it does not support their conspiracy theories. I believe the failure of the current regime in admitting its demonetization debacle has blurred the balance in the vision of many. But I am not judging the fairness of the criticism meted out nor am I baiting anyone for a debate on this issue. I am trying to read between lines.

Without doubt, our economy is in the doldrums and we don’t need Nobel Laureate Abhijit Banerjee to tell us this. (Incidentally, his book Poor Economics is a must read.) Our project pipeline has slowed so severely that we would need all the power of Mangalyaan to bring the project portfolio up to speed.

One positive change has been India’s recent improvement in the ‘Ease of Doing Business’ rankings, where we have moved up to to 63rd place. Given that we were at 142nd place in 2014, this jump of 79 places is a significant improvement. DIPAM has a new secretary and the Government intends to stand by the divestment process, which is being readied for a real sale this time unlike the intergovernmental transfers of shareholdings in the past. At the India Construction Festival organised by FIRST Construction Council, NHAI Chairman NN Sinha stood for a government that is ready to listen and responsive to changing realities. He was understated and yet very vocal about the changes he was ready to make. He was also appreciative of the challenges of the industry. Given his reactions, one could tell that NHAI will reform sooner than later to meet the aspirations set for this body, propelling the road sector back to a higher gradient.

India needs two dozen companies of the size of L&T if the Government actually spends Rs 100 trillion in the next five years as the total turnover of all of them is only Rs 2.7 trillion. In the past 10 years, the Government spent Rs 7 trillion. If this figure goes up three times to Rs 20 trillion per year, we need capacity of the likes of those we evaluate at the Construction World Global Awards, when we felicitate the fastest growing construction companies. In the large category, we have five major players above the threshold of a Rs 7,500-crore turnover: L&T, Tata Projects, Dilip Buildcon, AFCONS and NCC. The medium category is within the band of Rs 2,000 crore and Rs 7,500 crore. Over the past couple of years, we have lost several erstwhile shining stars to either losses, CDRs or NCLT. Yet, the industry has been able to deliver a topline growth of 22 per cent and turn around its abysmal aggregate losses into black.

That said, the returns are still pathetic and we must laud the efforts of the construction industry to continue to plod against all odds. Let’s raise a toast to the winners felicitated at India Construction Festival in this issue!