Be dabangg in 2013

Will 2013 see renewed acceleration in projects becoming available for bidding? Will projects stuck in the web of permission get the green signal? Will the RBI finally reduce interest rates? Will the UPA government continue its drive towards policy reform? Let us first look at the reasons why 2013 can be a better year than 2012. We have P Chidambaram in the finance ministry, quite determined to reduce fiscal deficit and thereby create grounds for the RBI to reduce rates; a big plus in the offing. Foreign institutional investors have pumped in $ 23 billion in 2012, with the last $ 3.5 billion coming in December, indicating that the confidence in the government has been restored to some extent with the retail FDI booster. However, the fiscal cliff is a worrying issue as we step into 2013 with most global markets worried about the big squeeze in expenses that could cause a major liquidity crunch across the globe. Yet there is a good chance that it may get resolved. The public sector has grown in terms of market capitalisation by Rs 200,000 crore over the previous year and nine of the PSUs are sitting on cash piles of Rs 1,80,000 crore alone. The FM has directed them to 'use it or lose it', meaning 'invest' or 'pay dividend'. The formation of the Cabinet Committee on Investment (CCI), committed to resolving issues and thereby expediting projects of over Rs 1,000 crore, is a new move aimed to step up economic activity too. The Infrastructure Development Fund (IDF) is a great product to attract international investors and would be an effective mechanism for fulfilling our finance requirements. Between 2004-05 and 2009-10, considered to be periods of growth, there was a reduction of 14 million jobs in agriculture and 5 million in manufacturing. The good news is that most people displaced found jobs in construction, where employment went up by 18 million. The bad news is that if employment in these sectors has plunged during a growth phase, how will we provide a secure future to people in these sectors when times are challenging? The construction sector was able to absorb a larger workforce during this phase but, now with the current slackness in project execution and the project pipeline, the prospects have dimmed, leaving our social arena prone to disturbances. The CCI is yet another name for creating new assurance for infrastructure investors. However, in the past, similar committees chaired by the PM have not been able to resolve any issues. Even the PSU 'use it or lose it' mantra will not work as the PSU chiefs themselves have not been able get clearances for many of their key projects. Thousands of crores are stuck in legal disputes with more cropping up day by day. In summary, in my opinion, 2013 may be a tad better than 2012 simply because the effort to recover lost ground has begun. With a bleak global scenario, there will be unexpected pressure at all, times that may dampen the spirits, but our economic ills are inborn and need home remedies. Here's a list of action points if the government can be a wee bit resolute and Dabangg! Set up fast-track dispute resolution cells with time deadlines for resolving cases involving infra projects. Projects ready for commissioning but stuck for trivialities need special attention as resources are invested but not put to use. The Environment Ministry to put up its guidelines on its website and indicate deficiencies in project proposals within a time deadline. Introduce GST. CCI to have monthly meetings and to put up all decisions of the meeting monthly on its website. States should create a similar committee for state projects over a certain value with similar time deadlines for resolution. Accord priority to IDF and expedite its implementation.