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Ready to leapfrog?

Infrastructure is India’s most happening industry. But is India leapfrogging in terms of technology usage? Asks Balaji Sreenivasan

I recently read in the press that the great Indian cow problem has been delighting investors. Between Ahmedabad and Vadodara, cattle, tend to wander onto the highway, disrupting traffic and hence commerce. So, at great expense, the government is planning to widen the road and include cow underpasses or cattle crossings (yes you read that right!), one of many such projects underway in India. Thankfully enough, cows aren’t the primary reason we are witnessing new infrastructure projects in India today!
While the Indian infrastructure industry has a great opportunity to leapfrog in terms of technology usage, it is happening at only a few organisations. Those organizations that get their act together will prosper and become world class players, the others will perish or at best remain bit players.

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COMMENT Comment on this article

This movie has played before in the western countries and while the lessons are obvious, not all players will learn the lesson to their advantage.

India’s Growth and PPP
India’s rapid growth of GDP (8.5% in 2008 and around 6.5% in 2009 despite the global recession), makes it one of the major countries which are on the fast track. The Prime Minister recently announced that India will target 10% annual growth in GDP for the next ten years. He has already committed US$ 300 billion for infrastructure projects over the next five years. Even that may turn out to be on the low side. However, without a very significant investment in building out the infrastructure, this kind of growth, or even a nominal level of growth in GDP, is impossible. And without an adequate infrastructure the economy will come to a bottleneck. China is a perfect example of this phenomenon. They are making very major investments, which dwarf what India or the western developed nations are doing, because there is no other way around to keep their rapid growth going. If India does not make the investment, it will never be able to be a competitive player in world trade and definitely second class to China. Let us face it, China looks down on India today and that relationship will be more belligerent if India does not step up.
It is evident that with the passing of the 2009 budget, the Indian government’s intense focus on infrastructure development is facilitating huge investments in the basic infrastructure. In addition core basic material companies like steel, cement, oil and gas, aluminium and coal will need to grow capacity at a rapid rate.
The Indian government has also realised that it does not have the resources to fund these investments all by itself, and has opened infrastructure projects to private capital under the PPP umbrella. This has caused private financing to fuel an infrastructure boom in India. Sleepy Indian construction contractors that a few years ago existed on occasional handouts of government contracts and road tarring binges prior to elections now have fat order books. Today India’s infrastructure investment is about 11% of GDP and expected to stay there. This is more than twice the rate of the developed western countries but not as brisk as China.

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