Last time we had discussed about infrastructure investments being targeted at more than Rs40 lakh crore during the 12th Five Year Plan. As we are aware, that’s nearly double of the targets of the 11th plan. (By the way, we cannot overlook the fact that the new targets assume a strong economic growth. And the irony is – strong economic growth needs good infrastructure.) The XIth plan has showed that private participation has gone up considerably and it is not surprising the government has factored in greater private investment in the XII the plan – to the extent of nearly 50%. We are cautiously optimistic about this vision. We are cautious because there still remain several regulatory and legal complexities that need to be addressed. And optimistic because things have improved considerably in the last five years – notwithstanding the recession. One can also take heart at the fact that banks’ exposure to infrastructure lending has grown almost four-fold during the XIth plan period.
back to the XIIth plan targets, I feel that some of the money that got stuck (and still is) during the economic slowdown in the foreign markets should be brought into our country – of course, without compromising national interests.
Kudos to the government for proposing to simplify the FDI regime in this year’s budget while at the same time maintaining the existing FDI flows. We also appreciate the clear intention of further opening up gates by introducing user-friendly regulations and guidelines for FDI. But intention is one thing, implementation is another.
Comparisons with China have become quite common these days and I too cannot resist drawing parallels in the context of FDI. In the ‘Doing Business 2010 report’ by the World Bank, China ranks number 89 in the ‘ease of doing business’ category, while India ranks 133 (right below African countries like Lesotho, Tanzania and Malawi). Of course, one cannot say that China’s rankings are ideal but a comparison is necessary given the fact that these two Asian giants are influencing the global economic landscape like never before. More importantly, our ranking also confirms that it is critical to implement substantial reforms across the board to drastically improve the country’s investment and business climate. From the infrastructure industry’s perspective, this will be more than welcome.
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