Bringing the Economy Back to High Growth Path**
Prime Minister Dr. Manmohan Singh called a meeting of Ministers and Senior officials of the Infrastructure Ministries - Power, Highways, Civil Aviation and Shipping & Ports on 6th June, this year. The purpose was to devise suitable measures to bring the economy back to high growth path. Indian economy which had been growing at 9 per cent per annum for the past eight years, grew only at 6.5 per cent in 2011-12 and in the last quarter of the financial year the growth rate was 5.3 per cent. Such turn of events, made the Government take suitable measures to reverse the down turn.
At the meeting it was decided to invest two lakh crore rupees in the current financial year and compared to past year made substantially increased allocations for several sectors of the economy. The quantum jump in investment in these sectors, with significant private sector participation through public-private partnership mode, is expected to provide a massive boost to overall manufacturing activity in allied sectors.
Indian economy needs $ 1 trillion of investment in infrastructure in the next five years. Explaining the rationale for increased investment in the core sector, the Prime Minister said that development of infrastructure would always be an integral part of any strategy for fast economic development. “In the short term, development of infrastructure will boost investment rates across the economy. In the long run, it will remove the supply constraints that affect industry and trade,” pointing out that the government alone would not be able to meet the vast investment needs and, therefore, “it is important that we involve the private sector in our efforts, through Public Private Partnerships.”
The meeting focused, in particular, on the ambitious projects and investment targets pertaining to ports, roads and airports. In the ports segment, the target for this fiscal comprising 42 projects valued at Rs. 14,500 crore is almost three times what was achieved in the last fiscal. Of these, two projects are for brand new major ports on the East Coast, one in Andhra Pradesh and the other in West Bengal — with a total investment of Rs. 20,500 crore. A statement issued by the Government said, “The total capacity which will be awarded this year will be 360 million ton per annum”. In roads, the total length to be awarded in 2012-13 will be 9,500 km, marking an increase of 18.7 per cent over the last year and an increase in investment by 73.6 per cent. Of these, a total of 4,360 km of roads will be awarded for maintenance under the OMT (Operate, Maintain, Transfer) system for the first time. In civil aviation sector, green field airports are proposed to be built in Navi Mumbai, Goa and Kannur. This apart, Delhi and Chennai will have airport hubs. Power generation capacity is also proposed to be hiked by 18,000 mega watt.
Dr. Singh described the targets as ambitious and impressive. He expressed hope that these are achievable and said that the Government is aware of the challenges involved in their implementation. Hinting at the global economy he said “The global economy is passing through difficult times with the Eurozone being the cause of concern all around. There is a flight to safety taking place globally. Then there has been the persistent problem of rising international prices of petroleum and other commodities in the last few years. Domestically, rising demand, along with supply side bottlenecks have contributed to inflationary pressures. All these factors combine to constitute a formidable economic challenge”.
It may, however, be remembered that this is not the first time the Government is taking up a major initiative to build massive infrastructure. One of the problems in implementing the projects is the delay in getting clearances and sometimes, different ministries take opposing stands on some projects. Keeping these in view the Prime Minister said, the Government will work on multi-fronts. When the Ministers present in the meeting cited inter-ministerial differences, Dr. Singh asserted “I would expect the ministries to very expeditiously resolve any inter-ministerial differences and turf battles that might arise as we go forward.”
The assertiveness shown by the Prime Minister in the Government’s drive to re-energize the economy will revive investors confidence. The Prime Minister said that, there will be a review of progress in implementation every three months. Hopefully all these factors hindering progress will be identified and removed as the projects progress and the Indian economy which the Prime Minister said is capable of achieving double digit growth, will return to high growth path soon .
*The author is a Freelance Writer.
Disclaimer: The views expressed by the author in this article are his own and do not necessarily reflect the views of INVC.