On a brighter note……

Couple of days ago I was having a discussion with one of my client and we were lamenting as to how the previous central government gave lot of thrust to developing infrastructure, especially roads whereas the present government is not prioritizing infrastructure. In fact, the last government laid more roads and highways  in 5 years than what was totally laid in the first 50 years of Indian independence. Their focus on infrastructure and sowing right seeds paid off when current government assumed power resulting in 9% GDP growth every year. After reading a Bloomberg report yesterday, now I’m convinced the good work which began earlier by the past government is being continued by current government too. As per Bloomberg, the 100 kilometers (62 miles) of rural roads that India is adding each day may save Asia’s third-largest economy from the worst of a global recession. Please read the full article below.

 

“After national highways, the Indian government’s effort to provide all weather road connectivity in rural areas under the Pradhan Mantri Gramin Sadak Yojana (PMGSY) is beginning to bear fruit. It is finally triggering off meaningful socio-economic transformation and rapidly opening up new routes for growth. Quite literally! As per the government body, rural roads are the biggest contributors to poverty alleviation and an investment of Rs 10 m in roads carries the ability to lift 1,650 people above the poverty line. Also, rural connectivity has the potential to add to domestic consumption, which makes up 55% of India’s economy, compared to 37% in China.

 

As per Bloomberg, the 100 kilometers (62 miles) of rural roads that India is adding each day may save Asia’s third-largest economy from the worst of a global recession. New roads built so far under the US$ 27 bn program have brought urban markets within reach of 60 m village dwellers over the past five years, letting them earn money selling fruits, vegetables and milk that would have spoiled otherwise. These villagers are now spending their cash just as the world economy falters. Particularly because they not just have the roads for commuting to the markets but also extra income during the non harvest season due to the employment generation schemes.

 

Spending on the road project by the PMGSY was about 5% of GDP in 2007. A vision statement for 2025 drafted by the Ministry of Rural Development estimates that the investment needs to increase from current levels to US$ 8 bn a year until the 14th Five Year Plan (2022-27). Given the Finance Ministry’s estimates that inadequate capacity can shelve two percentage points off the nation’s growth each year, the emphasis on rural infrastructure seems undeniable. “

 

(with Inputs from Equitymaster)

 

(Originally drafted and mailed on 21’st November’08)