Law minister Kapil Sibal probably got it right when he said, the other day, that India’s perception is a lot worse than its reality. It is fashionable to say nothing works in India, though to some extent that is the result of seeing India’s growth slipping from 9% to 5%, and a large part of this due to poor government policy from the retrospective tax amendments to changing its mind on 3G intra-circle roaming and more. The data, it has to be said, also backs this story: restructuring of bad loans may not have peaked, commercial vehicle sales declined by 6.6%, passenger cars fell by 10.4% and even two-wheelers growth was flat at 1% in April and, based on CMIE data, R7.5 lakh crore continues to be stuck in stalled projects.
Yet, as FE has been reporting over the past few weeks, there are an equally large number of projects that have begun to gain traction, and we’re not just talking about the projects the Cabinet Committee on Investments (CCI) has already cleared or is trying to clear. The R95,000 crore Dedicated Freight Corridor (DFC) has begun to gain traction with contracts near getting awarded for a fourth of the DFC by the Indian Railways. Not only is the Delhi Mumbai Industrial Corridor Development Corporation (DMICDC) close to awarding contracts for a new city as well as a few other large projects along the DFC, the bigger news here is that some of the DMICDC states are preparing new laws that will make it easier for new cities to come up, the new cities are going to be ‘smart’ in the sense that with sensors plugged into optic fibre cables that are going to be part of every trunk road, a central control room will monitor just what is happening to power/water/sewage/traffic across the city. The 22-km Mumbai Trans-Harbour Link, it is true, has had yet another delay and bids, FE reported yesterday, will not be called for another 6 weeks; the Mumbai metro, similarly, is stuck and there is no clarity on when it will move forward. But, as the story points out, large parts of the eastern freeway are complete and that will cut commuting from Colaba to Navi Mumbai by 30-40%. Other infrastructure projects including the first phase of the mono-rail and the metro are also nearly complete.
That’s the India story: whether the glass is half-empty or half-full is a matter of perception. It’s useful to keep in mind, though, that even while full year GDP is expected to be 5%—data on this will be out Friday—the total value of investments made in the country will still be around $600 billion this year. None of this is to say that India’s problems aren’t serious ones or that the current account, for instance, won’t remain a concern if moves like opening up the coal sector aren’t made quickly, but a 5% GDP year is also the one in which India saw FDI inflows of $36.9 billion and FII inflows of $27.6 billion. That’s the other reality that must not be ignored.