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INFRA OUTLOOK-2008
Dear Readers,
Expectations have been heightened as India, touted as the fastest
growing economy in the world, extends its ambitious reach into
another New Year. Global gurus, normally gung ho about India's
growing economic sheen have lately been muted lately thanks
to the worldwide slowdown triggered by the US economic crisis,
which found negative reverberations in the canyons of Wall Street,
and oil prices hitting the $100 per barrel mark. Ergo the all-important
question is: How will India's infrastructure fare against this
volatile backdrop?
Word is out that the New Delhi's romance with 10 per cent
growth may hit a rough patch in 2008 with a slower pace of
GDP. Such a view is bolstered by a report by the Switzerland-based
banking giant UBS which predicts that there could be a strong
investment switch away from markets with a strong domestic
focus such as China and India towards export-oriented Korea
and Indonesia. In yet another bleak assessment another banking
major, the US-based Citigroup has revealed in its 2008 Asian
Economic Outlook that infrastructure bottlenecks and talent
crunch pose long-term hurdles to India's economic growth,
while worsening global outlook and political scenarios pose
short-term risks. Indeed managing India's gargantuan developmental
needs is not going to be a cakewalk. As evidence of that is
the fact that during the past one and half years the government
has had to revise its financial requirements for infrastructure.
While India remains relatively immune to US credit woes, the
oil prices, if sustained at current high levels, may impact
the ability of Indian economy to grow under its own steam.
India's economic growth could slow down in 2008 in the face
of Reserve Bank's strict measures to contain inflation. FICCI's
business confidence survey for the second quarter of 2007-08
shows considerable sluggishness in the industrial and services
sector Rising global crude price and the US sub-prime crisis,
coupled with the hardening of the Rupee and with high interest
rates hurting exports, corporate India is apprehensive about
the country's growth momentum in the near future, according
to the recently released FICCI business confidence survey.
Outlook for manpower employment though is expected to remain
buoyant with employers in the mining and construction sector
unveiling hiring plans against the backdrop of heavy investment
in infrastructure across the country. The large-scale construction
of roads, airports, power plants, malls and SEZs (special
economic zones) and the introduction of the public-private
partnership mode across various infrastructure verticals is
an encouraging sign. There are heartening indications as well.
Indian companies like L&T, Suzlon, Bharat Forge along
with domestic giants like Tatas, Birla, Mahindra and Ambanis
figure among 100 firms posing an "urgent threat to industry
leaders" of the world. To add to this is the overwhelming
global interest in India's infrastructure development notably
in real estate, retail, hospitality, construction, power,
mining and transport sectors, despite the much vaunted new
policies - particularly in aviation, mining - not yet being
released by a dithering Centre. Global majors have got their
eyes set on the tremendous opportunities for growth here.
Whether India will measure up to the challenges in this year
remains to be seen. Have a terrific 2008!
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