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Roads Could Make You Rich, The Right Way

  • ECONOMIES MOVE as fast as the roads would permit them to move and it is with this realisation that India has embarked on a gargantuan plan to modernise and add capacity to its road network. Highways, high-speed expressways and freight corridors have added to the giant wheel of economic growth. The liberalised market of India has offered the private sector with huge opportunities to build roads and develop worldclass highways. The eleventh plan slates a rather modest investment figure of `7850 crores ($78.50 billion) and most of it is sought via the public private partnership (PPP) channel. For most of this development story, profit opportunity is written all over it.

  • A 100% FDI is allowed in this sector, and yet, the investment excitement is not as deep as it needs to be. Sadly, investors are not picking up on the opportunity. Unfortunately there is a belief that world economics takes cues from experts; the truth being the opposite. If 1.2 billion people live in a strident civilised social order, a potential for demand always remains and grows. It doesn’t matter if the experts have got it wrong. There is an avalanche of demand, and more investments waiting to happen. And yes, there is no better place than the developing economies like India, where such investments should be made. United States is not where returns on investments materialise anymore.

  • Investment in India is slated to grow and reach the zenith of its potential, as the country’s human development accomplishments are not really folklore. Our democracy has follies, but its 1.2 billion population lives in a curative democracy, where the emerging markets is leaving a pertinent mark. There are roughly three reasons why I feel India makes a decent choice for investments. One, consumer spending plays a sizebale role in the Indian economy. Thus, India doesn’t have to implement policies that distort the global economy (like China does with its currency regime). India’s growth is less susceptible to shocks from the international economy, purely because of high consumer spending. Two, nature of banking: private banks as well as nationalised banks seem less prone to political movements and policies are not crafted as per political mandate. Three, India’s democracy: it has managed to move on with its problems of poverty and corruption in a way that people do not compromise on civil rights liberties. Socioeconomic growth in India has not been as rapid as China, but there is a subtle stability in the way things move here. India is the only nation that is governed by non-adhoc laws.

  • After all, one should judge the power of a Testarosa Ferari not by the speed at which it is being driven, but its potential to sustain such speed in the future. India is driving at 5 Km/Hr and you have to know that it has sufficient power under the hood to hit 250 in under 10 seconds (which is where we are heading to!). India has taken its foot off the brakes, and stepped up on the accelerator. Thus, the next 30 years of the Indian economy is unquestionable. There always would be those set of economists who would cry foul and opiniate with sordid news on India. But, investment decisions should not be swayed by such banter. Do your own math. Multiply that figure on the Indian roads.There is much that the private infrastructure players can reap on the Indian roads. Get a load of this: to sustain the country’s economic needs, India’s 3.3 million kilometre road network is on the most compelling capacity augmentation and modernisation programme. An efficient road network is critical for India’s socioeconomic development. It also is pertinent to keep its huge geographic size politically integrated. The need is dire.

  • WHEN INDIA comes to shop for roads, PPP contracting opportunities rarely ever come this big. India’s desperation in the business of road development is reflected in its policy decision to allow 100% FDI in the sector, the desperation is only further amplified in the 10-year tax holiday the nation is willing to dangle as a carrot. The approach of the government is clearly annunciated in its well defined infrastructure policy. With the Forex rate at `53 to a dollar, the investment swing, won’t stop. The demand in India is so tremendous, the size of the young population so astounding, the positive return from India’s road sector promises to be permanent. If you have the legal acumen you can contract faster, the technical forecasting acumen to bid accurate, the technologies and machines to lay roads faster, and the organisational acumen to run your operations, Indian roads needs you and willing to reward you. Train your focus on India’s road infrastructure and it would be your road to riches.

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