Despite all the brouhaha about the rising foreign investments in India, the FDI (which creates assets in any economy) has flowed in pittance to India.
• The states in India should be allotted separate funding in lieu of the Forex reserves solely for developing infrastructure
• Developing the infrastructure in backward region
• Infrastructure development Economic Zones should be developed with dedicated industries supplying the products to the Infrastructure projects like the roads and the railways.
It can be argued that the severe impediment to any investment in India has been directly related to the almost deplorable physical infrastructure present in most parts of the country. Be it the potholed roads, clogged ports, erratic telecommunication or the almost invisible electricity, India needs to make amends at an extremely faster pace to bring a real time change in the state of affairs. In a recent study conducted by A.T. Kearney and the CII, 70% of participating MNCs commented positively to investment plans in India but the majority of them were skeptical on the infrastructure front.
The most striking and the glaring deficit then has been the infrastructure deficit. Last year, after the Finance Minster P. Chidambaram (during budget speech) stopped short of announcing the total amount that the government needs to reel off viz a viz infrastructure, Prime Minister Manmohan Singh estimated that the government needs to spend (on an urgent basis) close to Rs.6,750 billion for creating world-class infrastructure in roads, power, telecommunication, airports and seaports.
Despite tall claims on electrifying close to 125,000 villages in this fiscal, it has been a sorry spectacle to witness burgeoning forex reserves existing simultaneously with almost 15% un-electrified villages. Not only that, the physical infrastructure in the urban areas (Jawahar Lal Nehru Urban Renewal Mission has met opposition from the state governments who fear loss of votes) need urgent government positioning. In the new year, the government needs to act urgently to make tangible changes into the state of affairs failing which the 'Hindu Rate of Growth' might not be too far off.