Slump in oil, steel and cement prices presents India with an opportunity to build infrastructure at lower costs as well as shore up public and private spending, Chief Economic Advisor Arvind Subramanian said today.
Speaking at the India Investment Summit here, he said though India faces some headwinds from global slowdown, the country “continues to be heaven of macro stability”.
“Although it is a challenging time, it is a kind of positive shock for investing in infrastructure. If oil, steel, cement, commodity are down, cost of building infrastructure comes down and returns to infrastructure goes up.
“In a sense there is a big opportunity for India because of our emphasis (on infrastructure) and international environment, which in a sense increases returns in general and infrastructure in particular,” Subramanian said.
Addressing global pension and sovereign wealth funds, he said all macroeconomic fundamentals — fiscal deficit, CAD and inflation — are strong.
“That should assure you that macroeconomy is stable,” he said, adding while external situation pose a challenge in terms of growth, the consolation is that global weaknesses will further strengthen India’s economy.
“Govt has ambitious plan for public investment. Railways, road, irrigation are going to receive high priority. So there is emphasis on domestic investment and international environment has made return on investment actually go up. Plus the fact that India continues to be heaven of macro stability, all these come to make India exciting time and place to invest in,” Subramanian said.
Since the 2008 crisis, the global economy has not been able to pick up momentum, with some country or the other facing problems.
Indian economy is expected to grow between 7-7.5 per cent in the current fiscal. Last fiscal, it grew by 7.2 per cent.