Speedier clearances no magic wand for Indian economy to clear infrastructure logjam

Sep 02 2013, 16:46 IST
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GDP growth in the latest quarter was the slowest since during the global financial crisis, and the Indian rupee has tumbled ever deeper against the US dollar. GDP growth in the latest quarter was the slowest since during the global financial crisis, and the Indian rupee has tumbled ever deeper against the US dollar.
SummaryStroke of a pen in New Delhi will not be enough to kickstart the moribund economy.

group of a lack of progress. However, he accepted that a fast-tracked project still faced many hurdles, including wrangles over land acquisition and law-and-order problems at a state level.

"We cannot expect an overnight transformation," he said. "In any project, there would be a number of issues and ... until those are resolved, the project does not go on stream."

One beneficiary of last week's project clearances by a cabinet panel was Essar Group, a diversified conglomerate with interests in power, oil and steel. After a 5-year wait, Essar was finally promised environmental approval to develop two coal blocks that will feed a power plant in the state of Jharkhand.

The reaction of one company official, though, was lukewarm. The approval may have come through, but a timeline for when the company can actually start mining was still uncertain. "Funding is linked to the environment clearance to the coal blocks, and banks will release funds once we have all the clearances. The announcement is a positive development, but we have got nothing in our hands, so we will progress on this once everything has been approved," said the official. SHIVERING RUPEE

India's track record for infrastructure development is miserable compared with China and most emerging market economies, and its failure on this score has sapped growth.

The government has targeted spending of $1 trillion on new projects over the five years to 2017, but it has fallen short of previous funding and implementation goals, and much of the country is still plagued by power blackouts and bumpy roads. A land acquisition bill, which is aimed at speeding up infrastructure and industrial projects by giving farmers better compensation for selling their land, was passed in the lower house of parliament on Thursday.

It takes about 295 days to acquire or lease public land in India, more than twice the global average, Standard Chartered wrote in a research note on Friday that cited World Bank data. Getting private land takes 99 days, versus a global average of 61 days.

Despite New Delhi's best efforts to get infrastructure moving, the problem appears to be getting worse.

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