1. Big worry for India, Gross Capital formation drops to 28.3%, lowest in decade

Big worry for India, Gross Capital formation drops to 28.3%, lowest in decade

Govt just lowered d price of domestically produced gas to $ 2.50/unit. Remember all the policy drama of price ranges from $8 to $12 ?!

By: | Published: October 5, 2016 6:16 AM
Infratweets

The move to reduce the price of natural gas by 18% to .5 per million British thermal unit (mBtu) on gross calorific value basis for the period October 1, 2016 to March 31, 2017 is seen as a setback to public sector and private producers.

Tweet: Govt just lowered d price of domestically produced gas to $ 2.50/unit. Remember all the policy drama of price ranges from $8 to $12 ?!

Domestic gas producers hit by declining prices

The move to reduce the price of natural gas by 18% to $2.5 per million British thermal unit (mBtu) on gross calorific value basis for the period October 1, 2016 to March 31, 2017 is seen as a setback to public sector and private producers. It is learnt that the country’s largest gas producer, ONGC, has appealed to the government for a remunerative price.

Tweet: Now really worrying: Gross Capital formation as % of GDP drops to 28.3% – lowest in a decade. Had hit peak of around 35% in mid 2000s.

Gross capital formation hits an all time low

In keeping with the slow growth of private and public sector investments, gross fixed capital formation, an indicator of new capacity addition in manufacturing and infrastructure companies, has contracted significantly. Many believe that the bottoming out has happened and going forward this statistic is expected to climb up again.

Tweet: Shortage vs Effective demand: Those who had set up power plants on huge macro outages have been rudely surprised at lack of “real” demand.

A problem of plenty

The inadequate demand for power has come as a shock to the power industry. Experts feel that the problem of huge overcapacity in the sector arising out of poor offtake by discoms will only be exacerbated with an additional 62 GW of thermal power plants being built and the surge in renewables.

Tweet: Road constrn & mining clearly leading revival process: Tipper trucks sales up 40%, Constrn Equip 41% and Bitumen 35%. (last 5 months).

Prospects brighten for construction sector

Sales of construction equipment used in road construction, irrigation projects and mining related machinery have grown during the January to July period. Data collected by the Indian Construction Equipment Manufacturers Association point to revival for construction companies.

Tweet: Water is d new weapon in the international armoury. China now blocks tributary of Brahmaputra for a hydro project. No water treaty there.

Water as a strategic weapon

]Soon after India conducted a review of the use of its water under the Indus Water Treaty with Pakistan, China announced that it had blocked a tributary of the Brahmaputra in order to complete its $740 million hydropower project in Tibet.

Tweet: India hub in Chabahar-Iran: After involvement in port & rly line, India considering proposal to develop airport there too. Strategic!

A strategic move

Iran has approached India to modernise the Chabahar airport and thereby expand the scope of cooperation on the strategic Chabahar port in southern Iran. A milestone pact between the two countries signed in May this year will enable India to access Afghanistan and Europe by bypassing Pakistan.

Tweet: Cyber attack risk: All power cos to now have a Chief Security Officer to be in contact with Nat Critical Info Infra Protection Centre.

Protecting the National Power Grid

The Centre plans to put in place a security management system with the help of states to safeguard against cyber attacks. Gencos, discoms and transmission firms have been asked to implement information management security systems to protect the grid.

Tweet: NITI prescribes 10 yr tax holiday for Coastal Economic Zones. Worth it for a limited no of serious efforts even after experience of SEZs.

Tax exemption to boost CEZs?

Even as the finance ministry is looking at phasing out exemptions, NITI Aayog has proposed tax holiday for coastal economic zones (CEZs). The CEZs which would be much larger than SEZs are being planned in coastal areas to set up labour-intensive industries such as clothing, electronics as well as electrical manufacturing, light manufacturing to tap export markets.

– Vinayak Chatterjee is Chairman of Feedback Infra
His Twitter handle: @Infra_VinayakCh
A weekly compilation of the author’s tweets—
with a brief backgrounder—in the infra space, by Adite Banerjie

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