Indias economic reforms

1
Indias economic reforms

• Dr. S. Narayan
• December 2005

2
Indias growth story

• GDP growth of 7.
• Manufacturing sector grew at 9.13 2004-05) as
  against 5 in (2000-01)
• Capital goods grew at 13.95 (2004-05)
• Consumer goods grew at 11.7 (2004-05)

3
Agriculture

• FDI in retail and food processing on the anvil.
• Barriers to movement of agricultural products are
  going down
• Phenomenal growth in commodity markets

4
GDP quarterly growth
5
Investment in India Capital goods production
6
Investments in India value of projects
outstanding
7
FDI

• FDI primarily coming through mergers and
  acquisitions in small and medium enterprises.
• Example Hemendra Kothari at 500 million, Sunil
  Mittal at 1.2 billion

8
Progress on VAT

• 14.6 growth in tax revenues of states which have
  implemented
• BJP led states finally agreeing to implementing
  VAT
• The barrier of the CST to be taken off in the
  coming months

9
Economic Diplomacy

• "Look East" policy
• SAFTA and ASEAN initiatives
• Indo Pak, Indo China, Indo US, and Indo Russia
  relations on a high

10
Concerns about implementation, not policy

• Infrastructure
• Roads
• Decision about type of contract to be awarded for
  road development has taken 14 months. Finally BOT
  model chosen.
• Less than 400 km of road work has been tendered
  out since May last year as against 4500 km over a
  similar period earlier.

11
Infrastructure

• Airports
• Delhi-Mumbai privatisation not taken up even
  after 18 months, though no policy hurdles
• No road-map of further airport development
  available
• Railways
• Fast-freight corridor approved in principle 8
  months ago. No progress.

12
Energy policy

• Integrated energy policy not ready even after 1
  year.
• No progress in nuclear initiative the US has
  complained.
• 28 coal projects awaiting sanction for last 18
  months. Only 6 cleared by CCEA so far.
• Mining approval on iron-ore unclear. Holding up
  progress in Jharkhand and Orissa.

13
Financial sector

• Confusion in policy interpretation by SEBI RBI
• Corporatisation of stock exchanges
• Participatory notes
• OTC trading in government bonds
• Private sector banking and new bank licenses.
• Recognition of hedge funds as an entity
• Asset reconstruction companies equity holding.