Monday, April 30, 2007

And Miles To Go Before ...

India would love to be ranked No.2 globally - be it economic power or steel production or some other criterion. We are already euphoric about emerging as the second strongest economy by the year 2050. This is not daydreaming. The world famous financial analyst Golden Sachs made this forecast after thorough research. But doubts linger in the minds. Already the GDP growth rate for the year 2007-08 has been scaled down to 8.5%. Then, are we going to attain double digit growth rates or the economy will start cooling even before getting heated?
I read in Economic Times that India is set to emerge as the world's second largest steel producer by the year 2016 when the production capacity will rise to 120 million tonnes. The steel secretary is reported to have given this one-liner assurance -"Given a conducive mineral policy framework, this country should be producing 120 million tonnes by 2015-16 and 180 million tonnes by 2019-20". Doubting Thomas es would say it took 16 years after the liberalisation of the steel industry to double the capacity; will it then be possible to treble capacity just within 9 years notwithstanding the acquisition spree of foreign steel companies by domestic producers. The National Steel Policy took years to see the light of the day. The mineral policy framework will emerge only after several ministries and Planning Commission arrive at a consensus. All this will take time. Then one does not know whether the policy will really be 'conducive' to the steel industry or not. Some of the mega projects for which MOUs were signed with lot of fanfare have not made much progress. Posco project in Orissa is still dragging its feet over land acquisition and independent port facilities at Paradip. The JSW project in West Bengal is facing resistance over land acquisition.
The serious delay in execution of power projects (which are the most important ones for building the infrastructure) and the recent alarming news of severe power cuts in the industrial hub Mumbai affecting production show the failure of the government to implement projects in time. During the Tenth Plan, power sector could achieve just 56% of capacity addition against target. The Working Group on power has already warned of serious fund shortage to the tune of Rs450, 000 crores ($100 billion) during 2007-12 which is nearly 45% of the total funds needed for power projects during the period.
With such pathetic performance of the government in the past, the optimism aired by officials should be taken with a pinch of salt. We should not get too excited about such scenarios as we have learnt from past experiences that there's many a slip 'twixt the cup and the lip. Some may consider me as a pessimist for expressing such doubts. I would be happy if I am proved wrong.

1 comment:

SNO said...

Very well analysed.

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