At the 3rd Equipment India conference in September 2012 when I was sharing my views with the equipment captains over coffee, they were apprehensive and I was optimistic. My optimism was emboldened when P Chidambaram came onboard as Finance Minister in November. But now looking back over the past 12 months, even though the FM has led from the front, the damage has been far deeper. Now when the Prime Minister had one opportunity to bring some rational thinking by asking the opposition to align with the nation's interest, he began the blame game. If for 'Food Security Bill' all can align themselves even though it is an economic disaster, why can't they come together to pass bills for the development of the country. The administrative reforms will be seen as poor-friendly too as the poor or lower middle class face the brunt of the administrative high-handedness day in and out. The GDP growth has further decelerated to 4.4 per cent, a clear reflection of the ongoing downturn; seven out of eight sectors either registered contraction or a lower rate of expansion; financing woes, infrastructure constraints, lack of government support, high interest rates have all been detrimental to the industry. The pull down, as has been reported is due to dismal performance in mining and manufacturing sectors. The ad hoc ban on mining has killed economies of Goa and Karnataka and now both are likely to receive the green signal to resume operations with covenants. Further, on a macro level, the recent move to clear 36 stalled infrastructure projects worth Rs 1.83 lakh crore has been read as a 'right move' and more efforts, it is viewed, should greatly help to improve the positive mood.
The Ministry of Environment and Forest (MoEF) recently cleared about 80 files relating to road projects out of 347 road projects which were held up for a long time. The highways ministry had sought some relaxation in issuance of green clearances for national highway projects to hasten construction work. More projects, faster environment and forest clearances, support in land acquisition and a general clarity in policy are the key.
The volatility of the rupee has made imports prohibitive which is good for the local industry and would add to the bottomline of those that are using India as a sourcing hub as they would earn the arbitrage on the rupee depreciation by exporting. Yet, a stable rupee now would be the need of the hour.
That brings the Land Acquisition, Rehabilitation and Resettlement Bill passed by Lok Sabha into focus. The response to the Bill is a mixed bag - while one school of thought is quite jubilant that the new Bill will lay down a transparent process for land acquisition for, development of essential infrastructure facilities by giving adequate financial compensation (which has been pegged at twice the market value in urban areas, and four times the market value in rural areas) to the project-affected people, others find it anti-development as certain provisions such as compensation and high cap on consent required may make projects unviable, that the very purpose of the new Bill will be defeated. The economy is in the docks but we need more than two 'Docs' to fix the economy. The elections are still over six months away and the government needs to put together an action committee with the opposition and get critical reforms executed.