

Infrastructure in India


One of India’s most important industries has a knackered balance-sheet

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Such a shame that so much of India's potential lies trapped by an inefficient state and awful infrastructure.

That awful infrastructure also leads to deaths of hundreds of thousands on overcrowded roads each year - this is about more than just money and growth.


Simple fact for India to take on :- It has too many people to fit into its land !

Being the 7th largest country is not helping, if India is a visualized economy,

Then being a visualist, What SORT of Infrastructure are you going to develop for 1 billion people.

You simply have to tell Indians to get out of India, and live in Russia. These are the Reasons why building projects take so long. In Chennai/ Madras it takes them 10 years to build a metro- rail. I am sure China can do that in 1 year. Why ? Because you have to make sacrifices and say to villagers,"sorry you have to get out", live elsewhere, that is okay in China, because it has space, what about India, well it doesn't. Which is why you need the stubborn government to be replaced with a Communist styled, Sentorial Republic government, who needs to be firm and decisive !

UCpMsqk2U8 in reply to Supremus

Sure, India is sloppy but I'll take sloppy democracy any day over the Chinese Dictatorship which will eventually go the Soviet way...

And what exactly is a "visualized economy?" Did you mean "virtualized economy" (a poorly phrased term for "Service Economy")?

ShameOnU in reply to UCpMsqk2U8

Are you silly?
India is a false democracy, don't cheat others by using the name of democracy, just read the figures in India, more than 80% of the government officials are inherited from their family, and the corruption in India is worse that China and Russia, and China is just one-party government and not dictatorship, Russia is more democratic than India, because most Indians are controlled by local powerful families. Don't regard other as idiot, the only thing is that the west give a democracy name to India, but it means nothing for Indian people.

UCpMsqk2U8 in reply to ShameOnU

Given the nature, tone and content of your multiple comments here, "IamUnkownUser," it seems like "facts" don't matter to you and you and a generation of blindly ideological Chinese nationalists have been beast-fed by Mao's still effective propaganda machinery!

Well, good luck to you! The law of gravity like other facts, sooner or later assert themselves!

Jai Prakash Sharma

Investment in Infrastructure development, both social and physical, though, a priority for sustainable economic growth, yet the same requires a hassle free public-private partnership that involves a transparent bidding process, clearly earmarked outlays-preferably through Special Purpose vehicle- project planning, speedy environmental clearance, time bound implementation, realistic cost accounting and auditing, and accountability fixing, which, given the UPA government's current preoccupation with multiple political and economic challenges, and the infrastructure industry's financial woes, really seems to be a tall order.


Prediction by 2050 India will be home to everything that is wrong with humanity.

UCpMsqk2U8 in reply to puranakheela

I'll posit that every single country in the world is home to everything that is "wrong with humanity" right now!!

You don't have to wait until 2050 for "wrongs of humanity" and you're living in a fool's paradise if you think that is restricted only to India.

indica in reply to UCpMsqk2U8

Yes, I agree. Indians who never left India often assume that life abroad is 'near perfect'. One may have good roads and clean shopping malls but one discovers other factors that were not problems in India.

I am alarmed by the creeping hedonism and irrationality in Western civilisation. Even the famed, disciplined Japanese culture is losing its young people to a punk culture.

None of my remarks is meant to suggest that India can feel satisfied with the way things are.

trialcritic in reply to ShameOnU

OMG, we have started an India vs China comparison. This is a problem for the insecures. Having been to China multiple times, I appreciate the Chinese for their hard work. In fact, China as a country is much better managed than India. As an Indian, I have no problem accepting this. The first requirement to solving the problem is admitting that you have one.

Bill88888888 in reply to trialcritic

For your comments, I think your compatriots will scold at you.

It is interesting that at 30 years ago, the Chinese did not compare with India in the same way when China's GDP was lower than India's.

Indian security issues are so much related to its economic growth but most Indian refuse to believe it. Look at how much the Indian advance their military but not their society. It is obviously to be seen.

ShameOnU in reply to trialcritic

Hi Parunach, thanks for your discussion, frankly speaking, I don't understand why TE and other Indian guys like to compare India with other countries including China and Russia, and then make the conclusion India will lead the world in 30 years because of the democracy and English-speaking and the economy of India is more sustainable, really subjective and ulterior, I am a little bit sick of this kind of tone, please focus on improving the people's living instead of using politics as an excuse to slander other country. if you read the main-stream news in the west, I have to say that they should care more about real benefit the grass-root people can get not about ideology! Every country has its own way.

ShameOnU in reply to Bill88888888

You are absolutely right, the insecurity of India comes from its internal conflicts that some princely states want to be independent and actually they have sufficient reasons to do so, and the majority population living in the poverty, which imposed great pressure on Indian government,and one of the best way to transfer the internal confrontations is to portrait several outside enemies, and Pakistan and China are ideal choices. When it comes to nationalism, Indian government is using nationalism more than other countries in order to consolidate its domestic politics. If you know modern Indian history, you will find that the war between India and its neighbors mostly because of its intense domestic political situations, not from so-called threat form other countries, Indian leaders like to use war to take risk and transfer the focus. Actually, India is an real threat to the world peace if India can't solve its domestic poverty. It is sad that so many people can't understand the simple history, and use their nationalist irrational to judge the world.

Ajay Singh

Most investors in India are fleeing because of the corruption and lack of good governance. Anybody stupid to invest in Indian infrastructure is guaranteed to lose their shirts!

jay kashp

Hats off to Economist. I think this is one of the best articles I have read in recent times.

I hope some one in Delhi is thinking about working towards ameliorative alternatives to the sluggish rate of development.

Eating food in dalit homes can only go so far - after a time - the people will begin to ask the Prince to abandon the home - it is time people delivered instead of harking back to discredited ideas of esteemed Late Grandmother.

Stephen Morris

By eliminating the opportunity for transparent tendering and replacing it with opaque negotiations for packages which cannot be readily compared, public-private partnerships guarantee that corruption will be entrenched.

The situation becomes ever worse as the years roll on and an incumbent tax farmer (for example, the incumbent owner of a road tolling monopoly) makes an offer to extend the franchise period in exchange for some “free” road or other contribution. In this case there is absolutely no opportunity for competition.

There is a reason that transparent price-based tendering was introduced in developed countries. It is the same reason that corrupt politicians and corrupt businessmen are forever trying to white-ant it.


This is a time to buy infrastructure stocks! I bet a weighted basket of Indian infrastructure stocks would give above 50% returns in 2012.

They are damn cheap at current market prices.

Indian Ocean in reply to guest-iiwmeno


And also infrastructure bonds sell like hot cakes in India. Look at the recent bond floated that was oversubscribed in the first day of sales by investors from NHAI.


Capital is there (specially from private investors), if only Govt had some will.

PL123 in reply to Indian Ocean

"Capital is there (specially from private investors), if only Govt had some will."

May be the interest groups, locals and state governments are the problem..

"I think this was true few years back, but now with prices coming down for solar panals, India has big plans for green energy."

You should thanks China to bring down the cost of producing Solar panals, but do you have enough space to place Solar panal? This is my question before. You have 1,2 billion population and is growing, when poor people improve living standard, then energy supply need to increase considerably.

Nuclear power plant is just too dangerous to countries like CHina and India, too populated.

Connect The Dots

India has a Virtual Economy-- master of software and cloud based services.

But it will not get a real manufacturing based economy unless it finds a Saudi sized oil field in the Himalayas.

And it likely will never reach China's levels of export success due in part that it has to compete with the competitive Chinese.

India's best strategy is to compete where China is weakest: levering its English skills, technology skills, service sector and youth.

A virtual economy is better than nothing.

silent night in reply to Connect The Dots

The planet owns about 200 countries and areas,not only China and India.For example,India also has to face more competitions from ASEAN,a 600m population area,in software industry etc.Philippines even ranked first in the global shared services and business process outsourcing industry in the world by IBM's statistics,insteading of India last year.Indonesia,Vietnam are very competitive in many areas,let alone Indian neighbours,Sri Lanka and Bengal,also have better educated population,even cheaper labours than India.

India also has a serious property bubble,at least,in some areas.For example,Mumbai's property price(＄10000/m2) is 2 times higher than Shanghai's(＄3900/m2),the highest property price's city in China.If India invests more in infrastructure now,it will bring more property bubble and higher inflation pressure which,more than likely,leads to a stagflation in India in the future,let alone the prolbem whether India can raise the fund and investment for its infrastructure in the backgroud of an uncertain
global economy.

PL123 in reply to silent night

According to this website Mumbai is really expensive. But who want to live there when the traffic is so bad. You need a Helicopter to work.

"...In 2010 alone, property prices in Mumbai picked up by 60 percent. A rate like US$5.1 million (or US$17,000 per square meter) is typical for a 300 square meter luxury-used apartment in the city’s prime areas....."

zerge in reply to Connect The Dots


You do realize that India has a 1.2 billion population, right? You cannot convert that number of people into programmers and call center operators.

silent night in reply to canabana

Certainly in Shanghai the property prices also will be very high if they be located in or near some special areas such as CBD(Central Business District).The highest property price in Shanghai is Tomson Riviera apartment’s $26,984 (170,000 Rmb/m2),the best location and the most luxurious decoration in Shanghai. But not all apartments are high as same as Tomson Riviera’s. By the end of December 27, the statistics shows that 2011’s average house price level is $3,547/m2 (22,351 Rmb/m2) in Shanghai.

If PL123’s quote about Mumbai’s house price is true that "...In 2010 alone, property prices in Mumbai picked up by 60 percent. A rate like US$5.1 million (or US$17,000 per square meter) is typical for a 300 square meter luxury-used apartment in the city’s prime areas....."."While Mumbai’s property market was ranked as the 10th most expensive worldwide and Shanghai’s ranked 35th last year," http://www.2point6billion.com/news/2011/04/04/property-prices-may-declin...

Logically speaking,if Shanghai has a property bubble, Mumbai has a larger property bubble because Mumbai’s house price close to three times higher than Shanghai’s.


For India, keeping the quality of infrastructure is really a very big issue, especially facing the multiple situation in this elephant country. One of points to predict the vision of investment in a country is to measure the degree of infrastructure’s maturity.

Among the BRIC’s aggressive competiton, the only catogory India wins over other three is infrastructure. Especially comparing with China, India cannot take any grade but which of infrastructure to say India has the ability to attract foreign direct investment (FDI). If there is another reason, that is the Oxford doctor degree of prime minister Manmohan Singh higher than which of China’s communist party’s Hu Jing-Tao, Wen Jia-Bao and the next leader Xi Jin-Ping, Li Ke-Qiang.

With the recover of world economy, many developed countries regain their focuses on these four countries. According to yesterday’s NHK world, Japan’s prime minister Yoshihiko Noda is visiting New Delhi to meet Mr. Singh couple by the end of this year after his visit to Beijing to talk with China’s President Hu Jing-Tao and prime minister Wen Jia-Bao, saying Japan is ready to provide assistance to Indian infrastructure projects. Mr. Noda indicates that the 2 countries share these clear and mutually complementary economic conditions, beyond their obvious relationship, showing very friendly relation with India. But on one side, there is just some worse shortage concerned of infrastructure in China than in Beijing. Throwing mass investment to China better than to India is indeed worth getting better benefit successfully. On the other side, Mr. Noda changed the day he met China’s Hu and Wen, making many people connect the 1941’s Nanjing Massacre and this visit (because of the same date) either deliberately or to no purpose.

As the author referred to the airport, roads and bridges, the economic growth is depending on the infrastructure very much. However, although India can sustain more than 7% high economic growth in 5 years, India has serious inflation problem on consumer price index(CPI). For more than two years, India has been facing more than 5% per one month terrible CPI rapid increase. Mr. Singh and his successor Rahul Gandhi, India’s incumbent president Sonia Gandhi’s son, seem not to provide the solution to this serious inflation problem. Therefore, it’s hard to know whether this elephant can show more magic in front of the world.

Mitesh Sharma

This is the peak time when India needs lot of investment in infrastructure, as that is integral path towards growth. India is not dependent mainly on export and a self-dependent economy so not much effected by crisis of European world. But seems like things are not right at local end currently:
1. Corporate governance: Due to huge number of scams coming out in past sometime, foreign investors are not loosing confidence. So this is time when strong anti-corruption rules should come which help increase confidence in corporate.
2. Inflation : Increasing inflation is eroding investors money, so controlling this is most important task for now. As this is a key factor for investors pulling out their money.
3. High interest rates: Borrowing cost increasing for companies which is increasing burden of their debt.
4. Decreasing Rupee value: This is one of the key factor for foreign investors, as rupee is decreasing so their money in dollars. Also the Indian companies which have taken debt from abroad have to pay more, which will hamper their growth as interest burden will increase.
5. Small debt market: As debt market is not very huge, so sometime companies have to pay higher interest rates which cause long term issues.


Excellent timing, great research and insightful analysis. Indeed a solution is desperately needed for India's infra woes.


Nail on the head. Loved reading this piece. If the infrastructure companies could save on some of the kickbacks, an essential part in securing any of these mega projects, their cost of doing business could substantially come down...

"Incredible India" seems to be an all weather slogan for India...


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