Indias economic reforms

Dr. S. Narayan December 2005

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% (200405) Consumer goods grew at 11.7% (200405)

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

GDP quarterly growth

Investment in India: Capital goods production

Investments in India: value of projects outstanding

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

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

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

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.

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.

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.

Financial sector
Confusion in policy interpretation by SEBI & RBI 1. Corporatisation of stock exchanges 2. Participatory notes 3. OTC trading in government bonds 4. Private sector banking and new bank licenses. 5. Recognition of hedge funds as an entity 6. Asset reconstruction companies equity holding.