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Cuckoo Land Economics – No Power, No Infrastructure still PM expects 6.5% Growth in 2012

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No Power, No Infrastructure in India

India’s Governance was always quite bad except for a few good years here and there. However the massive global credit boom from 2004 to 2008 allowed the Indian leaders to think that they had turned the corner as the Indian economy raced at more than 8% plus growth rates. However as the boom turned into a burst, the Indian economy has also started to sag. The politicians have little clue what to do and some who do, have no power. India suffers from a huge infrastructure deficit in almost all areas like power, ports, airports, roads etc. That deficit is starting to hurt as massive corruption and apathy has led to huge problems for the private industry. Factories are not being supplied with electricity for days on end and new infrastructure is being delayed for years.

However the PM continues to live in cuckoo land with his advisory council predicting a 6.5% growth rate in 2012 as industrial production declines, the country suffers from a drought and politicians are up to their usual shenanigans. Foreign Funds too have started pouring money into the Indian markets fueled by ZIRP in the West. Everyone is living under the happy illusion that this is a cyclical downturn and sunrise is just around the corner. However with no effort being made, how things are going to improve is not being asked by the policymakers or investors.

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Delays in execution of mega infrastructure projects has seen a massive Rs 52,446 crore jump in their original cost estimates.

The cost escalation has gone up by 36 per cent from Rs 1,45,271 crore to Rs 1,97,716 crore as on May 31, 2012, official figures state.

The cost overrun pertains to 28 power projects, 36 railway projects and 84 schemes of Ministry of Road Transport and Highways (MoRTH).


Industries in Andhra Pradesh have been starved of power for the last three days. The next three days are the schedule days of declared power holiday in industrial estates around Hyderabad, according to industry bodies. Fapcci represents about 3,000 units. Speaking to Business Line, Surana said, “Our efforts to get in touch with senior Government officials have been in vain as we have run into weekend and Ramzan festival on Monday. There is no word from the Central Power Distribution Company on this barring a statement on Friday.”


Foreign Institutional Investors (FIIs) have infused a net amount of USD 1.02 billion (about Rs 5,692 crore) in August so far, taking the total for this year to USD 11.4 billion (Rs 57,958 crore) in Indian equities, according to the Securities and Exchange Board of India (Sebi).

According to market analysts, despite a slow economic growth, high interest rate regime and weak monsoon, overseas investors are showcasing confidence in the Indian stock markets amid expectations of the government’s fresh initiatives on policy reforms.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

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