Invest In India » Trust Of India

Cheque payments may become costlier from April

Ziaulla Namani — Fri, 01 Apr 2011 06:41:08 +0000

From 1^st April 2011, cheque payments may become a costlier affair.

As reported by the Press Trust of India, the Reserve Bank of India (RBI) has allowed banks to levy higher service charges for their clearing, especially of high-value and outstation cheques.

As per an RBI circular coming into effect from April 1, 2011, banks would be free to fix service charges on speed clearing of cheques of value above Rs 1 lakh.

At present, the RBI does not allow banks to charge more than Rs 150 per cheque for speed clearing of cheques worth over Rs 1 lakh, while there are no charges for value up to Rs 1 lakh.

However, speed clearing of cheques with value up to Rs 1 lakh would continue to remain exempt of any service charges.

For normal local clearing also, drawee bank can charge up to Rs 1.50 per cheque from tomorrow, as against Re 1 at present. For local clearing through cheque truncation system, which works electronically by processing the scanned image of the cheque, drawee bank can levy a service charge of Re 1 from tomorrow, up from 50 paise at present.

Besides, RBI has also given a free hand to the banks to decide on the service charge on outstation cheques of over Rs one lakh, as against a maximum limit of Rs 150 per cheque allowed currently.

However, the central bank has decided to lower the service charge for outstation cheques up to Rs 5,000, by allowing a levy of Rs 25, as against Rs 50 currently.

The outstation cheques between Rs 5,000 and Rs 10,000 would continue to attract a fee of Rs 50, while those between Rs 10,000 and Rs 1 lakh would also continue to be levied a charge of Rs 100.

Paypal to restrict e-payment

Malvika — Sat, 29 Jan 2011 12:34:13 +0000

Online money transfer service provider will restrict the e-payment option for the Indian Merchant.

Press trust of India reported that PayPal on Friday announced changes in its payment to Indian transactions, following the guidelines issued by the Reserve Bank of India on requirements for governing the processing and settlement of export-related receipts facilitated by online payment gateways.

From March 1, 2011, “any balance in and all future payments into your PayPal account may not be used to buy goods or services and must be transferred to your bank account in India within seven days from the receipt of confirmation from the buyer in respect of the goods or services,” said PayPal’s blog, spokesman Dickson Seow in a posting.

“Export-related payments for goods and services into your PayPal account may not exceed USD 500 per transaction,” he said in a blog. Seow hoped that this 30-day advance notice period will enable its Indian customers to plan their future use of its services accordingly.

For global users, he said he regrets the inconvenience to be caused from March 1, 2011, when they try to purchase from or send payment to an Indian merchant over USD 500 per transaction.

For purchases or payments above this transaction value, you will have to use an alternative payment method,” he wrote. In February last year, PayPal had announced to have suspended certain type of payment transaction in India.

“I am writing to let you know that personal payments to and from India and transfers to local banks in India have been suspended while we work with our business partners and other stakeholders to address questions they have about the service,” wrote PayPal spokesman Anuj Nayar in a blog posting in February 2010.

©2009 Copyright by Invest In India

Sebi permits domestic investors to trade in overseas indices

Malvika — Wed, 12 Jan 2011 04:46:47 +0000

It is reported by the Press trust of India that the Securities and
Exchange Board of India (Sebi)on Tuesday paved the way for Indian
investors to trade in large indices of 24 global exchanges, including
that of the US, Europe and Asia.

As per a Sebi circular, Indian exchanges will be able to provide
trading in derivatives contracts of these global indices.

However, one of the world’s largest bourse London Stock Exchange
(LSE), with whom two Indian exchanges, National Stock Exchange (NSE)
and MCX SX, have tied up for cross-listing of their indices, is not on
the list approved by Sebi for the new guidelines.

“It has been decided to permit stock exchanges to introduce
derivatives contracts (future and options) on foreign stock indices in
the equity derivatives segment,” Sebi said in a circular.

“No single constituent stock (should have) more than 25% of the
weight, computed in terms of free float market capitalization, in the
index,” it said.

Sebi further said that after the introduction of derivatives on a
particular stock index, if that index fails to meet the eligibility
criteria for three months consecutively, no fresh contract shall be
introduced on that index.

The trading in derivatives on foreign indices would be restricted to
Indian residents only.

“The absolute numerical value of the underlying foreign stock index
shall be denominated in Indian rupees. The derivatives contracts on
that foreign stock index would be denominated traded and settled in
Indian rupees,” the circular said.

Sebi has also allowed certain foreign indices, including the Tokyo
Stock Exchange, to trade in Indian bourses.

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Assocham: India may face high inflation pressure in 2011

Malvika — Tue, 28 Dec 2010 03:51:09 +0000

It is reported in the Press Trust Of India that the Industry chamber Assocham today said that India in 2011 may witness continuation of high inflationary pressures, to the government that expects inflation to slow down to around 6 per cent by March next year.

In a paper titled, ‘Realising the Objective of Stabilised Inflation’, Assocham said, “2011 may continue giving pain to the government on the issue of food inflation and put pressure on the manufacturing sector due to hyper-inflation.”

Wholesale price inflation in the country fell to 7.48 percent in November, prompting the government to say that it will go down to around 6 per cent by March 2011.

However, the skyrocketing prices of onion, garlic and tomato have dampened the government and RBI’s estimates. Food inflation for the week ended December 24 surged back to double-digit level at 12.13 per cent, after the three weeks’ slide towards single-digit level.

“The major drawback of the country’s inflation control strategy is that it always considers inflation as a seasonal and temporary problem”, it said.

Global crude oil prices are also hovering around USD 95 per barrel due to increased demand in Europe on account of an unusually freezing winter.

The Assocham papers put the origins of the present inflationary pressure in food and fuel prices hike in the first half of 2009-10.

Assocham said continued hyper-inflation has been putting pressure on the Indian manufacturing sector.

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Six of top-10 firms lose over Rs 42,000 crore this week

Malvika — Sun, 12 Dec 2010 11:58:51 +0000

Press Trust of India has reported that the combined market capitalisation (m-cap) of six of the country’s top-10 firms went down by Rs 42,791 crore during the past week, with two of the country’s top lenders, SBI and ICICI Bank, bearing the maximum loss.

Amid a weak stock market, which fell by 458 points, or 2.29 per cent, last week, the market valuation of State Bank of India also declined by Rs 21,256.29 crore to Rs 1,73,768.19 crore as on Friday’s trade. Similarly, private sector lender ICICI Bank too saw its m-cap diminishing by Rs 7,385.32 crore to Rs 1,28,343.91 crore.

During the last week, SBI’s scrip plunged 10.89 per cent, while ICICI’s tanked by 5.44 per cent on the Bombay Stock Exchange.

Among the top-10 firms, RIL , ONGC, Infosys Technologies and NTPC led the gainers front, while SBI, ICICI, TCS, Coal India , ITC and Bharti Airtel emerged as losers in the list which is decided as per their market capitalisation.

Top private telco Bharti Airtel also saw its valuation eroding by Rs 5,639.31 crore to Rs 1,25,659.94 crore.

IT major TCS too lost Rs 3,933.97 crore from its m-cap which stood at Rs 2,10,467.5 crore.

With an m-cap of Rs 2,00,039.12 crore, coal behemoth CIL witnessed an erosion of Rs 3,537.16 crore from its valuation.

FMCG honcho ITC also lost Rs 1,039.36 crore from its kitty to take its m-cap to Rs 1,30,919.79 crore.

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India’s forex reserves reached to $300 bn mark

Malvika — Mon, 15 Nov 2010 15:12:57 +0000

According to the Press Trust of India, the foreign exchange reserves of India reached the $300-billion mark. India achieved this figure for the first time since 2008 with an addition of $2.2-billion last week due to the healthy rise in foreign currency.

With this achievement India is in the bracket with countries China, Japan and Taiwan that have foreign exchange reserves exceeding $300-billion.

India, which has attracted $35-billion of foreign fund flows in capital markets alone this fiscal.

India’s foreign exchange reserves had earlier touched $300-billion in March 2008, before the setting-in of the global slowdown in September that year.

Foreign currency assets, the largest component of the forex kitty, grew by $2.19-billion to $271.29-billion for the week-ended November 5, the Reserve Bank of India (RBI) said in data released on Friday.

RBI said, “Foreign currency assets expressed in US dollar terms include the effect of appreciation or depreciation of the non-US currencies, such as the euro, pound and yen, held in the reserves.”

The country’s apex bank also said that after surging by $1.15 billion the week before, the country’s gold reserves were static at $21.67-billion in the reporting week.

Reserve bank data says that India’s Special Drawing Rights (SDRs) increased up by $43-million to $5.23-billion for the week, while the country’s reserve position in the International Monetary Fund also moved up by $22-million to $2.035-billion.

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Indian investors wealth eroded by Rs 1.6 lakh crore as market goes downward

Malvika — Fri, 12 Nov 2010 13:46:06 +0000

According to the report by the Press Trust of India (PTI), due to the poor industrial growth and negative global cues, Indian investors in the stock market saw their wealth eroded by 1.6 lakh crore.

Sensex fell 0.5 per cent in early trade on Friday, with financials leading the losses, taking cues from weak world equities. The sensex dropped by 432 points.

This is the steepest decline registered by the Sensex since a 467-point fall on May 19, 2010.

Marketmen attributed today’s debacle to weak cues from Europe and China, as well as poor domestic industrial production numbers for the month of September.

SMC Capitals Equity Head Jagannadham Thunuguntla said, “This is a knee-jerk reaction to the negative news flow from the global markets. Dalal Steet was already in a bearish mood, which became worse after the IIP numbers almost halved to 4.4 per cent for the month of September as against the year-ago period.”

The descent of the index was led by blue-chips Reliance Industries, ICICI Bank, SBI and DLF.

At the close of today’s trade, market capitalisation of the country’s most valued firm, Reliance Industries, stood at Rs 3.47 lakh crore, while state-run ONGC and software major TCS’s valuations were Rs 2.79 lakh crore and Rs 2.06 lakh crore, respectively.

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Invest in capital market for good return: UTI Chief

Malvika — Mon, 27 Sep 2010 17:16:02 +0000

As per the news by PTI, the Indian market will continue to perform well in coming days as well.

The investors can make good money on return, if their funds remained invested in the capital market.

The CMD of Unit Trust Of India (UTI), Director U K Sinha said, “The Sensex, which as an index was created in 1980, had given a compounded return of 17 per cent year-on-year (Y-O-Y).

“This was the period when GDP growth was very low, there was an external war and civil disturbance and natural calamities. Despite all these, the benchmark has given a compounded return of 17 per cent,” he maintained.

Sinha, who chaired a committee on behalf of the central government on Capital flows to the country, said during 2000-2009, the Indian economy had become closely integrated to the global economy.

Indian corporates have foreigners on board, Foreign pension funds are investing in India, he said adding Indian pension funds will have to come to the market and it would give a boost.

UTI presently has one crore investors.

UTI also launched schemes for milk farmers, women and an income protection scheme for girl child below poverty line in Bihar, which is the largest scheme in the world.

Commenting on the protection to investors, he said Indian investors are being protected. No where in the world today entry load has been banned like in India. Replying to another query, he said Retail investment penetration was very low in India.

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Mutual Fund Companies in India

Tushar Mathur — Thu, 16 Oct 2008 05:32:00 +0000
The concept of mutual funds in India dates back to the year 1963. The era between 1963 and 1987 marked the existance of only one mutual fund company in India with Rs. 67bn assets under management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). By the end of the 80s decade, few other mutual fund companies in India took their position in mutual fund market.

The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund.

The succeeding decade showed a new horizon in indian mutual fund industry. By the end of 1993, the total AUM of the industry was Rs. 470.04 bn. The private sector funds started penetrating the fund families. In the same year the first Mutual Fund Regulations came into existance with re-registering all mutual funds except UTI. The regulations were further given a revised shape in 1996.

Kothari Pioneer was the first private sector mutual fund company in India which has now merged with Franklin Templeton. Just after ten years with private sector players penetration, the total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual fund companies in India.

Major Mutual Fund Companies in India

ABN AMRO Mutual Fund
ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset Management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund.

Birla Sun Life Mutual Fund
Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial. Sun Life Financial is a golbal organisation evolved in 1871 and is being represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from India. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment. Recently it crossed AUM of Rs. 10,000 crores.

Bank of Baroda Mutual Fund (BOB Mutual Fund)
Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under the sponsorship of Bank of Baroda. BOB Asset Management Company Limited is the AMC of BOB Mutual Fund and was incorporated on November 5, 1992. Deutsche Bank AG is the custodian.

HDFC Mutual Fund
HDFC Mutual Fund was setup on June 30, 2000 with two sponsorers nemely Housing Development Finance Corporation Limited and Standard Life Investments Limited.

HSBC Mutual Fund
HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital Markets (India) Private Limited as the sponsor. Board of Trustees, HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund.

ING Vysya Mutual Fund
ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING Investment Management (India) Pvt. Ltd. was incorporated on April 6, 1998.

Prudential ICICI Mutual Fund
The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was setup on 13th of October, 1993 with two sponsorers, Prudential Plc. and ICICI Ltd. The Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI Asset Management Company Limited incorporated on 22nd of June, 1993.

Sahara Mutual Fund
Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial Corporation Ltd. as the sponsor. Sahara Asset Management Company Private Limited incorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid-up capital of the AMC stands at Rs 25.8 crore.

State Bank of India Mutual Fund
State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch offshor fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately. Today it is the largest Bank sponsored Mutual Fund in India. They have already launched 35 Schemes out of which 15 have already yielded handsome returns to investors. State Bank of India Mutual Fund has more than Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread over 18 schemes.

Tata Mutual Fund
Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsorers for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. The investment manager is Tata Asset Management Limited and its Tata Trustee Company Pvt. Limited. Tata Asset Management Limited's is one of the fastest in the country with more than Rs. 7,703 crores (as on April 30, 2005) of AUM.

Kotak Mahindra Mutual Fund
Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It is presently having more than 1,99,818 investors in its various schemes. KMAMC started its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering to investors with varying risk - return profiles. It was the first company to launch dedicated gilt scheme investing only in government securities.

Unit Trust of India Mutual Fund
UTI Asset Management Company Private Limited, established in Jan 14, 2003, manages the UTI Mutual Fund with the support of UTI Trustee Company Privete Limited. UTI Asset Management Company presently manages a corpus of over Rs.20000 Crore. The sponsorers of UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank (PNB), State Bank of India (SBI), and Life Insurance Corporation of India (LIC). The schemes of UTI Mutual Fund are Liquid Funds, Income Funds, Asset Management Funds, Index Funds, Equity Funds and Balance Funds.

Reliance Mutual Fund
Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual Fund which was changed on March 11, 2004. Reliance Mutual Fund was formed for launching of various schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities.

Standard Chartered Mutual Fund
Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd. is the AMC which was incorporated with SEBI on December 20,1999.

Franklin Templeton India Mutual Fund
The group, Frnaklin Templeton Investments is a California (USA) based company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest financial services groups in the world. Investors can buy or sell the Mutual Fund through their financial advisor or through mail or through their website. They have Open end Diversified Equity schemes, Open end Sector Equity schemes, Open end Hybrid schemes, Open end Tax Saving schemes, Open end Income and Liquid schemes, Closed end Income schemes and Open end Fund of Funds schemes to offer.

Morgan Stanley Mutual Fund India
Morgan Stanley is a worldwide financial services company and its leading in the market in securities, investmenty management and credit services. Morgan Stanley Investment Management (MISM) was established in the year 1975. It provides customized asset management services and products to governments, corporations, pension funds and non-profit organisations. Its services are also extended to high net worth individuals and retail investors. In India it is known as Morgan Stanley Investment Management Private Limited (MSIM India) and its AMC is Morgan Stanley Mutual Fund (MSMF). This is the first close end diversified equity scheme serving the needs of Indian retail investors focussing on a long-term capital appreciation.

Escorts Mutual Fund
Escorts Mutual Fund was setup on April 15, 1996 with Excorts Finance Limited as its sponsor. The Trustee Company is Escorts Investment Trust Limited. Its AMC was incorporated on December 1, 1995 with the name Escorts Asset Management Limited.

Alliance Capital Mutual Fund
Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance Capital Management Corp. of Delaware (USA) as sponsorer. The Trustee is ACAM Trust Company Pvt. Ltd. and AMC, the Alliance Capital Asset Management India (Pvt) Ltd. with the corporate office in Mumbai.

Benchmark Mutual Fund
Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt. Ltd. as the sponsorer and Benchmark Trustee Company Pvt. Ltd. as the Trustee Company. Incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark Asset Management Company Pvt. Ltd. is the AMC.

Canbank Mutual Fund
Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the sponsor. Canbank Investment Management Services Ltd. incorporated on March 2, 1993 is the AMC. The Corporate Office of the AMC is in Mumbai.

Chola Mutual Fund
Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee Company and AMC is Cholamandalam AMC Limited.

LIC Mutual Fund
Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882. . The Company started its business on 29th April 1994. The Trustees of LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset Management Company Ltd as the Investment Managers for LIC Mutual Fund.

GIC Mutual Fund
GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a Government of India undertaking and the four Public Sector General Insurance Companies, viz. National Insurance Co. Ltd (NIC), The New India Assurance Co. Ltd. (NIA), The Oriental Insurance Co. Ltd (OIC) and United India Insurance Co. Ltd. (UII) and is constituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882
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Older mutual funds mean better returns?

Tushar Mathur — Mon, 07 Jul 2008 13:36:48 +0000

Keeping an eye on daily finance news and tips, I’ve realized something: of late, many companies have set up mutual fund houses in order to capitalize on India’s booming economy. But do you know which of these were the first to set up shop in India? And how are they doing now?

The Indian mutual fund industry boasts of some of the most popular names of the business world, both Indian as well as foreign. Reliance, ICICI-Prudential, Fidelity and HSBC are some of the leading fund houses offering mutual funds that have yielded stupendous returns. But there are some funds that have a long history of existence.

UTI: Unit Trust of India was the first mutual fund established in India by the Government of India. It offered many guaranteed return schemes that were in vogue during the 1980s and early ‘90s. These schemes invested exclusively in debt instruments that offered high interest in order to generate high returns for investors. The fund started offering equity funds that invested a major part of their corpus in the stock market and stock market instruments. But sadly, all the funds from this fund house have been laggards, partly due to the bureaucratic approach of the fund and partly due to the risk-averseness of the fund manager.

SBI: The State Bank of India, the country’s largest bank, ventured into the mutual fund business by establishing SBI Mutual Fund. It offers many funds such as Magnum Contra, Mangum Taxgain and Magnum Comma. Initially, none of the funds from SBI gave magnificent returns. But then the fund manager changed his approach and revamped his fund offerings. As a result, some of SBI’s funds like Contra and Taxgain became the most popular funds due to their ability to generate high returns.

Franklin Templeton: The story of Franklin Templeton is slightly different. Basically, Franklin Templeton is an American mutual fund house. When it wanted to enter India in 1996, it bought out Kothari Pioneer ITI Mutual Fund that had been in operating since 1994, thus giving it a presence of over 17 years. Franklin has some of the best performing mutual funds in the country — Franklin Taxshield is one of the most consistent tax-saving mutual funds. Besides, Franklin Prima Plus, Prima and Bluechip have brought smiles on the faces of their investors by giving astounding returns. This is the only private sector mutual fund in the country to offer a pension plan, the Templeton India Pension Plan.

HDFC: The Housing Development Finance Corporation marked its entry by taking over Zurich Mutual Fund in 2001. HDFC Equity (previously Zurich India Equity Fund) has been a consistent performer and has outperformed its benchmark index every year. Hence, it finds a place of pride in every investor’s portfolio. HDFC Taxsaver, Long Term Advantage Fund and Top 200 are other funds from this house that have yielded spectacular returns.

Birla: Birla Mutual Fund is the fund house belonging to the Aditya Birla Group. One of its funds, Birla Advantage Fund is the oldest in the country. It gave spectacular returns till 2000. However, it made the mistake of concentrating its portfolio on the IT sector and with the bust of this sector, the fund’s performance deteriorated. Some of its other funds, however, such as Birla Equity Fund, have yielded handsome returns.

Have you invested in any of these funds? Were you happy with the returns generated?

I personally have bought funds from HDFC and SBI and they are doing pretty well.

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Is India’s infrastructure really improving?

Tushar Mathur — Mon, 17 Mar 2008 06:12:21 +0000

As an NRI are you concerned about experiencing camel-back rides on pot-holed roads, spread of water-borne diseases through drinking water and sudden blackouts or electricity load shedding back home in India? There’s no reason to – these are experiences of the past. Foreign direct investment in various industry sectors, inflow of foreign tourists, hosting of international events like the Asian Games, Cricket World Cup and Commonwealth games have focused the global spotlight on India.

Globalization has created an urgent need for superior infrastructure on a massive scale and India has risen to the challenge.

The Asian Development Bank (ADB), a major source of funds for India’s infrastructure projects, has earlier funded public transport, power, and urban infrastructure projects. Encouraged by its success, it’s now considering investments in new infrastructure projects, such as restoration of water bodies, agriculture, and tourism. India’s infrastructure development will require an investment of USD 150 billion in the next few years. India’s current investment rate of 31% of GDP is expected to grow with foreign investment inflows in future. (Source: Press Trust of India)

Improvement initiatives

Governments, both past and present, have acknowledged the need and initiated bold ventures for developing world-class infrastructure in India.

* Highways and road networks are under construction and state governments are sprucing up existing state highways and roads with an investment infusion of Rs.1,80,000 Crores from the central government. (Source: ICRA)

* Proper roads, telephone, electricity, and drinking water to every village by the year 2009 is the goal of the ambitious Bharat Nirman Program with a budget of Rs. 1,74,000 crore. (Source: Ministry of Commerce and Industry)

* The government is determined to achieve a growth of 8% to 10% over the coming years and planning massive investments to improve basic infrastructure such as ports, airports, roads, electricity, and telecom.

* To fuel rapid growth, the government awarded contracts for four-laning of about 5,500 km of national highways in the year 2005-2006, the largest initiative since the National Highways Development Program started rolling.

Challenges

India’s infrastructure growth faces some formidable challenges. International financial institutions must provide funding before foreign exchange reserves drain out completely, as learnt from the Asian crisis experience of 1997. The large disparities of deficit and surplus in world economics need to be balanced to avoid a sudden downturn and adverse effect on emerging economies like India. For example, in 2005, the USA had a current account deficit of USD 805 billion, whereas Japan, China, and the Middle East had a surplus of USD 163.9 billion, 158.6 billion, and 196 billion, respectively. (Source: Press Trust of India)

Terrorism is on the rise and threatening to disrupt economic growth. Rising international oil prices have created volatility and indirectly affected all economic growth across sectors. The biggest challenge is to achieve sustained economic growth in the Asian region.

The initiatives planned and rolled out with a positive and cooperative approach among global economies can help surmount the challenges. This will help overcome problems not just in India but in other developing countries, too.

Do you think overcoming these challenges will take more than just a co-operative approach? Tell us why. Do write in with your suggestions on what the government can do to improve infrastructure in India.

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