Infrastructure deficit biggest hurdle for Make in India: S&P


The country’s poor infrastructure is the “biggest hurdle” to government’s flagship Make in India programme, S&P Global Ratings said today.

“Infrastructure is the biggest hurdle to the ambitious Make in India programme of the government,” S&P Global Ratings Credit Analyst Abhishek Dangra told reporters on a conference call.

Make in India

The infrastructure deficit is costing up to 5 per cent of the GDP and an improvement will boost export competitiveness, according to some estimates.

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However, he was quick to add that the export powerhouse of China also faces problems on the infrastructure front.

Congress advt 2

Every rupee invested in infrastructure development has a ripple effect and helps the GDP by Rs 2, he added.

The passage of the Goods and Services Tax, billed as the country’s biggest indirect taxation reform, will give a fillip to the logistics and manufacturing sectors, he said.

Dangra said there are problems in the country’s transportation sector with capacity constraints and underlined the need for better regulation.

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Even if the government leads with transportation spends, execution will be a key challenge, he said.

The government’s limited finances will make it essential for the private sector to pitch in, the agency said in a note.

“The government is scaling up spending, but its heavy debt burden could derail its ambitions to improve public infrastructure,” it said.

The global ratings agency said India Inc will see a turnaround in performance soon.

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“The performance of Indian corporates is bottoming out. It will be a slow, U-shaped recovery for them,” S&P Global Ratings Credit Analyst Geeta Chugh told reporters on a call.

Revenue growth is expected to move up in the next 2-3 years, the agency said, adding that this will be possible largely on increased government spending and the consequent increase in domestic economy.


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