Recent surge in stocks like L&T, Dilip Buildcon, NBCC may be an illusion!!
With NDA coming back to power, everybody has an eye on the numerous election manifestos which the Modi Government has promised to the country ranging from export competitiveness to cash payouts to the farmers.
One of those pledges is a whopping $1.4 trillion (c. 15 times the size of Sri Lankan economy) of investment in Infrastructure by 2024. Now that’s seriously some number. But before you get exhilarated, there’s something you should take a note of.
For an expeditious infrastructure development, passing of the Land Acquisition Bill in the Rajya Sabha is mandatory, but the Modi Government may find it strenous to get the approval because of lack of majority in the upper house.
Even past figures and data are not so propitious either. The value of stalled projects has risen to almost ₹3-lakh crore since June 2018. According to different capital expenditure surveys and Goldman Sachs Group, one of the critical issue behind the stalling of projects in India is the access to land, which is both expensive and difficult to acquire. Moreover, lack of private capex by companies in last few years, owing to stringent regulations surrounding land acquisition has added to the woes.
Prima facie, the investment number looks quite fascinating until one goes a step deeper to get a better sense of the overall situation. Revival of capex by softening of regulation could be a big positive. But easier said than done, its not going to be a hastle-free ride for the Government with few roadblocks to be encountered.
(Source: BSE & The Hindu Business Line)