India approves $36b of infrastructure deals
THE Indian government said yesterday it had approved a raft of infrastructure projects worth 1.83 trillion rupees (S$35.7 billion) to revive economic growth and restore investor confidence, after a crash in the rupee to record lows.
"The message that we are sending is that the investment cycle has restarted, and we are pushing it. It is gathering pace," Finance Minister P. Chidambaram said at a news conference to announce the kick-start of 36 stalled projects in sectors from oil, gas and power to roads and railways.
He said a Cabinet panel had cleared 18 power projects, alone worth 830 billion rupees.
The announcement did not lift the rupee. Dealers said it was partly depressed by concerns over Parliament's approval on Monday of a plan to provide cheap grain to the poor at a cost of nearly US$20 billion (S$25.7 billion).
"It's not out of choice, but out of compulsion, that the Finance Minister is announcing so many things," said Mr G. Chokkalingam, managing director and chief investment officer of Centrum Wealth Management in Mumbai.
"The trinity of the fiscal deficit, slowing growth and an unstable currency is hitting us badly. In addition to these, the government has passed the food-security Bill, which may put fear in the minds of rating agencies."
It will also take time for these projects to have any impact on the economy, which will reduce the immediate effect of the news in financial markets.
Mr Hitendra Dave, head of global markets at HSBC India, said: "These projects have long gestation periods. So it will take several months, maybe years, to achieve the desired economic activity."