With the private sector left with limited cash flows, the government struggling to mop up revenues and household savings slowing, local funds for India’s ambitious infrastructure build-out will be hard to come by. But it’s not just the lack of resources that is stymieing investments. The business environment today is so unfriendly — regressive taxation, inflexible labour laws and miles of red tape — it’s no surprise new project announcements crashed to a15-year low in June.
The Economic Survey has predicated India’s growth on a revival in investments but while measures may be taken to deepen the long-term market for bonds, resources and a Credit Guarantee Enhancement Corporation may be set up, it will be a while before these yield results.
