The London based Institute of Chartered Accountants, obviously knowing a thing or two about balancing books and cooking up growth, ruffled a few feathers in Whitehall recently by criticising the Government for failing to invest in the regions, failing to invest in transport, failing to deliver fibre optic connectivity and allowing major public infrastructure projects to fall into stasis. Talk about kicking someone when they’re down, but it’s hard to disagree: especially with Hinkley Point still clutching at its footings ten years after commissioning, road, rail and utility networks creaking at the seams and public investment at an all time low.
But half a world away in India, things couldn’t be more different. This year’s Union Budget included a $125 Trillion, five-year splurge on infrastructure investment and just to put it in perspective, that’s enough to give every man, woman and child in the United Kingdom £1,515 to buy half a Virgin annual season ticket from Liverpool to Manchester. And, as ever, the Modi Administration hasn’t been short on ambition when it comes to spending these breathtaking sums.
For a start there are plans to make India a hub for Aircraft Finance and Leasing with new International Financial Service areas and Special Economic Zones; more urban Metro Rail initiatives, more gas grid works (expect more pavements dug up in Mumbai): more water networks and i-ways and much needed airports for the regions.
And even though India already has one of the world’s most extensive road networks, covering 5.5 Million kilometres with more than 10,000 kilometres added in 2017-18 alone, the Union Budget also includes plans to build a further 125,000 kilometres over the next five years (as well as opening up waterways to alleviate road congestion). India’s Highways and Transport Minister, Nitin Gadkari, said the subcontinent’s roads were the “country's assets" and this Budget emphatically put its money where his mouth is.
And to put that in perspective, the United Kingdom currently has a total of 394,000 kilometres of roads and will have built just 643 kilometres of new highways between 2015 and 2020: assuming, as Costain recently found to its cost, that most of these aren’t cancelled.
Under the Union Budget provisions, Foreign Portfolio Investors will also be able to subscribe for listed debt securities issued by ReITs and as part of a program to encourage trade and give a boost to the Make in India Campaign, customs duties are being flattened on a range of goods including tiles, vinyl flooring and CCTV cameras.
The South Indian Chamber of Commence President called it “a transformational and forward looking Budget”…And he’s right, what’s not to like about it?
Nobody understands the fundamentals of the Indian economy better than Red Ribbon Asset Management, which has placed the subcontinent at the heart of its investment strategies since the company was founded more than a decade ago. Drawing on an unrivalled knowledge of local markets with an expert team of more than a hundred advisers working in India’s economic hotspots we look to explore opportunities to share in the potential of this, the fastest growing large economy on the planet.
Executive Overview
Infrastructure investment is the key turbo charger of all modern economies, and by that standard India has certainly taken its place at the global top table.
The sums announced in last month’s Union Budget are simply staggering and I have no doubt they will now give added impetus to the explosive growth we have seen in the subcontinent’s real estate markets over recent years.
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