Summit Notebook
Exclusive outtakes from industry leaders
Paranoid governments and conspiracy theories
Adi Godrej, who marshals his namesake $2.5 billion diversified group, believes the Indian government is “paranoid” about the possible effects of allowing more foreign investments into sectors such as airlines.
“They (the Indian government) have not allowed foreign airlines to invest in private airlines, and they cite security. I don’t see what security would be compromised,” Godrej told the Reuters India Investment Summit in Mumbai.
“If British Airways or Delta got to own part of an Indian private airline, they are worried about what would happen in times of a war, etc. You are in control of your country. What can they do in difficult times to stop it?” he said.
Godrej also said that allowing more private players into sectors such as roads and education would help lift India away from infrastructure perils plaguing the country.
It’s not hard to think of Indian government officials sitting at their gnarled desks in crumbling office buildings doing what Mel Gibson’s character did in the movie Conspiracy Theory. But as Mel Gibson discovers, the enemy probably lies within. How’s that for a conspiracy?
AUDIO – Finding a model; then build, baby, build!
Infrastructure spending. Public-private partnerships. Government buildouts.
This week, all of these kinds of phrases are much on the mind of our guests at the first ever Reuters Infrastructure Summit held in New York, San Francisco and Washington.
While infrastructure means different things to almost all of our guests (schools, roads, bridges, etc) — one of our first guests, Petra Todorovich, talked at length about the need for high speed rails.
Todorovich, the director of the Regional Plan Association’s America 2050 project, told Reuters that buiding the high-speed rails makes a great deal of sense for travel, business and infrastructure.
What model would she use? Try the airlines. While equity investors might feel a cold wind blowing through their portfolios at the mention of the perpetually difficult-to-predict sector, Todorovich likes the way the industry melds its private side with its public financing.
Todorovich also spoke about other models for infrastructure spending that different locales have used.
Todorovich was one of the first speakers at this year’s summit, which runs through the end of this week.
We are going to have to pay for all these projects sooner or later. I don’t think at this point we even know the true costs of these project and as it always happens, the price tag will dramatically increase by the time these infrastructure and other projects will be completed. Look at Boston’s Big Dig. This is a perfect example of government failure and miscalculation, the project costs were dramatically underestimated (maybe even voluntarily, to make it easy to sell to the public) and by the end the expenses and costs had ballooned. I think all the new projects that had been on the discussion plate, you could easily multiply it by 2 or 3 and that will be your true cost, and if not 100% correct, the number is very close to reality. How to pay for these? That’s a good question…
Also,the current uncontrolled inflation in food prices, especially vegetables and pulses point to a very synchronised plan by the Government and Retail majors. They are trying to prove a point that FDI in retail is the only way to curb this increase.
Same approach was noticed a decade ago, when the govrnment of Maharashtra started load shedding (electricity supply in spurts) to make the lives of it’s residents miserable, and then paving the way for Enron to set in.