India Announces Very Large Infrastructure Plan, But Out on PPP Financing Limb
Dec. 2, 2019 (EIRNS)—Indian Prime Minister Narendra Modi’s Commerce and Industry Minister has announced a large new infrastructure investment plan for India, which begs for the LaRouche/Hamilton credit and funding method but does not have it. The plan, announced Nov. 27 by Minister Piyush Goyal and reported in the Press Trust of India Nov. 27, is nonetheless hard infrastructure, not any kind of green new deal. Modi had, himself, first announced the plan on Independence Day, Aug. 15, saying it would nearly double the size of the Indian economy to $5 trillion over the five years of the plan.
Goyal announced a goal of RS 100 lakh crore (approximately $1.4 trillion equivalent) in investment over just five years, to “transform availability and quality of infrastructure at airports, roads, highways, railroads, ports.... All infrastructure-related sectors—aviation, shipping, electricity, and oil and gas—are going to see a huge thrust in the next five years,” said Goyal at the India International Trade Fair. His portfolio includes railways, and he said the rail aspect of the plan involves investment of RS 50 lakh crore, but this over the next 12 years.
There has been a distinct slowdown in Indian economic growth, to about 4.5%/year in GDP terms, when Modi’s government, after he won re-election, had anticipated 7% growth this year. The infrastructure is clearly a response to that, and the right one, to create economic demand and increased productivity.
Goyal said, however, that this would involve various public-private partnerships, because, “obviously, the government cannot put in this kind of money alone, so we will have to engage the private sector.” The government has borrowed heavily to support wage and salary increases and other wealth transfers, and is not in a position to make very large new borrowings. It could issue a volume of new currency with appropriate backing—but does not think of that—or with international credit partners—but does not have them yet. A New Bretton Woods system on Lyndon LaRouche’s design, explained by him since the 1990s, is needed soon.