Investment Opportunities in India

April 28, 2011

Government lays greater stress on education in India

Education in India is primarily handled by the government. The government’s large Union Budget outlays allot sufficient funds for setting up school infrastructure in the country. Elementary education is guaranteed to every child between the age of 6 and 14 years and whatever possible is being done to improve the quality of education and increase access to education for every child. Since the Eleventh Five-Year Plan greater emphasis is given to the quality of education in India.

Poor quality education reduces academic achievement by the students and lack of proper training in soft skills reduces their employability opportunities. Steps taken by the government to improve quality and access to education in India include programmes such as Sarva Shiksha Abhiyan (SSA), Mid-day meal schemes and Kasturba Gandhi Balika Vidyalayas. These schemes emphasise on increasing the number of schools to provide access to a larger population, and on improving infrastructure of existing and new schools by providing greater amenities and building more classrooms.

Increasing enrolment rates and reducing dropouts and gender inequality are two other aspects which the government of India aims to lay stress on. Recruitment of quality teachers forms one of the most important aspects of consolidating the education sector in India. These teachers also need to be properly trained to impart education more effectively to children.

Private-Public Partnership
The task is so enormous in a country of India’s size and population that the government has to turn to Public-Private Partnership (PPP) to run the schemes effectively. The PPP initiative will be primarily used to provide IT-based education to a majority of India’s student population. Private companies will contribute by providing infrastructure in the form of computer labs and content at government schools. It will also train teachers how to use their content and infrastructure. Training is also being provided to the teachers to enhance their education imparting capabilities.

Soft skills
Soft skills such as communication, IT skills, computer proficiency etc are also very important in making a student employable. Private enterprises are coming forward in this area and providing short and medium-term courses and induction trainings. Many organizations like Everonn and NIIT are coming out with innovative approaches to get a share of the market.

This, however, is not enough, and more involvement of the private sector is called for. According to a NASSCOM report, there will be a requirement for 2.3mn IT professionals by 2011 and a shortage of 5, 00,000 personnel required. Therefore, it is more important to emphasise on quality of education in India, rather than the number of educated students. This reflects the strong growth potential that the IT Training Industry has and its ever-increasing relevance for the IT Sector.

Problem areas
The large sizes of classes in private schools prevent teachers from giving individual attention to students. This results in considerable waste of time, effort and money. Companies like Educomp and Everonn have introduced innovative products which would solve this problem. These are online products, available 24/7, and do not require the student to travel to the location where the classes are held. However, these products require broadband connectivity, the availability of which is very poor in India. India’s broadband penetration has to improve substantially to make these products successful.

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April 13, 2011

Investment in Infrastructure in India

Though there are excellent opportunities for investment in infrastructure, major investment concentration is seen in sectors such as roads and highways, ports and airports, railways and power. Infrastructure in India is gaining in importance and a number of public private partnerships (PPPs), targeted at US$150 billion, is receiving support from the government. India needed huge investment and the private sector has a major role to play on its own as also in association with the government.

New avenues for foreign investment
Several avenues have been opened up flow of foreign investment in the infrastructure sector. SEBI-approved mutual funds have been allowed to accept subscription by foreign institutional investors to help boost overseas investment in Indian companies including those engaged in infrastructure projects. FII ceiling on investment in infrastructure bonds has been raised to $25 billion from $5 billion and the overall limit for corporate bonds to $40 billion. FIIs can also invest in unlisted bonds with a minimum lock-in period of three years.

The Indian market offers a good deal to investors who can gainfully use their expertise in these sectors. The Indian Government is seeking investment in infrastructure from both local and domestic capital. To encourage FDI in infrastructure in India, the government is allowing 100% FDI in a large number of sectors. Even in those sectors where prior approval is required, it requires only between 6 and 8 weeks to get clearance.

Investment in infrastructure to be doubled
The Indian Prime minister Dr. Manmohan Singh wants investment in infrastructure to be doubled to about $1,000 billion during the 12th Five Year Plan ending 2017 and has advised the Finance Ministry and the Planning Commission to draw a plan of action for achieving this level of investment.

The optimism arises from the impressive performance by the telecom sector.

Concern areas in infrastructure is said to be power deficit and the aggregate losses of around 30%, causes mainly because of technical and commercial faults are worrisome. Other concern areas are low capacity addition in the port sector, a huge investment backlog in railways and low penetration of broadband services.

23% increase in infrastructure projects
In this year’s Union Budget the Indian Finance Minister has projected an increase in infrastructure projects by another 23%. There has already been a considerable hike in Government focus on investment in infrastructure. This further thrust is likely to give a tremendous boost to this sector.

As per reports of the mid-term appraisal (MTA) of the Eleventh plan (2007-12) private sector investment in infrastructure has risen in the last few years. This has encouraged the government to go on an overdrive regarding infrastructure creation.

It is expected that the private sector will contribute at least half of the over $1 trillion dollar (Rs 40.99 lakh crore) investment planned in infrastructure in the 12th plan (2012-17).

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