New Congress and Stimulus Keeps Indias Growth in Fast Lane With China

India Globalization Capital, Inc. a leading infrastructure and materials company competing in the rapidly growing infrastructure industry in India, today commented on India’s new Congress Party, the stimulus packages approved and their effect on infrastructure growth.

Modernizing infrastructure in India is crucial to keeping India’s economy in the fast lane with China. The recent victory of India’s Congress party in last month’s general elections may help restore the flow of capital to India and reduce the stress on capital-starved companies and the banking system, and provides a clear mandate for economic reform with privatization and infrastructure development as its top priorities. The government of India said that the economy grew at 6.7 % in the last fiscal year and is hinting at a growth rate as high as 8% for the current fiscal year. The interim budget calls for spending as much as 9% of the GDP on infrastructure by the year 2014. The full budget is expected in a few weeks.

“As India’s new Congress gears-up the stimulus packages, and spending on infrastructure begins, our materials and infrastructure operations will directly benefit. We are positioned to take advantage of almost $475 billion being allocated to India’s infrastructure over the next five years,” said Ram Mukunda, Chief Executive Officer of India Globalization Capital.

One of the key factors in India’s growth is the movement of labor to more productive jobs in city centers. Nearly 140 million people who currently live in rural areas will move to urban centers by 2020 according to Goldman Sachs, and 700 million people will have “urbanized” by 2050; a problem solved only by an aggressive infrastructure build-out. Mark Mobius, manager of the Templeton Emerging Market fund said, “There is full realization that infrastructure is in dire need. Even if they get half of what they would like to get done, that will represent a lot of progress. Spreads on emerging-market debt are coming down, so it will be easier [for India to fund infrastructure development], and to the degree that government can push through public/private partnerships, which was difficult with Communists on board, it will be significant.”

For more information about India Globalization Capital, visit the company’s web site at: www.indiaglobalcap.com.