Obstructive bureaucracy, talent crunch, poor infrastructure, policy uncertainty-these have been the key obstacles to doing business in India. Even if investors were to be asked to expand this list, it's unlikely that they would ever include availability of land as one of the constraints. After all, among the three fundamental factors of production-land, labour and capital-India is most well-endowed with the first one. May be the time has come to question this fundamental assumption. Investors-Indian and foreign- with funds in hand, are struggling to get their projects off the ground, literally. Every big industrial house in the country is facing problems with land acquisition. The high decibel case of the Tata Group's Nano project near Kolkata is just one, though the most instructive, example.
As Business Today discovered through one week of extensive reporting and research(read India Inc. stuck), investments worth over Rs 2.5 lakh crore are on hold because of the R&R (rehabilitation and resettlement) roadblock. At stake are not just some big-ticket investments, but also jobs and incomes of millions. This roadblock can deepen the impact of the slowdown that the economy has already slipped into.
One hard proof of the extent of slowdown is our story on ICICI Bank's strategic shift (read Are the dark clouds for the real?). India's second-largest bank, which has grown exponentially over the past decade, is bearing the brunt of a sudden downswing in its retail business. That's not all.
Companies across sectors are rethinking-and mostly shrinking- their capital expenditure plans (read The gravy train slows down). The head of Egon Zehnder, the world's largest executive search company outside the US, John Grumbar, explains why and how economic downswings change companies' expectations of their top managements(read 60 minutes) .
One sector of the economy where aggressive growth still seems possible, and is, indeed, being pursued, is infrastructure. Although infrastructure is still the single biggest bottleneck to high and inclusive growth, some standout projects do hold out hope that the creation of world-class infrastructure in the country may have begun.
These isolated examples now need to be replicated faster and on a larger scale to make a difference to the economy as a whole. A slew of erstwhile small companies- mostly construction and engineering firms-have made the most of the new opportunities in infrastructure and transformed themselves into world-class operators.
Our special report (read A bridge to somewhere) profiles projects and people who stand out amidst this dismal landscape that is Indian infrastructure.