Domestic investment, not FDI is central to India's economic recovery

It is remarkable how our leaders seem to think — or, at least, let on they think — that foreign direct investment (FDI) is central to solving India’s economic problems. FDI will do no harm, and should be welcomed in most sectors. But it cannot don cape and tights and come to the economy’s rescue. That role goes to domestic investment. Since the private sector is chary of investing in the absence of visible signs of growth or is prevented from investing, thanks to missing clearances or missing payments, particularly if you are in the business of producing power for sale to state electricity boards, it is public investment that must take the lead in reviving growth.

The Delhi-Mumbai Industrial Corridor (DMIC) is a prime example of the kind of public investment that should be galvanising the economy out of stupor. But for reasons that are beyond lay understanding, the project languishes. Acquiring land has become an arduous task. So, any project that calls for acquisition of fresh land is liable to fall into a time warp.

This is what makes Railway projects stand out. The Railways owns much of the land on which it wants to lay an extra set of tracks, renovate a station, install modern signalling to replace outdated mechanical systems or build new coaches and locomotives.

And expanding the Railways capacity has the added advantage of cutting down on India’s oil imports: if the Railways could divert a portion of the freight being moved by road to itself, energy consumption on freight would come down significantly.

It might not be a bad idea to get some people from Delhi Metro, trained under its former chief E Sreedharan, with his uncanny ability to complete projects on time, to head some Railway projects. Let Railway and Metro officials compete to finish their projects first. Even as clearances for other infrastructure projects are speeded up, the Railways should be able to get going and create demand for steel, cement, trucks and the rest of it. It is time our leaders stopped warbling about FDI and cracked the whip on investment directly under their charge.