India's Infrastructure: Over Hyped?

hi everyone welcome to today's video so this is Singapore roughly 50 years [Music] ago and this is Singapore [Music] today it has developed a lot now entire case studies can be built around this but there are three summarized points that I will tell you why this country was able to develop so fast number one point is that there government spent a lot of money in terms of infrastructure development that led to gross fixed Capital formation this is an economic term which simply means in terms of construction of Road highways Bridges this that stuff but was it productive expenditure because if the roads get bu and what not right so that's not productive use of capital so to say right so the first key reason why Singapore developed was that their government paid a lot of emphasis in terms of creating efficient infrastructure which led to higher grow fixed Capital formation the second key reason why Singapore developed well was that they followed a responsible public private partnership model in which the government or the nation ended up owning critical resources for example makab Telecom so singel is the company that controls majority of Telecom which is held by tamask if I'm not mistaken which is held by the Singapore government that's a strategic asset read about Singapore's airport that who has developed it who controls it now again you will find that Changi owns it Changi controls it and basically that again is controlled by the government so to say so there has been no loss of critical infrastructure from the government the third key thing is that has created a lot of Harmony lot of trust with the Singaporean government is the fact that they have actually worked towards the betterment of their people okay the Healthcare in Singapore is subsidized the quality of Education right from primary school all the way to higher education is extremely subsidized people can Avail very lowc cost very very high quality education right from Nursery play group all the way till College third key thing housing so in housing there is a board called as Housing Development board which is run by the Singapore government they literally changed the way the entire Singapore functions almost 92% people who own these hdb housing come from middle income to lower income segments of the Singaporean society and they end up owning houses 92% is the home ownership rate of these hdb houses these are high quality houses in fact I lived in one of them when I was in Singapore and by no standards these could be considered as low quality inferior housing projects so to cut the long story short Singapore grew really fast because spent on infrastructure was brilliant it was amazing on top of this critical Services healthare education housing these have been provided to people at reasonable rates and till date people Avail benefit from it therefore over time Singapore has become a high productive Nation so to say and it sees a lot of Allegiance towards his government and C how exactly take a look at the Singapore tax rate they are spending how much the personal income tax is roughly 22% it's a wider tax space that so much tax is being charged for you and you're not getting anything in return you are paying 22% tax but at the end of the day majority of the singaporeans send their kids to public schools now what is the situation in India unfortunately well if you have to send your kids to school massive fees inflation what is the situation of housing I mean you take so much loan Emi and then the house does not get completed but on the flip side we keep on speaking about the fact that so many highways Railways this this is getting developed tickets and all that stuff so what exactly is the problem in India infrastructure space are there any investment opportunities in the India infrastructure space how you should approach it I will try to explain this topic by giving you very simple easy to understand examples these type of videos are going to benefit you if you watch it with a non-political lens I'm going to speak for and against the government on this topic I'm going to highlight good work that they have done bad work that they are doing so that you at least understand the topic and form a rational opinion please political discussion neither I'm a spokesperson of any politic party Nei I'm an honest taxpaying citizen I'm just sharing my perspective on this entire issue showing you data so with that said let's begin and the first key question that comes is that why is infrastructure so critical in a country like India in very simple language that India right now is on a demographic dividend demographic dividend simple example say I will help you understand that see guys when you are young you are hungry you are aspirational you can have the energy you can work hard you can create a lot of economic output for the country for yourself better your life all that stuff so that in very simple understanding Viewpoint is the demographic dividend of a country India is a very young country this is our comparative advantage that for example the Western world is getting stagnated so to say there is decline in population India's population is going to Peak somewhere around 2060 2065 K aspas so in India there is Young hungry population which is full of energy and it can do amazing work but unfortunately if the infrastructure is not built productively please notice the word productively if the infrastructure is not built productively unfortunately it does not translate to anything it is like right I mean a small jar and you are trying to fill water but that M or that jar has a hole in the bottom and you can keep on pouring money or water into it but so that is the precise problem in terms of infrastructure development in India you yourself would have noticed Road right what was the point of building the road in the first place makes no sense there are so many Pooles there is so such poor quality of construction on real estate so many negative negative things are there so this is not a rant video this is an analysis video but the first key point that I would request you to understand is very simple that see just throwing money in terms of constructing off road or throwing money in terms of constructing the next shiny building does not equate to infrastructure creation okay just because you're spending X trillion dollar on construction does not mean that infrastructure has become good it takes a lot to create quality infrastructure and it reflects in the end things of how it's going to benefit you there is a very high Divergence between the money being spent on infrastructure and the type of benefit it is creating for our citizenry just answer a very simple points I know that a lot of people would just simply get triggered so my question is to them that see guys tell me one very simple basic thing that if the infrastructure in our country is so good if so much progress is happening why is it that the youth unemployment rate is close to 15% 15% in India right now why all the end results do not lie right so that's the negative part now the positive part is that see a lot of things revolve around marketing you can sell a lot of bad products simply because you have marketed them exceptionally well right a classic case study is stock market so to say sentiments then things can keep on going bullish bullish bullish fundamentals will catch up but it might take a decade to catch up to the fundamentals so to say so on that note in case you very bullish about infrastructure looking at the GDP numbers trillion dollars we are spending on infrastructure so therefore our infrastructure is great and therefore more money will flow in that's a narrative that you choosing to believe in then you are believing in the marketing do I believe in it 100% I see value in marketing there is no denying that that India as a brand has come up it has created a lot of impact in the world so many people investors are bullish about India this is exceptionally good marketing this is where we have done an exceptional job and the current government should be loed for that this is an excellent step and please do not take it otherwise doing really good marketing is a very important step in any economy so on that note in case you're looking to make infrastructure Investments one of the simplest way of riding that bull on infrastructure would be that you could consider investing in these type of mutual funds in return you can definitely go and check out do more due diligence that's one very simple way of riding this infrastructure wave now let me deep dive into India's data and let me start sharing some numbers facts and figures so number one if you take a look at the capital expenditure in The Last 5 Years you will see that there has been lacks of cores of rupees have been spent on infrastructure now infrastructure is a deeply complicated topic yeah know is an infrastructure is destruction of INF so accounting is really really tough so there are few more data points that I will share then I will Deep dive into it see if we look at the road constructed on per day kilometer basis then you will see Financial year 2023 May exceptional work has been done by the government right I mean it only used to be 12 km of Road constructed every day now it has reached 42 KMS and there is just no way to validate the auth it of these points but these points were highlighted by Dr parala prabakar I don't know what the veracity of this data is if any of you can validate or invalidate this that would be very useful for our entire Community to get better understanding but just quickly take a look at this clip Computing of even these things are having a problem because you know earlier can I can I interrupt just one one one sentence current earlier 1 kilomet of a four lane road used to be 1 kilom of a four lane road now 1 kilm of a four lane road today is 4 km so therefore when you boost up everything now similarly a lot of talk has happened that you know what so many new airports have been built in India yes that is true but what is the net connectivity of those airports for example the city where I come from which is airport that's it reg and all that stuff so take fine new airports have been constructed but but honestly if you having just three or four flights out then it's not very healthy from that perspective but having said this again trying to help you understand the full picture here that see development of airport will be step one then after that maybe improving connectivity would be another bringing cost down would be another aspect of it so the progress will happen in layer so I'm hopeful that over time there will be more development that will be happening in this space now of course these are my opinions and inclinations which I can't balance it out so I will try to show you real data here which will help you understand more about the efficiency of infrastructure in India now again there is a matrix called as gross fixed Capital formation for infrastructure and here what you will notice is that from the year 2021 there has been a constant decline in Gross fixed Capital formation what does that mean for example consider two aspects one is that hey you are going and creating statues one could keep on making the argument what returns so many shops are created so many tourism comes is that by there is something called as feasibility study just show the feasibility study before spending thousands of crores of taxpayers money on creating statues if you can validate it tourism here is an estimate that has been given by XYZ organizations three independent parties have validated it then of course these type of projects should be supported but on the flip side if you are improving your public education system where people want to send their kids to public school that is a definite Improvement in terms of your gross fixed Capital formation because why because human capital undoubtedly for a young country aspirational country like India is going to be the number one mover on this space unfortunately in India we keep on talking about the fact okay great but what's the point even if from old I or IM students are having the worst possible placement scenario which we have witnessed in several years so here are snippet you know this year the placements at iits have been really sad really bad you yourself if you are in the jobet Market you will see that the job market situation in India is really really bad right now counter arguments I keep on getting you know what akhat this has been a problem after covid that people are not getting jobs no that is not correct for example check the data for any developed Nation check it for the US what is the unemployment rate there well it's less than 4% what is the unemployment rate in Japan Deb to GDP what has been the unemployment rate there well it's very very low so to cut the long story short yes a lot of money is being being spent on infrastructure in India but is it leading to better Healthcare better job outcomes better education better facilities for common people is that really happening or not again that's a subjective answer you can have your own opinion I'm trying to show you both the sides of the story so continuing to Deep dive into the data and let me highlight three four critical problems that I personally see now of course you might might not agree with this the first critical problem on India's infrastructure development is the disproportionate spent by different state state list and what you will see that if you take a look at the number of projects and the total project cost and you will clearly see that Gujarat and Maharashtra have been the primary beneficiary of infrastructure development in India so to say majority now is that Equitable growth the short answer is no because if there are Deep Pockets of underdevelopment happening in India and Equitable growth is not happening that will just lead to a lot of migration to certain States so to say and there is massive infrastructure pressure and yeah it just destroys the city right Bangalore at one point in time used to be a beautiful city very green clean less pollution Etc right it takes like 2 and a half 3 hours just to get to the main city from the airport now is that sustainable what will be the situation after 10 years so yes one could argue that a lot of money is going to certain States but if Equitable development does not happen there will be Mass influx of population in certain pockets and that will literally destroy the cities the second key problem in our infrastructure is the sale of strategic assets for example now I'll not go into the details of it corporates India May which are friends with the government they end up getting majority of the projects etc etc and that is just lopsidedness for example if you pick the Telecom industry in India which is a critical part of digital infrastructure it is controlled by a private business if you look at ports airports road development majority of the contracts are again given out to private players contrast this example to Singapore right as I was saying that hey Telecom which company controls it it's a government company which is sel airports who controls it again it's the government now I get the counter argument you know what then a lot of money will not come in where will we raise money to build this infrastructure and what if these private players are very honest by they private players are capitalist that's how it is I'm not trying to question their business model but at the end of the day the price for you is going to go up a classic case study is for example and this is not my words these are the words of airline companies who have raised objections over increased charges at adani owned airports right this is example number one example number two that if you take a look at BSNL now what is it that BSL does mobile Towers now building that critical infrastructure so BSNL has built a lot of towers now private companies are using it on 2020 3030 year relases BSNL tower bankr now other people are coming and plucking the mangoes so the bottom line is that someone planted the trees tree Plantation now since fruits have started to come right private players are plucking those fruits the next major problem is the sustainability of infrastructure problem and all that stuff very good but see think about it this way comp ma comp infrastructure use you need skilled Manpower India there is massive Skilling issue another important note you can check it from this tweet you will see that in India only 5% of the workforce is trained training cost that is picked up apprenti model just for example Germany Japan it's very very high a lot of money goes into training the Manpower every country understands that your people are your biggest strength if you don't invest in good education good healthare affordable healthcare what's the point right why are people paying taxes in India the quality of Labor is really less these are not my words these are the words that have been covered on multiple Publications multiple research Reports say majority of engineering graduates in India are unemployable from a skill point of view now of course people will turn around Economist you know what that stuff if people are given that level of training maybe they will become better entrepreneurs maybe they will become better at whatever job they are doing it's not critical that they become entrepreneurs only there should be sustainable jobs in the market for which people will Aspire if the jobs itself are not there what is the incentive to upskill so in short let me start summarizing some of the key points number one has infrastructure development taken place in India absolutely yes government has done a wonderful job in terms of spending more money on infrastructure creation big big airports are built big big statues are built big big parliaments are built all that is great second question that is it practically benefiting the end user as of now the short answer is absolutely not the cost of education has gone up the cost of healthcare has gone up employment situation is out of hand there is massive unemployment in India right now people are just getting entertained people are entertained just by engaging in all this stuff and they cannot see beyond headlines which is problem number three that newspaper headline they used to form opinions similarly now people do not have patience to look into the in-depth data on anything number you know what x trillion doar have been spent so automatically things have become better my advice to you would be that please check what the productivity of that spent is that Matrix is called as gross fixed Capital formation check it for yourself you yourself will see the real picture finally no government is doing you a favor by spending your taxed money on infrastructure development it is supposed to be spent for the benefit of the people in an equitable way one of the primary points there we need to keep in mind is that see guys the Strategic assets once the country starts losing it private ultimately prices will be Jagged up for you it will be called as capitalism but that entire capitalistic model has been built how by doing massive loan mafy for the corporates by giving them special advantages in terms of debt restructuring by giving them massive access to public money that is the reality I'm very happy to listen to any facts or counter facts that you would like to present very happy to listen to that site please do not make it a political debate would request you that if you share these videos with your friends in your family groups Etc then it gets more traction more people are made aware of the things on which they need to think I'm not telling you how to think I'm just presenting data in front of you and asking you to investigate my opinion is not the right opinion my opinion is just one opinion of the many opinions but hopefully it will prompt you to do your own due diligence and trust your brain at the end of the day thank you so much for watching and I'll see you soon

Channel: Akshat Shrivastava

Views: 214,313

Keywords: akshat shrivastava, wisdom hatch, wisdom hatch courses, stock market courses, akshat shrivastava courses, stock analysis, stock market returns, indian stock market, investing in india, investing for beginners, nifty 50, akshat shrivastava stock market courses, making money in stock market, akshat shrivastava portfolio, india gdp to debt ratio, macroeconomics, global economics, india growth story, india general elections, indian gdp, adani and modi, singapore economy

Id: fSJrqhlHEn4

Length: 20min 52sec (1252 seconds)

Published: Wed Apr 17 2024