Showing posts from July, 2014

Railway & PPP: FDI & Learning Chinese?

Look at DMRC Airport link expt with Reliance. Unless private party gets 30%pre tax profits no one interested to put money. And if capital has to come from private funds, the capital cost of project increases by 20 to 30% automatically. To assure the requisite revenue flows to service debt and ensure profits, recovering capital is an impossible task because our econony does not allow such fare structures to be born by users. FDI initially looks attractive because interest rate could be lower.  But after factoring in FE risk, unlikely to be any cheaper. I find only sovereign funds from China or similar arrangement with Japan can afford to invest with own national interest agenda. There is no free lunch in the world. India has collective genius to dump own intellectual capital and revels in copy cat brhaviour. Probably China or Japan will take over Mumbai Ahmedabad Bullet train. More likely China. Interesting time! Elite in Mumbai will start learning Chinese!…