Roads to prosperity

Economic analysts have gone into paroxysms in recent times writing articles that compare the two Asian giants - India and China. But, what does all this mean to YOU as a potential investor in India?

Let's start off with a theme talked about ad-nauseum: infrastructure. Since most people know that the infrastructure in India is poor, it is somehow bad for the economy. But what is important is there is serious commitment from the Government to dramatically improve the infrastructure. So there are ways one can BENEFIT from a bad infrastructure that is on the road (pardon the pun) to improvement. Invest in companies that directly benefit from a booming infrastructure -- cement, steel and constructions firms.

Another sector that stands to gain is the aviation sector. A domestic industry that was monopolized by state run carriers till a few years ago is now facing cut-throat competition and price wars. Since roads and the rail service is below par, business people prefer to travel by the faster (and in some case, cheaper!) air routes. The industry will also flourish on account of the expanding parcel service industry in India.

I’ll talk about the growth of the middle class in India, and implications for the world economy, in the next post.

Ciao