Corporate profits could be under pressure in the coming year, even though gross domestic product (GDP) and industry growth could go up. These were some of the findings given in the annual “Survey of Professional Forecasters" compiled by the Reserve Bank of India.

Way to go: With the road transport and highways ministry planning to spend Rs3.5 trillion over the next three years, many road building firms have begun working on plans to raise funds. Harikrishna Katragadda / Mint

Twenty forecasters participated in this round. The report was made public last week.

GDP growth forecast has been revised upwards to 6.5% in 2009-10 from 5.7% in the last survey. Long-term forecast for five years for real GDP was estimated at 7.5%, which is revised upwards from 7.0% in the last survey. For the next 10 years, GDP is expected to grow at 8.0%, revised upwards from 7.5% in the last survey.

The forecast for agriculture has been revised downwards from 3% to 2.5%. This could come down further, if the monsoon turns out worse than has been predicted till now. For industry and the services sector, the forecasts have been revised upwards from 4.1% to 4.8% and from 7.5% to 8.3%, respectively.

The proportion of domestic saving to GDP is indicated to be 35.0% in 2009-10, revised marginally upwards from 34.6%. The forecasters predict private final consumption expenditure to grow at the rate of 7.0%, up from earlier forecast of 6.0%.

The profit growth of the corporate sector in 2009-10 has been revised further downwards to 7.5% from 9.0%. The growth in profit is expected to improve to 15% in 2010-11.

Broad money (M3) growth is revised upwards to 18.0% in 2009-10 from the earlier forecast of 17.5%. In 2009-10, bank credit is expected to grow at the rate of 18% against its previous forecast of 16%.

Union government fiscal deficit is placed at 6.8% of GDP in 2009-10, which is same as expected in the last survey. The combined gross fiscal deficit is placed at 10.1% of GDP, revised marginally downwards from 10.2% in the last survey.

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Exports are expected to contract by 0.55% in the current fiscal, but to grow by 12% in the next. Imports are expected to contract by 3.5% in 2009-10. Net surplus under invisibles is placed at $80.9 billion (Rs3.9 trillion) in the 2009-10 against $78.5 billion.

All this sounds good. The big question is whether the government will ensure proper administration of funds or continue going the populist way in the coming years.

Infrastructural Dreams

Almost everybody is betting big on infrastructure. There are companies getting ready with their prospectuses to raise money from the capital markets for power generation, road construction, town development and even power distribution.

Adani Power Ltd appears to have convinced many fearful entrepreneurs that it was possible to raise funds from the capital markets, if the story was convincing enough. At the same time, aware of the huge potential in the power distribution business, even players such as the Ashoka group have entered the business with orders worth Rs1,000 crore from Maharashtra State Electricity Distribution Co. Ltd for the supply of transformers and allied equipment. Firms such as Torrent Power Ltd, which has proved its ability to control distribution costs in Bhiwandi in Maharashtra, are also trying to get orders for distribution and generation.

With the ministry of road transport and highways planning to spend Rs3.5 trillion over the next three years, many road building firms have also begun working on new plans to raise funds both from the Indian capital markets and also from overseas. But the most interesting public offering could be from IL&FS Transportation Networks Ltd, which has grabbed a clutch of projects in Rajasthan to develop infrastructure, including roads. What makes this project unusual is that, like the Ganges Road Corridor, it will meet costs not from government grants but by exploiting commercial development rights in those areas.

Eventually, this will be the way to go forward. First, it will allow the government to stop playing the role of a financing agency and instead focus on implementation policy guidelines only.

Second, it will allow for money to be raised from rentals, development of real estate, advertising rights, etc. This will allow people to use roads without paying tolls.

Third, it will get governments a share of the revenues instead of adding to debt. Fourth, it will accelerate infrastructure development, and, last, it will allow for gross domestic product to grow faster than anyone had predicted.

It is over to you, Kamal Nath.

Telecom’s exit wars

Positions are now being taken by all telecom players over how to usher in number portability. While some of the players want a fee ranging from Rs300 to a few thousand rupees to be charged to telephone subscribers before they allow them the right to use their mobile number with another telecom carrier, Reliance Infrastructure Ltd has announced that it will prefer a charge of just Rs20 for facilitating such transfers. It appears the firm will do everything it can to wean away subscribers from other telecom networks to its own.

But could this be the gambit of the spider to the fly? After all, Reliance Infra’s policies for permitting existing customers to terminate their subscriber accounts can be the most cumbersome. Unlike Tata Indicom, which accepts termination requests on phone, email and through letters after a confirmation of the identity of the request maker, or Vodafone Essar Ltd and Bharti Airtel Ltd, which accept letters, Reliance refuses to accept letters, emails or telephonic requests for termination. It wants subscribers to go in person to its outlets. Forms are not available online or on its website. In fact, some subscribers had to approach the Telecom Regulatory Authority of India to get their subscriptions terminated.

But most worrisome are reports that some telecom players even approach banks and credit card firms, advising them not to allow subscribers to terminate their direct debit instructions to the telecom service operators without the concurrence of the service provider. The banks stall such requests on one pretext or the other, till the matter is taken up with Reserve Bank of India’s (RBI) ombudsman.

Clearly, RBI will also have to warn banks against such collusive practices. Legally, a customer can even cancel post-dated cheques. It is up to the receiver of such an instrument to file a case against the customer. The banks cannot support the payee against a customer’s instructions.

R.N. Bhaskar runs a company with significant interests in distance learning and examination certification and writes on corporate and business policy issues. This is his final column. Comments are welcome at