Contrary to many assumptions, India is no longer a country of promise. The promise in India has arrived and is taking shape in an unprecedented way. Not long ago, India was a country governed by a strict Nehruvian model of socialism. While various sectors are still governed under Nehruvian nostalgia, the reforms of 1991 fundamentally transformed the institutional and governance structure of the state.
As the disposable income of the aspirational class grows and India integrates itself into the global economy, it will require significant investment in its infrastructure capacity. Investments in infrastructure will prove an important ingredient to steer economic development and equity. For many analysts, there exists a strong correlation between GDP and the aviation sector. They argue that, as the country grows, the ability to travel will penetrate across different classes and thus will create demand for global businesses. In the last few years (2009-2011), the total domestic airline passenger traffic of India, has seen a compound annual growth rate (CAGR) of over 17%, with 81 million passengers flying in 2015-16. If this trend continues, it is forecast that it will reach over 140 million passengers by 2020. Boeing estimates that air traffic within South Asia is alone expected to grow at 9.9% annually—marking it the highest growth rates in the world. If these estimates are to be taken seriously, South Asia will require around $120 billion investments and India covers almost 80% of this aviation market.
To meet these challenges, the Narendra Modi government, under the banner of ‘Make-in-India’, has promised greater focus on infrastructure development, by increasing liberalisation vis-à-vis its Open Sky Policy, modernisation of airports and logistical systems. In regards to permissions of FDI in commercial airlines, the Indian government has committed to allow up to 49% FDI in domestic scheduled passenger airlines under the automatic route (with intentions of increasing over 50%), and 100% permitted for NRIs.
23/08/16 Gaurav Daga/The Wire
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As the disposable income of the aspirational class grows and India integrates itself into the global economy, it will require significant investment in its infrastructure capacity. Investments in infrastructure will prove an important ingredient to steer economic development and equity. For many analysts, there exists a strong correlation between GDP and the aviation sector. They argue that, as the country grows, the ability to travel will penetrate across different classes and thus will create demand for global businesses. In the last few years (2009-2011), the total domestic airline passenger traffic of India, has seen a compound annual growth rate (CAGR) of over 17%, with 81 million passengers flying in 2015-16. If this trend continues, it is forecast that it will reach over 140 million passengers by 2020. Boeing estimates that air traffic within South Asia is alone expected to grow at 9.9% annually—marking it the highest growth rates in the world. If these estimates are to be taken seriously, South Asia will require around $120 billion investments and India covers almost 80% of this aviation market.
To meet these challenges, the Narendra Modi government, under the banner of ‘Make-in-India’, has promised greater focus on infrastructure development, by increasing liberalisation vis-à-vis its Open Sky Policy, modernisation of airports and logistical systems. In regards to permissions of FDI in commercial airlines, the Indian government has committed to allow up to 49% FDI in domestic scheduled passenger airlines under the automatic route (with intentions of increasing over 50%), and 100% permitted for NRIs.
23/08/16 Gaurav Daga/The Wire
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