The recent win of Senator Barack Obama has certainly changed the core nature of the United States. That an African American could be elected to the Presidency is a far contrast to the time before 1965 when African Americans could not even vote.
No doubt people in our city and more specially, the people in the IT sector would be watching the US elections closely. Given that their jobs are dependent on the policy direction of the Senator in the coming future. Mr Obama would not take immediate protectionist measures given that the benefits of free trade far outweigh the short term costs.
Even the US would not drastically change it's regulation and start micromanaging the economy like how our dirigiste model is currently dismally performing. We are after all, growing from a low base. The Banking and Financial Sector of the US, which is the biggest client of our IT companies would rush to recapitalise and drive down costs. This would drive down IT spending and deliver some benefits to Bangalore because of the need to cut costs.
A more robust IT framework would be needed to adjust to the new financial scenario. Hence products such as flexcube by I-flex and Finacle by Infosys could have more prospects. Most of the financial herds would now focus on investing more in infrastructure in China and India as a "counter cyclical device" to quote what our PM Dr Manmohan Singh said at a summmit in Beijing, China.
China will now start depending less on exports, particularly to the US and focus on spending it's vast surplus on it's domestic infrastructure in order to usher in consumerist culture. Time is right for India to do the same as it is doing already. India is already spending on domestic infrastructure and urban revival schemes such as JNNURM.
More funds for PPP investment in infrastructure will flow more easily now. We aleady have the Japanese investing in our Metro rail. Bangalore, now in the long run, should focus on creating a niche for itself. It should no longer be satisfied with being the "Outsourcing Capital" but become a unique "Silicon Plateau" of the world.
More importantly, since there is money willing to come our way for infrastructure investment, BBMP should seriously think of floating Municipal Bonds not only on local exchange such as Mumbai, but also in international exchanges such as London, New York and Hong Kong. The market is there for Municipal Bonds and the BBMP can get money at lower rates.
Obama win - whats' in it for Bengaluru
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Municipal Bonds - Is this a good Idea ?
Bonds are an accepted way to attract finances by various government bodies, but with all the sops being dished out (such as tax exemptions, etc.), it is debatable if such schemes really benefit the city. It benefits people, no doubt, but the costs of such finances for the common good, is questionable. Earlier, there had been a scheme - "Municipal bonds", as it was called, but the amounts collected (over 120 crores), expressly for road improvements had been spent out with little to show on our streets.
Those who invested, insist that roads had been improved - to the delight of BBMP, but handing out works contracts for road works thro' these monies was not satisfactory. One was left wondering if funds had been mismanaged & if this had been a good initiative.
BBMP must shake up & raise enough (& more) funds by widening the property tax base. It has been reported that only about 35% of properties actually pay up, whilst the rest get away.
MuniBonds
1. For our govt agencies to tap the bond market finances need to be in order. They need to follow a structured accounting methodology like double entry accounting and flawless book keeping. This is unknown of in our govt agencies and they would loathe to put their accounting in order knowing how many skeletons will tumble out.
2. The project has to generate revenue to be able to pay back, failing which somebody (as always our govt.) will have to bankroll the project. THe agencies find that it is easier to just take the loan from the govt than get a soveriegn gaurantee and then have to go thru the trouble of putting their house in order, setting up a transperant and effecient financial process to maintain accounts, work out methodologies to pay back etc.
So, while i fully support our agencies to use the bond market i know fully well they will not do it for the above reasons.