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Narendra Modi’s $5 trillion GDP goal hits a hurdle: Debt at road builder

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India’s path to economic recovery faces another obstacle, with Prime Minister Narendra Modi asking the state road builder to stop constructing highways after its debt ballooned almost seven-fold over the past five years.

“National Highways Authority of India totally logjammed with unplanned and excessive expansion of roads,” the prime minister’s office wrote to NHAI in a letter dated Aug. 17. “NHAI mandated to pay several times the land cost; its construction costs also shooting up. Road infrastructure has become financially unviable.”

Modi’s office proposed that NHAI be transformed into a road-asset management company, according to the letter obtained by Bloomberg, and the prime minister’s office asked NHAI to reply within a week.

The decision is a reversal from Modi’s first term, when his administration was praised for its breakneck speed of highway construction that helped make India one of the fastest-growing economies in the world. However this came with the burden of escalating costs, leaving NHAI increasingly dependent on the government for financial support at a time when Modi is looking to contain his budget deficit.

Restricting road-building risks imperiling Modi’s target to make India a $5 trillion economy as roads are necessary for socio-economic development, said Vikash Kumar Sharda, a partner at Infranomics Consulting LLP, who previously consulted for PWC India. “Road is critical infrastructure, and putting breaks on it will not only result in a slowdown of highway construction but also of other sectors that are dependent on it.”

There’s a strong co-relation between economic growth and investments in infrastructure, with roads accounting for about 3.1% of gross value added, Modi’s economic advisers said in a report this year. Data due Friday will probably show India’s gross domestic product expanded 5.7% in the quarter through June, the slowest pace in five years.

Modi’s office now wants NHAI to revert to a model used by his predecessor, where NHAI would auction projects to developers. They’d construct the roads, collect toll from users and then would transfer ownership back to NHAI after an agreed period. Weak private sector participation pushed Modi to scrap this practice and he permitted NHAI to bear as much as 100% of the costs in certain road projects that led to ballooning debt.

NHAI’s outstanding debt of 1.8 trillion rupees would entail annual interest servicing of about 140 billion rupees, higher than the 100 billion rupees NHAI collects as toll, according to analysts at SBICap Securities Ltd.

Land acquisition costs have also risen to more than 25 million rupees per hectare from 9 million rupees after fair-price laws were introduced in 2013, and this alone accounts for more than 30% of NHAI’s expenses, according to ICRA Ratings Ltd.

The prime minister’s office didn’t reply to an email seeking comment and NHAI declined to comment. The letter contains only suggestions and top-rated NHAI is fully capable of raising enough debt to keep building roads, Nitin Gadkari, Modi’s minister for roads, was cited by the Mint newspaper as saying on Tuesday.

Ratings company ICRA on Wednesday said the build up of debt means NHAI must either go slow on new projects — a choice Modi can’t afford as he needs to spur economic growth — or shift to a build-operate-transfer model involving equity-purchases by private players. Many developers can’t support huge equity investments that are part of BOT projects, the rating company said.

Among the beneficiaries of this shift could be IRB Infrastructure Developers Ltd., which has traditionally focused on BOT projects where the operator collects a toll from road users.

“The decision to switch back to BOT-toll is much needed given the fiscal constraints,” IRB Infrastructure Chairman Virendra Mhaiskar said. “In the present dispensation, given the land acquisition cost, restricting to BOT only for a year or two may be a wise idea.”

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Swiggy Instamart figures, Mumbaikars ordered 570 times more condoms in the last one year

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Customers are also ordering medical-related things through online shopping platforms. In metros like Mumbai, Hyderabad, Delhi, and Bangalore, people are buying goods online in large numbers. People living in metro cities including Bengaluru, Delhi, and Mumbai ordered an average of 6 million eggs in the last year.

These days people are doing online shopping fiercely in the country. Through Grocery Service Platforms, the goods of need are easily reaching people’s homes. From vegetables to medicines, just a few clicks on the smartphone are reaching people’s doorsteps. According to a survey, Swiggy Instamart has provided service to more than 9 million users between June 2021 and June 2022. In metros like Mumbai, Hyderabad, Delhi, and Bangalore, people are buying goods online in large numbers.

Healthcare products orders

Customers are also ordering medical-related things through online shopping platforms. According to a survey, Mumbaikars have ordered 570 times more condoms in the last 12 months. At the same time, in 2021, Instamart received orders for about two million sanitary napkins, menstrual cups, and tampons. Apart from this, a lot of orders have also been received for grocery items.

56 lakh packets of noodles ordered

According to the survey, between April and June last year, there was a 42 percent increase in the demand for ice cream in these metro cities. It was also learned that most of the orders were placed after 10 pm. In metro cities, people have ordered 5.6 million packets of instant noodles. In Hyderabad, users ordered around 27,000 bottles of fresh juice during the summer months.

60 lakh eggs ordered

The demand for eggs has increased manifold in the last two years. People living in metro cities including Bengaluru, Delhi, and Mumbai ordered an average of 6 million eggs in the last year. According to the report, customers from Bangalore and Hyderabad ordered the maximum number of eggs for breakfast. At the same time, people of Mumbai, Jaipur, and Coimbatore have ordered the maximum number of eggs online at the time of dinner.

Demand for dairy products

There has been a huge jump in orders for both tea and coffee. According to the report, there has been an increase of 2,000 percent in its demand. At the same time, 3 crore orders of milk have come for milk. People from Bangalore and Mumbai have placed more orders in the morning. Regular milk, full cream milk and toned milk are the most ordered dairy products.

Ordering fruits and vegetables

Orders for 62,000 tonnes of fruits and vegetables have been received in the last year. With 12,000 orders, Bengaluru tops the list of organic product buyers. At the same time, Hyderabad and Bangalore together have ordered more than 290 tonnes of green chilies in 12 months. Over 2 lakh orders have been received for bathroom cleaners, scrub pads, drain cleaners, and more in the last year.

Source: Aajtak

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Zepto, 10-minute grocery delivery app, raises $100 million

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Only five months subsequent to dispatching, 10-minute basic food item conveyance application Zepto on Tuesday reported it has raised $100 million driven by Y Combinator, taking its valuation to $570 million.

Other than the raise money, Zepto has been developing staggeringly rapidly and is significantly increasing its client base consistently.

In the course of recent months, Zepto has extended past Mumbai by dispatching in Bengaluru, Delhi, Gurgaon, Chennai, Hyderabad, and Pune (Kolkata to follow), the organization said in an assertion.

“Financial backers are reliably deciding to back Zepto due to our top tier execution. This is giving us extraordinary energy – we’re developing at an amazing rate, clients are adoring the item experience, our center unit financial matters are solid, and we have one of the most outstanding startup groups in India today,” said Aadit Palicha, Co-Founder and CEO.

The Series C raising money round saw support from new and existing financial backers, including Glade Brook, Nexus, Breyer Capital, Lachy Groom, Global Founders Capital, Contrary Capital, and that’s just the beginning.

The round came 45 days later the organization reported its $60 million raise money in November.

Conveying food in a short time is a game-changing encounter for clients in the nation, and a few players are presently joining the race.

“We are eager to twofold down and lead this round in Zepto. They initially dispatched with an alternate model, quickly turned to speedy trade in August 2021, and are presently adding 100,000 new clients consistently, 60% of the ladies,” said Anu Hariharan from Y Combinator.

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One stuck box of fertilizer shows the global supply chain crisis

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Somewhere in the world’s busiest port of Shanghai, a container of fertilizer sits among tens of thousands of boxes, waiting for a ride to the U.S. It’s been on the dock for months, trapped by typhoons and Covid outbreaks that have worsened major congestion in the global supply-chain network.

While the fertilizer has been stranded there since May, the port is just one stop on the long journey from central China to the U.S. Midwest. Delays have stretched a delivery that ordinarily would take weeks to more than half a year. And that time frame will keep expanding, as the goods have barely started the roughly 15,000 kilometer (9,300 mile) trek.

This is the tale of one humble shipment and its arduous journey across the world. While some of the barriers keeping it from its final destination may be specific to this particular case, the journey is emblematic of the inertia that has gripped global trade during the pandemic.

From the U.S. to Sudan to China, container boxes have been lying at ports, railyards and in warehouses as the pandemic rages on. In an industry with 25 million containers and some 6,000 ships hauling them, it’s easy to see disruptions as one big headache confined to the shipping world. But each container that’s delayed is economic activity that’s restrained, heaping costs one box at a time on consumers and making it more challenging to put corn on consumers’ tables or deliver presents for the holidays.

It’s also a lesson in the ripple effects across global supply chains, showing the limits of diversification as all networks are still closely connected with China.

“All roads lead back to China, and that has a major effect across the entire supply chain,” said Dawn Tiura, head of U.S.-based Sourcing Industry Group. “Congestion at one port or factory has far-reaching implications for neighboring facilities, which trickles out across the world.”

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