India infrastructure investments to boost PVC demand

11 April 2013 17:50  [Source: ICIS news]

MUMBAI (ICIS)--India's plan to spend around $1,000bn on infrastructure during the 12th Five Year Plan period (2012-2017) will provide a significant boost to polyvinyl chloride (PVC) demand in the coming years, an economist at the ongoing Vinyls India 2013 conference said on Thursday.

"Infrastructure spending is on a distinctly rising curve; spending will reach 9% of GDP by the end of the Plan period, up from the current level of 4%," said Ajit Ranade, president & chief economist at the Aditya Birla Group, on day one of the two-day conference.

The three sectors that are likely to see huge investments are power, telecom, roads and bridges and these are likely to account for over 50% of the total infrastructure spending, he added.

The other big driver for consumption of PVC and other polymers would be urbanisation. 

"The world crossed an important landmark in 2010 with more than 50% of the global population living in urban areas; the number for India is only 27%. Urbanisation will be a major driver for infrastructure spending and consumption," he said.

While the long-term outlook was positive Ranade also highlighted four key challenges facing the Indian economy in the near term - inflation, slowing GDP growth, high fiscal deficit and a widening current account deficit.

But he was hopeful that the problems would ease over the next year as the country’s economy is slowly moving in a positive direction.

Vinyls India 2013 concludes on Friday.

Additional reporting by Veena Pathare

By: Malini Hariharan
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