Investment Advisory Service

Saturday, 1 December 2012

The Ugly Indian

TN Ninan of the Business Standard has written a very crisp and thought provoking column concerning the case of Male Airport and similar contracts which were entered in the past and had Governments, Indian or foreign, as one of the parties to the contract. 

These contracts seem to put the Governments in positions where by if the revenue projections of a particular project are not met (which is almost always the case),
the successive compensations by the Governments follow the case of mating rabbits and the payments end up getting spiralled in a Fibonacci sequence.

What choices do the Governments have apart from either scrapping the contracts altogether or to renegotiate them ?

The issue closely resonates with concerns raised by Neeraj Marathe in his blog about Noida Toll Bridge.

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