Warren Buffett buy US rail road Giant Burlington Northern

Warren Buffett recently decided to fork out a massive US$ 44 bn to buy the US rail road giant Burlington Northern Santa Fe Corp. He referred to the deal as an all-in wager on economic future of the United States. For a man who wouldn't touch anything that does not have a sustainable competitive advantage, the rail road giant must surely be having plenty going for it.

Interestingly, the Indian government also seems to have of-late taken infrastructure growth, particularly investment in roads, a little more seriously. A leading business daily today reports how as many as 27 road projects worth a sterling Rs 300 bn may start rolling within a fortnight, thanks to lesser red-tapism in the bidding process. The government has finally cut the red tape that kept the roads sector tied down by letting the Ministry of Road Transport and Highways decide on bidding procedures and make changes to bid documents, effectively keeping the Planning Commission out of the entire process. More importantly, the private sector which virtually lost interest in road projects over the last two years after the Plan panel, introduced a string of tricky clauses in the bid documents, may make a comeback.

Although the Ministry of Road Transport has ambitions of building 20 kilometres of roadways a day, so far, the government has only been able to build 6.5 kilometres everyday. The Ministry has therefore taken a rain check and has pushed the target of constructing 7,000 kilometres of road this year by another three months. Nevertheless, once achieved, the prospects of economic benefit from the same to India far outshine that from railroads to the US.

So, while the Oracle of Omaha bets big on railroads, should we be drawing lessons from that and take a closer look at the roads?