 "Focus on infrastructure as the harbinger of growth: Suresh Prabhu")
At a time of renewed interest in India, people from all over the world want to come and do business here. The number of countries and companies interested to associate with India is far greater now than it was in the past few years.
We must make sure this interest translates into concrete business propositions. Infrastructure should be the focal point of India's development. China could achieve such a high growth rate for so long due to investment in infrastructure. When you invest in infrastructure, it has a cascading effect on all sectors.
India has an infrastructure deficit. When we create new infrastructure, it isn't for tomorrow or even today. We are still investing in the infrastructure of yesterday. That's why, despite making huge investment and continuing to do so, we are not satisfied. But now, I think, we can focus on infrastructure as the harbinger of growth for India.
Roads also got a huge investment. But after the progress made during the tenure of A B Vajpayee as Prime Minister, it got into some difficulty. Roads are again waiting for investment.
India has 7,800 km of coastline. It should not be very happy with the current ports and there is a huge possibility of development here.
Airports, I think, have done very well. People first see an airport and then form an opinion. Airports are improving even in tier-II cities.
Health care and education need investment. They push the ability of humans to deliver.
Now, I shall be selfish - the sector which needs huge investment is railways. If one doesn't invest, the quality of services will deteriorate, and when that happens, you can't expect more revenue. This vicious cycle goes on and on. As revenues go down, your ability to invest goes down and there is no reason for people to pay more for declining services.
If you invest enough in railways, there will be a huge benefit to transport, passenger services and the economy as a whole. We need 30,000 km more connectivity - for that alone, we'll need $30 billion.
Our Prime Minister's most relevant programme is 'Make in India'.
To make it a success, we need to pull demand in the manufacturing sector. The pull that will come from railways - spur a demand for steel, cement, locomotives, components and ancillary industries.
I am sure that in a few years, we will need something like $100 billion in railways alone and another $100 billion if you look at the time frame.
Banks are in trouble because they are by design not supposed to finance infrastructure. If you are raising money from the domestic sector, promising to pay back in five years, in a project which won't be completed in five years, obviously we have asset-liability mismatch.
We need to create new institutions and instruments to finance the infrastructure of tomorrow.
Now, in India, public sector undertakings (PSUs) are sitting on huge cash piles. Why don't we use the public sector of India as new growth engines? NTPC can invest in the railways. NTPC needs coal, Coal India needs to sell coal. Such companies can form a consortium and use the investment for expansion.
PSUs also have a strong asset base. Can we not use the core assets for raising revenues? Why not capitalise the current assets - which are free from debt - to make money?
We want all interests to be aligned from regulators to the banking system to the developers to the policy makers and the state governments as they are the ones carrying the burden of the whole thrust given to the projects. For that, we have a new institution, which is the brain child of the PM. And, we have a very dynamic and competent deputy chairman, a very good economist, Arvind Panagariya, to take it to a new level.
In India, there is enough private sector capability. Nowhere in the world is the private sector putting money in infrastructure for public use - at least the amount of money we are putting in. But we have no choice.
A publication like Business Standard has always taken a line of thinking, not taken in the past. So, you have been a thought leader in your own way. Why not use this forum for bringing in new ideas in the infrastructure sector? Take these new ideas from here to the NITI Aayog, which would be a right forum to bring it to a logical end.
Discuss trouble before trouble calls itself as trouble. Let's have a collaborative approach towards infrastructure. It's not just your problem or the government's problem but everyone's problem, so let's solve it together.
We must make sure this interest translates into concrete business propositions. Infrastructure should be the focal point of India's development. China could achieve such a high growth rate for so long due to investment in infrastructure. When you invest in infrastructure, it has a cascading effect on all sectors.
India has an infrastructure deficit. When we create new infrastructure, it isn't for tomorrow or even today. We are still investing in the infrastructure of yesterday. That's why, despite making huge investment and continuing to do so, we are not satisfied. But now, I think, we can focus on infrastructure as the harbinger of growth for India.
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The power sector got a good share of investments in the past 10 years, after the new law we made. It got $100-150 billion. But the sector won't get the whole benefit of the investment in the upstream sector until we plug the problems faced by the transmission and distribution system.
Roads also got a huge investment. But after the progress made during the tenure of A B Vajpayee as Prime Minister, it got into some difficulty. Roads are again waiting for investment.
India has 7,800 km of coastline. It should not be very happy with the current ports and there is a huge possibility of development here.
Airports, I think, have done very well. People first see an airport and then form an opinion. Airports are improving even in tier-II cities.
Health care and education need investment. They push the ability of humans to deliver.
Now, I shall be selfish - the sector which needs huge investment is railways. If one doesn't invest, the quality of services will deteriorate, and when that happens, you can't expect more revenue. This vicious cycle goes on and on. As revenues go down, your ability to invest goes down and there is no reason for people to pay more for declining services.
If you invest enough in railways, there will be a huge benefit to transport, passenger services and the economy as a whole. We need 30,000 km more connectivity - for that alone, we'll need $30 billion.
Our Prime Minister's most relevant programme is 'Make in India'.
To make it a success, we need to pull demand in the manufacturing sector. The pull that will come from railways - spur a demand for steel, cement, locomotives, components and ancillary industries.
I am sure that in a few years, we will need something like $100 billion in railways alone and another $100 billion if you look at the time frame.
Banks are in trouble because they are by design not supposed to finance infrastructure. If you are raising money from the domestic sector, promising to pay back in five years, in a project which won't be completed in five years, obviously we have asset-liability mismatch.
We need to create new institutions and instruments to finance the infrastructure of tomorrow.
Now, in India, public sector undertakings (PSUs) are sitting on huge cash piles. Why don't we use the public sector of India as new growth engines? NTPC can invest in the railways. NTPC needs coal, Coal India needs to sell coal. Such companies can form a consortium and use the investment for expansion.
PSUs also have a strong asset base. Can we not use the core assets for raising revenues? Why not capitalise the current assets - which are free from debt - to make money?
We want all interests to be aligned from regulators to the banking system to the developers to the policy makers and the state governments as they are the ones carrying the burden of the whole thrust given to the projects. For that, we have a new institution, which is the brain child of the PM. And, we have a very dynamic and competent deputy chairman, a very good economist, Arvind Panagariya, to take it to a new level.
In India, there is enough private sector capability. Nowhere in the world is the private sector putting money in infrastructure for public use - at least the amount of money we are putting in. But we have no choice.
A publication like Business Standard has always taken a line of thinking, not taken in the past. So, you have been a thought leader in your own way. Why not use this forum for bringing in new ideas in the infrastructure sector? Take these new ideas from here to the NITI Aayog, which would be a right forum to bring it to a logical end.
Discuss trouble before trouble calls itself as trouble. Let's have a collaborative approach towards infrastructure. It's not just your problem or the government's problem but everyone's problem, so let's solve it together.