Rajasthan Chief Secretary C S Rajan assures that although the state government is bringing amendments to the 2013 Central Land Act, industry need not fret about land acquisition in Rajasthan. The state government is building a 10,000-hectare land pool for industry that will be complete before the Resurgent Rajasthan Partnership Summit in November. In an interview to Sahil Makkar, Rajan says the public-private partnership (PPP) model is here to stay as the government is not in a position to bridge the demand-supply gap in sectors such as health, education, solar power and transport. Edited excerpts:
Tell us about the Resurgent Rajasthan Partnership Summit. What are your targets?
Our road shows have ended and we have generated over 200 leads. We are pursuing these leads to convert them into memoranda of understanding (MoU). We are building land stock inventories to support these MoUs. Simultaneously, we are putting together the legal and policy framework. All the pieces of the puzzle are being put into place. All policies are in place and a large number of bills have been legislated. By the end of the current Assembly session, we will be able to clear the pending legal framework.
Too much of an issue is being made of the Land Acquisition Act because of the uncertainties around the Central Act. That is why we undertook the exercise of developing large land stocks to be able to service the requirement of industry without going through the process of land acquisition. We are targeting a land stock of 10,000 hectares before the summit. We have secured 6,000 hectares and will get the rest before the summit. In the worst-case scenario, even if industries are not able to acquire one hectare (through the Land Act), we would not be worried. The land stock would be much larger than the land developed by the Rajasthan State Industrial Development & Investment Corporation Limited (Riico) for 323 industries in the last 40-50 years.
Did the state government acquire this land stock from farmers and the people?
This was not an acquisition. We asked the district collectors to identify government plots, which were unoccupied or uninhabited, and transfer it to Riico. The cost of land is low because no acquisition was required. We will develop these plots and sell them to the industries.
What is the state government's overall vision?
We want to take the development of the state to a higher level. We believe that without investment we will not be able to create jobs. Without creating jobs, we will not be able to generate income for people and revenues for the state. Income will fuel demand in many sectors. Revenues will help us spend more in the social sector.
In many countries the PPP model has not yielded favourable results. Why then is Rajasthan implementing it in the health, education, power, transport and other sectors?
We may be covering these sectors but the coverage is extremely thin. Take the roads sector. Till now the total number of projects identified and taken under PPP is just nine. Time will tell if we'll get bidders for 40 per cent viability gap funding (VGF), which is the limit prescribed by the finance ministry. Even if we get the VGF, the total number of roads will still be nine. Take another example: the health sector. We have identified primary health care centres (PHC), where we have infrastructure but no staff. We are partnering for PHCs where we are unable to deliver services because of manpower constraints. We are tying up with private companies or non-profit organisations in remote areas to operate the PHCs. So there might be PPP in various sectors, but its share within the sectors is minuscule.
But critics say your PPP policies are opaque and allow private partners to seek work on a first-come-first-served basis. Some PHCs have been finalised without inviting applications or bids. Has this been done to benefit certain private players?
It is an open system, available to one and all. What would be the bid variable, if we were to invite bids? This is not an opportunity or instrument to generate profits. All government services will be available at PHCs, according to government norms. This means the private party will not have the liberty to charge for drugs and diagnostic tests. So where will he make money?
There is no denying that the common man will benefit, but at the same time you are not creating a level playing field for private partners by randomly allotting PHCs in schools on a first-come-first-served basis.
It is open to one and all. We have not carved out territories for any particular firm. The bidding process is undertaken to accrue financial gains. We are not running the model on financial benefits.
Why can't the state run these services effectively? Are you running away from the responsibility?
If the government were able to offer all these services, after 65 years (of Independence) the state of affairs would not have been the same. The reality is many villages across most of the states are deprived of drinking water, power and road connectivity. So, should we wait another 65 years for the government to deliver these basic services or use the private sector to catalyse the process? There is no harm if the private sector helps in accelerating the delivery of services. It might be the primary responsibility of the government to provide these basic services, but it is not necessary that the government uses only its resources to do so.
What are the checks and balances being put into place to restrain private parties from exploiting the government's resources?
There is no major cash-handling here. We are taking financial security while allotting money to a private partner to run a PHC. Our financial interests are fully protected. The services we are providing are on a par with those elsewhere. We are providing generic medicines at a fraction of the cost of branded medicines. Therefore, there is no market for generic medicines.
The other criticism of PPP is that you are denying government jobs to residents of the state.
The private sector is not someone coming from Mars or the moon. It is one of us and will employ the local people. The demand-supply gap is not unique to Rajasthan; the problem exists in other states and other countries as well. In the US and the UK, there is a huge shortage of doctors - that is why a large number of Indian doctors are finding jobs there. It takes 10 years to prepare a doctor, so whatever decisions you take, it will take another 10 years to fructify. We have a uniform policy on employment across the state - it is not separate for urban and remote areas. But the private sector is not governed by these constraints. Private players can pay incentives; we can't because we have to pay uniform salaries.
But there is no dearth of teachers in the state. Does giving them jobs put a financial burden on the state's finances?
Teachers can be hired through provisions under the Right to Education Act. There may be teachers in the market, but I cannot engage and employ them; the private sector can. It has the flexibility and the freedom to directly appoint a teacher who has the requisite qualifications. I have to go through a transparent and statewide process, which takes time. For instance, organising a teachers' test takes not less than a year and the entire process can take up to three years.
So is the PPP a stop-gap arrangement till you raise your own resources and staff?
It is not like that. History has shown there was always a lag. State after state, the governments have never been able to bridge the demand-supply gap.
Tell us about the Resurgent Rajasthan Partnership Summit. What are your targets?
Our road shows have ended and we have generated over 200 leads. We are pursuing these leads to convert them into memoranda of understanding (MoU). We are building land stock inventories to support these MoUs. Simultaneously, we are putting together the legal and policy framework. All the pieces of the puzzle are being put into place. All policies are in place and a large number of bills have been legislated. By the end of the current Assembly session, we will be able to clear the pending legal framework.
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What assurances are you giving industry on the land acquisition?
Too much of an issue is being made of the Land Acquisition Act because of the uncertainties around the Central Act. That is why we undertook the exercise of developing large land stocks to be able to service the requirement of industry without going through the process of land acquisition. We are targeting a land stock of 10,000 hectares before the summit. We have secured 6,000 hectares and will get the rest before the summit. In the worst-case scenario, even if industries are not able to acquire one hectare (through the Land Act), we would not be worried. The land stock would be much larger than the land developed by the Rajasthan State Industrial Development & Investment Corporation Limited (Riico) for 323 industries in the last 40-50 years.
Did the state government acquire this land stock from farmers and the people?
This was not an acquisition. We asked the district collectors to identify government plots, which were unoccupied or uninhabited, and transfer it to Riico. The cost of land is low because no acquisition was required. We will develop these plots and sell them to the industries.
What is the state government's overall vision?
We want to take the development of the state to a higher level. We believe that without investment we will not be able to create jobs. Without creating jobs, we will not be able to generate income for people and revenues for the state. Income will fuel demand in many sectors. Revenues will help us spend more in the social sector.
In many countries the PPP model has not yielded favourable results. Why then is Rajasthan implementing it in the health, education, power, transport and other sectors?
We may be covering these sectors but the coverage is extremely thin. Take the roads sector. Till now the total number of projects identified and taken under PPP is just nine. Time will tell if we'll get bidders for 40 per cent viability gap funding (VGF), which is the limit prescribed by the finance ministry. Even if we get the VGF, the total number of roads will still be nine. Take another example: the health sector. We have identified primary health care centres (PHC), where we have infrastructure but no staff. We are partnering for PHCs where we are unable to deliver services because of manpower constraints. We are tying up with private companies or non-profit organisations in remote areas to operate the PHCs. So there might be PPP in various sectors, but its share within the sectors is minuscule.
But critics say your PPP policies are opaque and allow private partners to seek work on a first-come-first-served basis. Some PHCs have been finalised without inviting applications or bids. Has this been done to benefit certain private players?
It is an open system, available to one and all. What would be the bid variable, if we were to invite bids? This is not an opportunity or instrument to generate profits. All government services will be available at PHCs, according to government norms. This means the private party will not have the liberty to charge for drugs and diagnostic tests. So where will he make money?
There is no denying that the common man will benefit, but at the same time you are not creating a level playing field for private partners by randomly allotting PHCs in schools on a first-come-first-served basis.
It is open to one and all. We have not carved out territories for any particular firm. The bidding process is undertaken to accrue financial gains. We are not running the model on financial benefits.
Why can't the state run these services effectively? Are you running away from the responsibility?
If the government were able to offer all these services, after 65 years (of Independence) the state of affairs would not have been the same. The reality is many villages across most of the states are deprived of drinking water, power and road connectivity. So, should we wait another 65 years for the government to deliver these basic services or use the private sector to catalyse the process? There is no harm if the private sector helps in accelerating the delivery of services. It might be the primary responsibility of the government to provide these basic services, but it is not necessary that the government uses only its resources to do so.
What are the checks and balances being put into place to restrain private parties from exploiting the government's resources?
There is no major cash-handling here. We are taking financial security while allotting money to a private partner to run a PHC. Our financial interests are fully protected. The services we are providing are on a par with those elsewhere. We are providing generic medicines at a fraction of the cost of branded medicines. Therefore, there is no market for generic medicines.
The other criticism of PPP is that you are denying government jobs to residents of the state.
The private sector is not someone coming from Mars or the moon. It is one of us and will employ the local people. The demand-supply gap is not unique to Rajasthan; the problem exists in other states and other countries as well. In the US and the UK, there is a huge shortage of doctors - that is why a large number of Indian doctors are finding jobs there. It takes 10 years to prepare a doctor, so whatever decisions you take, it will take another 10 years to fructify. We have a uniform policy on employment across the state - it is not separate for urban and remote areas. But the private sector is not governed by these constraints. Private players can pay incentives; we can't because we have to pay uniform salaries.
But there is no dearth of teachers in the state. Does giving them jobs put a financial burden on the state's finances?
Teachers can be hired through provisions under the Right to Education Act. There may be teachers in the market, but I cannot engage and employ them; the private sector can. It has the flexibility and the freedom to directly appoint a teacher who has the requisite qualifications. I have to go through a transparent and statewide process, which takes time. For instance, organising a teachers' test takes not less than a year and the entire process can take up to three years.
So is the PPP a stop-gap arrangement till you raise your own resources and staff?
It is not like that. History has shown there was always a lag. State after state, the governments have never been able to bridge the demand-supply gap.