The infra quotient in manifestos

While some directions are laid out, the crucial issue of funding is left unaddressed

What can we expect for the infrastructure sector under a new government? 

Party manifestos are hardly the best place to look for the most accurate understanding of what any government will do — they tend to be big on promises, and are tailored to grab the attention of the aam aadmi. Still, it is heartening that both the Bharatiya Janata Party (BJP) and the Congress have treated the sector as important enough to merit a separate section in their respective manifestos. The BJP is the only one of the two to specify an investment number — Rs 1 trillion of capital investment by 2024 in infrastructure. It promises to construct an extra 60,000 km of national highways over the next five years. In railways, it promises full conversion to broad gauge and electrification of the existing rail network, and completion of the dedicated freight corridor by 2022. It envisages the connection of every gram sabha to an optical fiber network by 2022.

The BJP is also targeting what it calls “next generation infrastructure” which will cover gas and piped water supply to all households, doubling the number of airports and setting-up wayside amenities along national highways. It promises a National Urban Mobility Mission to provide technology-based urban mobility solutions and promises to incentivise the use of public transport.

The Congress too, promises to increase the length of national highways and speed up the pace of construction, as well as the modernisation of all outdated railway infrastructure. It makes an explicit commitment to formulate a policy on clean energy, and also to increase the share of solar and wind energy in the total energy supply. It seeks to encourage investment in off-grid renewable power generation “with ownership and revenues vesting in local bodies”. In the long run, it says, it aims to substitute LPG in homes by electricity and solar energy. Incidentally, the BJP too, aims to more than double current renewable energy capacity by 2022.
 

The CPI(M) too, has a separate section on infrastructure. In contrast to both BJP and Congress, the CPI(M)’s manifesto explicitly commits, not surprisingly, to reversing the role of the private sector in infrastructure and the idea of public private partnerships as a whole. Instead it promises to increase public investment in infrastructure with “adequate” plan outlays for power, communications, railways, roads, ports and airports.

The CPI(M) promises to make the Rehabilitation and Resettlement Act of 2013 universally applicable to all laws requiring land acquisition, as well as to more rigorously define “public purpose”. While the BJP does not really talk about land acquisition, the Congress does so but does not get into specifics, only promising that ‘distortions that have crept into the text and the implementation’ of the Land Acquisition Act and the Forest Rights Act will be removed to restore the “original purpose” of the two acts.

The Trinamool also promises to take a fresh look at land acquisition policy. It promises to create land banks by the government which would comprise land owned by central and state government departments. It promises to use such land for industrialisation and creating logistics hubs. It too, promises a clean energy policy.

Overall, what is the main message? 

One, that there are no breakthrough ideas this time, other than possibly the BJP’s special programme, “Nal se Jal”, to provide piped water supply to every household in the country by 2024.

Two, that the main national parties are quite predictable and similar in their promising a big push toward infrastructure with a focus on areas such as clean energy, utilities connect to households, investment in information and digital infrastructure, village electrification and roads construction.

What is lacking is a clearer articulation of each parties’ understanding of the critical challenges facing infrastructure today — whether it is the overhang of unfinished projects, regulatory bottlenecks, liquidity shortfall, power-sector woes and issues surrounding approvals. 

However, the elephant-in-the-infra-room question is the fiscal headroom available to continue to use public expenditure as the pump-primer of infra investments. This now poses a serious challenge. With the pressures looming large on account of promises made on universal basic income/direct benefit transfers and the expected high spends to relieve agrarian distress and fund social sector schemes (particularly health), the fiscal space for infra remains even more severely constrained than ever before. 

The BJP’s articulation of Rs 100 trillion in five years, means an annual investment target of Rs 20 trillion in infrastructure every year. That is well-nigh impossible from public expenditure alone even if buttressed with multilateral/bilateral development funding and access to other off-budget pools of capital.

For any government in power, there is really no alternative than to urgently take steps to revive private capital in the country’s development through the rejuvenation of PPP (public private partnership) processes. The Left, clearly, does not like the idea, while the others do not appear to have a clear strategy or intent, on this aspect.

The stark reality of the humongous funding requirement will willy-nilly be among the first set of challenges facing the new government — and it will have to bite the bullet on issues like reviving PPP (BOT, hybrid annuity et al) models, as well as initiatives like asset recycling, public assets monetisation and ring-fenced cesses. 

But these issues may well be outside the purview of a general-appeal manifesto.

The author is chairman, Feedback Infra