The infrastructure action agenda

These 10 priorities could shape a new Bharat

Among the many issues to be tackled in the infrastructure sector, the new government would do well to prioritise these 10 specific initiatives:

• State assets monetisation and recycling: Public expenditure will continue its dominant position as the key driver for infrastructure investments, and thereby also the pump-primer of the economy. The available fiscal headroom for the purpose is severely constrained. Headroom has to be augmented by releasing the moneys locked-up in state-owned operating utilities — both at the central and state levels. There is demonstrated appetite amongst foreign institutional investors to invest in these long-term annuity assets. However, the proceeds should not be mixed up with the Consolidated Fund of India, but ring-fenced in a separate National Infra Development Fund.

• Reviving PPP-plug and play: Public expenditure alone will not be able to meet the aspirational target of Rs 1 trillion of infra investments by 2024 as espoused in the BJP manifesto. Private capital has to be welcomed back urgently, and no better way than plug and play. Here, a 100 per cent government-owned SPV (special purpose vehicle) is created which secures all permissions, licences, and clearances as well as undertakes land acquisition. The SPV is then bid out to private developers. This is possibly the most appropriate risk-allocation format and also gets the highest bids for the State. Over and above this, the recommendations of the Kelkar Committee Report on Reviving PPP need to be acted upon.

• Nal se jal (water from tap): This is the most dramatic promise to the aam aadmi in the BJP manifesto. Nal se jal seeks to provide piped water supply to every household in the country by 2024. Implemented in full measure, it will change the lives of millions of Indians — particularly women folk. Coming as it does, after the fast-paced implementation of the “Saubhagya” scheme (electricity connection for all households), huge expectations have been raised. It could even emerge as a huge electoral booster in 2024.

• National Power Procurement and Distribution Company: Post UDAY outcomes, the case for a National Power Procurement and Distribution Company (NPPDC) is even more compelling. India needs a NPPDC as it will not only act as an effective counter and challenger to the drag of discoms but also create a national price-point for power purchases and tariffs. NPPDC should be in a position to guarantee regular off-take for stranded capacities, make payments in time and overall provide a confident anchorage towards market-making in the fragmented power sector. 

• River linking: Former president, Abdul Kalam, in his address to the nation on August 14, 2002, endorsed the vision and urged action. Besides the solution to floods and droughts, the idea has impactful outcomes like irrigation of 34 million hectares of land, potable water for rural and urban areas, 34,000-MW hydel power generation, inland navigation, and massive employment generation. In 2003, the government set up a high-powered task force, which on September 9, 2003, submitted its report and estimated that the cost of interlinking rivers would be upwards of Rs 5.6 trillion; probably, upwards of Rs 10 trillion by now.

• Completing bullet train by 2024: Prime Ministers Narendra Modi and Shinzo Abe laid the foundation stone of the Mumbai-Ahmedabad bullet train on September 14, 2017. India works on the demonstration effect — think of Delhi Metro and Delhi/Mumbai airports. The timely completion of the project will dramatically change perceptions of rail travel — be it speed, service, comfort or safety and will cascade into demands for a new generation of rail travel across the country. 

• Implement coastal economic zones (CEZs): This was one of the impactful ideas propagated by Arvind Panagariya when he was heading NITI Aayog. The proposed CEZs are to be targeted to labour-intensive and export-oriented industries like clothing, footwear, electronics, light engineering, leather etc. The Ministry of Shipping has identified 14 CEZs along the coastline under the National Perspective Plan of the Sagarmala programme. With a facilitative regime, these could transform India’s export competitiveness.

• UMTA (Unified Metropolitan Transport Authority): Indian cities need to put commuters at the centre of transportation decision-making. UMTA is an inescapable and urgent precondition. In August 2017, the Union cabinet cleared the new Metro Rail Policy wherein if a city wants central assistance for its metro rail projects, its state government will have to commit to setting up and operationalising UMTA. UMTA is expected to seamlessly and efficiently integrate various options through the prism of last-mile connectivity and payment mechanisms. 

• A DFI needed for infrastructure: The government-owned India Infrastructure Finance Company Ltd should be allowed the status of a DFI (development finance institution) for the sector. Commercial banks and NBFCs have moved away from long-term financing of projects, and alternative market instruments like Bonds, InvITs, REITs and Debt Funds have still not reached levels of full maturity. So, private domestic financing is unavailable and long-term developmental objectives are left in limbo.

• Municipal bonds: Globally, municipal bonds are an established and major source of funding for urban infra and utilities. In the US, the current size of the municipal bond market is over $3.8 trillion. Between 1997 and 2015, municipalities in India have been able to raise only $291 million, according to a report by Janaagraha. A conjunction of changes is municipal accounting, rating, autonomy and civic institutions are required to be pushed, as envisaged in the historic 74th Amendment to the Constitution. It is only then that municipal bonds can be raised in substantial amounts and we can get really smart cities.
 

The author is chairman, Feedback Infra