About 11 months ago — on February 29 to be precise — the then finance minister P Chidambaram announced his intention to create a national fund for transmission and distribution reform. “The details of the scheme will be worked out and announced very soon,” he said in his budget speech. It is now time for the next budget, and we still do not know what exactly “very soon” means in government parlance — one year, two years, or within the next five years.
The fund — proposed to be a whopping Rs 100,000 crore by Planning Commission member B K Chaturvedi — is aimed at extending soft loans to the state electricity boards or their successor entities while they tighten leakages in transmission and distribution. This seems very much like a proposal for a grant masquerading as a soft loan scheme, which is perhaps why it has been toned down by the finance ministry. This is not acceptable to Mr Chaturvedi who says that unless the size of the fund is substantial, nothing much would be achieved. The result: At the end of a year, we have nothing to show in terms of actual progress.
Now just look at another sector — infrastructure — where every government entity is on the same side of the fence. Yes, investments are required. Yes, they are huge. Yes, they are critical to economic revival and therefore, they are a priority. I decided to look for the top five or ten large infrastructure projects which are likely to be bid out in the next 12-18 months. Interestingly, the largest projects are the ultra mega power projects involving an investment of Rs 18,000-20,000 crore each. Bids for the fourth such project at Tilaiya in Jharkhand are already in and the successful bidder will be announced perhaps in the next few days. Will the fifth project be bid out in 2009? Very unlikely, unless we are surprised on the upside.
The power sector has the capacity to absorb investments of Rs 10 lakh crore in generation, transmission and distribution. This is the number that the 11th Plan Working Group estimated. This is also the sector where shortages are unlikely to ease at least over the next few years. There is a case for declaring this a priority sector within the infrastructure bracket.
Switch to the transport sector, and look at roads. According to the road transport secretary, the National Highways Authority is likely to complete projects worth Rs 20,000 crore during the current financial year, 35 per cent short of the target of Rs 31,000 crore. Nevertheless, there is a long list of projects on offer on its website — some Rs 10,000 crore worth under Phase II of the National Highways Development Programme (NHDP), over Rs 20,000 crore projects in NHDP Phase IIIa, Rs 40,000 crore in Phase IIIb, and Rs 40,000 crore in Phase V. What will successfully be bid out over the period that one is looking at is highly uncertain given the fact that no bids were received for a few projects that were put up for bidding recently. Top that with the fact that the developers are demanding a higher-than-the-limit viability gap funding of 40 per cent and you can make your own guess on how many projects will actually reach the construction stage in the near future.
The time it would take to get the dedicated freight corridors moving also seems indeterminate as of now, and the story is no different in the port sector. Airports — greenfield and those under renovation — are already passing through what is described as a “challenging” phase, with declining passenger numbers. In such a scenario, how much of a priority the upgradation of the smaller airports will be is anybody’s guess. Also, just to put the numbers in perspective, a greenfield airport like Hyderabad or Bangalore costs about Rs 2,500 crore, which is a little more than a tenth of what an ultra mega power plant costs.
There is the large Rs 38,000 crore project from Indian Railways involving the manufacture and supply of electric locomotives and 1,000 diesel locomotives over a period of ten years which has attracted the attention of the world’s largest companies like General Electric (in a tie-up with BHEL) and Bombardier. And one can’t talk about large projects without mentioning the controversial 1,000 kilometre Ganga Expressway Project which, at Rs 30,000 crore (Rs 40,000 crore according to some estimates), would be the largest project on the infrastructure list.
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We need to have a list of important infrastructure projects and fast-track them. I am fully in favour of the proposal of Feedback Ventures’ Vinayak Chatterjee to have a list of 20 “national priority” infrastructure projects which should have a separate body to oversee their implementation, and give monthly updates on progress. Better still, we could work on strict pipelines and evolve, for the infrastructure sector, something akin to the 150-day plan that Chidambaram has chalked out in his new ministry.
The Planning Commission is working on a list of nationally important infrastructure projects which will be unveiled some time soon. That is a good move though every infrastructure practitioner would be shocked at the absence of such a list so far.
Many years ago, a young Rajiv Gandhi managed to make computerisation and telecommunications a priority for a nation still used to its manual typewriters. It was an ambitious move for a struggling nation. Look at where his new computer policy of 1984 got us. Moral of the story: Prioritise. Then act fast!