Vinayak Chatterjee: Give these two the big push

INFRATALK

Mumbai as an IFC and the Delhi-Mumbai industrial corridor both deserve to be aggressively implemented by the UPA government.

The NDA government will always be remembered in infrastructure circles for the epochal National Highway Development Programme (NHDP). The present UPA government can certainly be credited with some good schemes "" pushing PPP, forex for infrastructure, the creation of the Indian Infrastructure Finance Co Ltd, viability gap funding, airport modernisation, Bharat Nirman, JNURM, ultra-mega power projects, and even SEZs. These, however, have not quite fired the public imagination as the NHDP and the associated rural roads programme did.

In this context, two new-age projects that have the requisite impact, and if properly 'pushed', can garner accolades for the UPA dispensation are Mumbai as an IFC and the Delhi-Mumbai industrial corridor.

Mumbai as an IFC
This proposition has been presented very forcefully and professionally by the ministry of finance in an elaborate report. The finance minister himself has strongly endorsed the idea at a well-attended gathering in Mumbai this summer. Fundamentally, the idea is for Mumbai to replicate a London, New York or Singapore, which are at present the only 'global' finance centres; and provide competition to other aspirants like Shanghai, Dubai, Paris, Frankfurt and Tokyo.

There are five infrastructure challenges before the UPA Government in pursuing this path-breaking opportunity. They are:

With its two financial centres being located in the Bandra-Kurla complex and Nariman Point/Fort in south Mumbai, intra-city drive times have become particularly critical. The linkages to the upcoming visionary SEZ in the immediate hinterland also needs to be factored in.

A host of PPP solutions, based on user charges, need to be rapidly rolled out in order to alleviate infrastructure constraints such as transport, power, water, sewage, drainage, railway stations and so on.

The city's administrative structure would have to be revamped. In China, the four largest cities have been given provincial status, much like Delhi. The central policy focus needs to be on the empowerment of the city government to take economic and service delivery decisions, as envisaged in the 74th amendment.

Financial allocations for the city made by the central and state governments have to be realigned to reflect the public revenues they generate and the city's legitimate needs for infrastructure maintenance as well as planned urban growth and development.

One suggestion floating around is turning Mumbai into a Special Administrative Region like Hong Kong. Such a 'one country, two systems' mechanism similar to the arrangement Hong Kong has with China would release a burst of energy "" administrative, financial and political.

Master Card Inc's recent survey findings put Mumbai at the tenth place in terms of the volume of 'financial' flows, ahead of Shanghai, Hong Kong, Sydney, Singapore and Zurich. Ernst and Young's Global IPO Report 2006 puts India's (read Mumbai's) IPO market as the world's eighth largest. With these two shots-in-the arm for IFC proponents, a Hong Kong type solution is well worth considering.

Delhi-Mumbai Industrial Corridor (DMIC)
Originally mooted by the Japanese as a high-speed "bullet-train type" dedicated passenger route, it was then transformed by the Planning Commission, PMO and the railways into a freight corridor for three reasons:

A high-speed passenger corridor would be seen as elitist;

Higher axle-loads on freight trains would necessitate fresh sections of track and the strengthening/revamping of bridges, culverts and tunnels. It was better to do this afresh for freight and leave passenger trains to consequently increase speeds on existing tracks vacated by slower freight trains;

The acquisition of rolling-stock and freight train operations on a PPP basis was seen to be financially and administratively less burdensome than for the passenger.

The Japanese were not particularly pleased, but nevertheless, the high-speed passenger corridor became a dedicated freight corridor. All this was happening as the SEZ frenzy was at its peak, and all concerned saw the great land value potential alongside the freight corridor. Surely enough, proposals flew in thick and fast to develop all kinds of economic clusters and connectivities across the freight corridor and lo and behold, the dedicated freight corridor morphed into an "industrial corridor"! Holy water was sprinkled on this idea when the Prime Ministers of Japan and India met in Tokyo in December, 2006 and a collaborative MoU was signed.

Japanese interest in this project is at an all-time high. India's department of industrial policy and promotion is enthusiastically preparing concept papers for a $90 billion ($50 billion till a few weeks ago) investment programme. The initial concept note was presented by Kamal Nath to the Japanese Trade Minister Akira Amari in New Delhi on July 2, 2007. The project would be launched in January, 2008 and completed in the next eight years. It is expected to mark another glorious chapter of Indo-Japanese collaboration after Maruti and the Delhi Metro, and would be the highlight of Japanese Prime Minister Shinzo Abe's visit to India in August, 2007.

History has shown that mega-infrastructure projects in India (or for that matter, elsewhere in the world) require a combination of strong political championing, unique structural solutions and visionary professional leadership to make them happen.

Five issues that are common to both the above-mentioned projects are:

The availability of 'soft' long-term capital of about 30 years' duration. This is normally available only under overseas development assistance schemes like World Bank, ADB or JBIC.

Buy-in from a multiplicity of stakeholders like state governments, local communities, NGOs, central government authorities, railways, ULBs and the like. These are best harmonised by creating an empowered 'authority' under an Act of Parliament. This would be in keeping with the spirit of similar enactments for SEZs, NHAI, electricity and so on.

The institutionalising of non-partisan, visionary, professional leadership and management, much akin to E Sreedharan's in Delhi Metro.

Continuing political support with some clearly identified cheerleaders. The signs are that P Chidambaram and Kamal Nath are warming up to the task for IFC and DMIC, respectively, but the enabling legislation should be designed to outlive the initial political champions.

Putting on the ground complex administrative frameworks consisting of a web of steering committees, empowered authorities, holding companies, land banking entities and a slew of connected SPVs.

Will the UPA government choose to move ahead purposefully? Watch this space.

The author is the Chairman of Feedback Ventures. He is also the Co-Chairman of CII's Apex Council on Infrastructure. The views expressed are personal