The battle-cry in the infrastructure sector is now about implementation. The bugles are sounding for efficiency of project delivery in the public sphere and about creation of bankable projects in the private sphere. Both have to ultimately do with governance and management in the public system. And this is clearly the Achilles's heel of infrastructure.
In the excitement of roping in the private sector, it is often forgotten that structuring 'biddable,' (and finally 'bankable') projects is the responsibility of the sovereign. The private sector can only respond to bids.
The first and second stimulus packages (December '08 plus January '09) have tried to squeeze the monetary and fiscal lemons, and delivered some juice as below:
(i) refinancing through IIFCOL worth Rs 40,000 crore (Rs 400 billion);
(ii) a gradually softening interest rate-cum-liquidity regime;
(iii) ECB access for NBFCs lending to core sector, and integrated township developers;
(iv) interest sops for low-cost housing;
(v) recapitalisation of PSU Banks by Rs 20,000 crore (Rs 200 billion);
(vi) an SPV to provide around
Rs 25,000 crore (Rs 250 billion) in liquidity support against investment-grade paper of NBFCs -- many operating in the infrastructure space.
It is expected that the combined effect of all the above could well be around Rs 100,000 crore (Rs 1,000 billion) worth of financial fillip to the infrastructure sector for the next 12-18 months. Fiscal capacity is now fully stretched. Moreover, there is no chance of any fresh fiscal concessions till autumn 2009.
So, it is time to rattle sabres on the long-overdue issues regarding implementation. There is general agreement now that the current effective constraint in infrastructure development is not money. Mahatma Gandhi famously said, 'Find purpose, means will follow.'
In his column in Business Standard on January 3, 2009, T N Ninan raised this issue: 'Why it won't work?' -- he then drew a link between corruption and poor governance, and indeed the slow paralysis of government. For the infrastructure sector, it is well-recognised now that the price for keeping a coalition together has been far too high.
Also monetary and fiscal interventions are the proud handiwork of economists and financial experts. Just as companies cannot be run only by the planning and finance departments, neither can the nation be run only by policy czars, monetarists, fiscal interventionists and economists.
We need managers and operational accountability. Unfortunately, for a country the size of India, only one infrastructure manager's name keeps cropping up, viz E Sreedharan of the Delhi Metro. While the nation rightfully salutes him, is it not the task of our leadership to identify and empower 100 Sreedharans?
So, if the third stimulus is to be about implementation, here are nine suggestions:
Reproduced below is the extract of a Business Standard interview with the deputy chairman of the Planning Commission on January 10, 2009:
You talked of $500 billion investment in infrastructure during this Plan. It does not look likely to happen.
Probably. But let me put it this way. When have we reached 100 per cent of a Plan target? The purpose of $500 billion was to define the scale of the effort. We have succeeded in putting infrastructure on the agenda.
Now that infrastructure is firmly on the agenda, we can perhaps collectively prioritise its implementation.
The author is the chairman of Feedback Ventures. He is also the chairman of CII's National Council on Infrastructure. The views expressed here are personal.
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