China has announced its $586 bn infrastructure plan while India continues to just talk of big investments.
With about six months, or even less, to go for the next general elections, the Union government should have been expected to go on an overdrive to announce major schemes and projects. Considering that the Indian economy is going through one of its worst crises, you would have also appreciated the government’s eagerness to launch schemes that would entail huge expenditure on projects, create jobs and hopefully some more demand.
So, it is surprising that the government has remained relatively quiet as far as taking decisions on new mega projects is concerned. Take a look at the last meeting of the Union Cabinet and the Cabinet Committee on Economic Affairs (CCEA) held on November 6, and you’ll get a sense of what is occupying the mind space of the Union government’s top decision making body. The disconnect between the thinking of the government’s political leadership and the reality that faces the Indian economy will become too obvious to be ignored.
On November 6, the Cabinet approved a Rs 950-crore project to construct Afghanistan’s Parliament building and the Indian chancery complex in Kabul. In addition, it enhanced the productivity-linked monetary reward scheme for port and dock workers, approved the national biodiversity action plan and ratified the agreement on the transfer of sentenced persons between India and the Hong Kong Special Administrative Region.
The deliberations and the decisions taken at the CCEA meeting on November 6 offered some hope. The CCEA approved a Rs 1,339-crore national project to construct 53 kilometres of new broad-gauge railway tracks in Sikkim. A Rs 574-crore 110-Mw hydroelectric project in Arunachal Pradesh, dredging of the Vallarpadam terminal at Cochin at a cost of Rs 381 crore, a Rs 350-crore biotechnology research programme in partnership with industry and some other schemes to set up border check posts and schools in educationally backward areas were among other major decisions taken at that CCEA meeting.
Central government officials concede that this surely does not indicate that the government is just a few months away from general elections. Nor does it show any urgency on the part of the government to announce some big projects to pump-prime the economy as large sections of Indian industry have demanded during their recent interaction with the government in the wake of the global financial crisis.
They, however, point out that the government has so far been mainly engrossed with the impact of the global crisis on the Indian financial sector and the capital market. Thus, the finance ministry, the Reserve Bank of India and the Securities and Exchange Board of India have been grappling with issues that might affect the banks, mutual funds, insurance companies and the stock markets. Which is why, there have been a slew of measures to provide enhanced liquidity for banks and related measures for other financial intermediaries.
It is true that the intended beneficiary of all these measures will eventually be the corporate sector, which will then be able to access funds to implement new projects and even revive the ones that had to be stalled for want of adequate financial resources. But what India’s industry wants now is not just easy finance. It is in dire need of some mega infrastructure projects that will provide it with more orders. In August 1998, the AB Vajpayee government had unveiled two mega infrastructure projects — construction of national highways, popularly known as the east-west and north-south corridors, and modernisation of the country’s major airports.
The highway projects got off to a flying start and contributed to the growth momentum the economy gained in the following five years. The airport modernisation project got delayed during the tenure of the Vajpayee government. It was the Manmohan Singh government that began its implementation. And an expanded highways project was also taken up for implementation by the Manmohan Singh government.
Government officials admit that there is now need to announce a few more mega infrastructure projects like the ones that were initiated by the Vajpayee government. Not just to earn some electoral dividends six months from now, but also to improve the economy’s prospects of beating the recession.
What Prime Minister Manmohan Singh continues to do (he did that again while in Muscat on Sunday) is only to talk about the need for a $500-billion investment in India’s infrastructure sector. China, in sharp contrast, is not talking. It has announced a $586-billion plan for investments in infrastructure projects to stimulate the Chinese economy.