This refers to Subir Gokarn's column Public Sector: Act V? (Muddy Waters, September 9). The lag in infrastructure and capital goods development is clearly hurting India's development. The other unnoticed lag is in developing innovative technologies that match domestic resources to urgent needs, the way Israel has done with water and defence management. The public-private partnership and pure private models' problems often trace back to three issues. The first is the overly optimistic market projections that make people quote absurd rates while rent-seeking instincts urge them to accumulate projects, much like land bank. The second is that of implementation getting lost in the maze of rules of land acquisition, forest and tribal protection and rehabilitation. The third is the fundamental dynamic of the broader consuming/user class having modest rupee income while the cost of projects such as land, capital goods, interest and energy is in dollar-equivalent terms. There is not a sufficiently large consumer base that is willing and able to pay market price. For a capital-poor, low-income country like India, infrastructure development necessarily has to have a subsidy element that only the government can provide.
P Datta Kolkata
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