Required: Institutional capacity

The UK's National Infrastructure Commission provides some lessons

July 10, 2014: Finance Minister Arun Jaitley’s first Union Budget speech in Parliament. He reads out Para 110 in Section V on Infrastructure: “India has emerged as the largest PPP market in the world with over 900 projects in various stages of development. PPPs have delivered some of the iconic infrastructure like airports, ports and highways which are seen as models for development globally. But we have also seen the weaknesses of the PPP framework, the rigidities in contractual arrangements, the need to develop more nuanced and sophisticated models of contracting and develop quick dispute redressal mechanism. An institution to provide support to mainstreaming PPPs called 3P India will be set up with a corpus of Rs 500 crore.”
 
May 26, 2015: The NDA Government constitutes a nine-member committee headed by former finance secretary, Vijay Kelkar. This Committee submits its report “Revisiting and revitalising PPP model of infrastructure development” on November 19, 2015. The committee strongly endorses setting up “3P India” which, it holds, in addition to functioning as a centre of excellence in PPPs, will enable research, review and roll out activities to build capacity. The committee emphasises the need to further strengthen the three key pillars of PPP frameworks, namely, governance, institutions and capacity, to build on the established foundation for the next wave of implementation.
 
December 31, 2019: The finance minister releases the report of the task force on National Infrastructure Pipeline (NIP) for 2019-25. At a press conference, she says “to achieve the GDP of $5 trillion by 2024-25, India needs to spend about $1.4 trillion over these years on infrastructure. The challenge is to step-up annual infrastructure investment so that lack of infrastructure does not become a binding constraint on the growth of the Indian economy”.
 
It has been recognised quite early that to push the infrastructure agenda hard as a key driver of economic growth, it is not enough to have a visionary project-pipeline and financing; there is also a need to create the required institutional capacity.
Here, the National Infrastructure Commission (NIC) of the United Kingdom, set up as recently as October, 2015, holds some lessons for India.
 
What is the charter of UK’s NIC ?
As an operationally independent agency under the UK Treasury, it functions as a think-tank focussed on the long-term infrastructure priorities of the country and provides advice and recommendations to the government on infrastructure challenges and strategy. It has a secretariat of approximately 50 staff led by a chief executive.
 
It takes a long-term view. The NIC publishes a National Infrastructure Assessment once every parliament term, setting out the long-term infrastructure needs of the country, spanning a period of 30 years, along with recommendations to the government on how those needs can be met.
 
But it also keeps an eye on immediate needs. A purely long-term blue skies view runs the risk that the recommendations will simply be ignored by a government focussed not on the next 30, but on the next five. The NIC, therefore, publishes sector-specific reports on more pressing infrastructure needs.

It moves beyond a narrow sector focus. In transport for instance, it examines solutions in multi-modal terms with an eye for the interdependencies between road, rail and metro transport.
 
The NIC charter makes the relationship, rights and responsibilities with the government clear. The government has a duty to formally respond to recommendations made by the NIC and make it clear which ones it accepts and rejects, along with reasons. The NIC monitors progress on recommendations. It publishes an annual monitoring report which keeps track of the government’s progress made on its earlier recommendations. In this way, it acts as a reality check on the gap between aspirations and actual achievement.
 
It builds bridges with other institutions. The NIC is required by its charter to engage with other stakeholders such as policy makers, infrastructure experts and other relevant bodies such as sector regulators. This is important because one of the biggest problems with institutions similar to the NIC in India, has been a lack of buy-in on recommendations from external institutions by ministry mandarins looking to guard their own turfs.
 
The NIC has to engage with the public. It is required by its charter to engage with the public while preparing its reports. Given that the public is the biggest “customer” and user of most infrastructure projects, this is critical in building consensus. The NIC is financially independent. While it is technically under the Treasury, it is funded by a “multi-year financial settlement” with the government which enables it to have visibility on funding across years at a time, rather than have to negotiate budgets every year.
 
So is its operational independence. Its charter makes it clear that it "will have complete discretion to determine independently its work programme, methodologies and recommendations, as well as the content of its reports and public statements."
NIC has the ability to hire good talent. A weakness of Indian institutions has been that they have turned into sinecures for retired bureaucrats. The NIC pulls in not just civil servants, but also professionals from the infra sector, from local governments, and from regulators.
 
Rebooting Indian infrastructure is crucially dependent on building institutions similar to the NIC in the UK. The principles on which UK’s NIC was established show the way.
 
The author is the chairman of Feedback Infra