The media is full of downbeat commentaries on India — slowdown, decision paralysis, logjam, policy lethargy and preference for indecision over action. So much so that The Economist of the March 24-30 edition carried a cover story titled “India’s economy: Losing its magic” with a picture of a snake rising initially to the charmer’s pipe and then landing with a thud.
Few would argue that the infrastructure sector has perhaps been the most affected. There is clear disenchantment with more policy announcements, committee reports and White Papers. The obvious expectation is decisiveness and action.
So here are 10 reasons a vibrant new infrastructure ministry can bring life back to the infra sector, and be a visible “action station”.
* Coordination: There are 12 ministries at the central level that directly look after a particular infra area. These are road transport, railways, drinking water and sanitation, power, urban development, atomic energy, renewable energy, shipping, civil aviation, communication and information technology, housing and water resources. The inclusion of rural development, environment, industry and commerce (special economic zones, national investment and manufacturing zones, and Delhi-Mumbai industrial corridor) and heavy industry (Bharat Heavy Electricals and so on) raises the count to 16. Adding Planning Commission, finance ministry and Prime Minister’s Office raises the number of institutions “involved” at the Centre to 19. Thus, a rash of Empowered Groups of Ministers, PM-chaired committees, principal secretary to PM-headed groups and presidential decrees are no surprise since they are all needed for coordination. It is about time such “coordination” was institutionalised through an infra ministry.
* Permissions and clearances: The table (Sovereign obstacles) summarises 56 strands of the “tangled web” in setting up power sector projects.
Also Read
These 56-odd permissions are given by a wide range of authorities, all in some measure, representing the “sovereign”. These authorities include all three levels of constitutional devolution — federal, state and local bodies and are rich in their diversity as well as in their potential to stall proceedings at any stage. One has to marvel at their sheer variety: village panchayats, municipalities, ministries of coal, railways and environment, state environment committees, state pollution control boards, forest departments, central electricity authority, power grid corporation, central electricity regulatory commission, state electricity regulatory commission, state transmission corporation, irrigation department, civil aviation, power ministry (in case you forgot!), port authorities, chief controller of explosives, customs department and, in some specific cases, clearances on account of impact on wildlife, coastal zone and archaeology. And this is only an illustrative list for a power plant!
The key to the solution lies in the “sovereign” itself taking the responsibility to cut through the web of “sovereign” obstacles through this new infra ministry. This should not be made the core competence of the private sector. Nor should the sovereign be allowed to abdicate its responsibility of clearing sovereign obstacles for projects in which it has itself invited private sector participation.
* Land acquisition: The Land Acquisition (Amendment) Bill, 2009 stipulates that land may be acquired by the state only for “public purpose”. The definition of “public purpose” is defence purposes and infrastructure development.
* Administration: A trillion-dollar infra market necessarily has cross-ministerial tasks like administering the viability gap fund or future annuity funds. An infra ministry is needed to comment on model concession agreements, keep an eye on bid-process procedures and transparency, and also oversee efficacy of institutional and multilateral funding. There is no reason such non-policy administrative tasks should be allowed to remain with the Planning Commission (by default) or the finance ministry (by design).
* Infra Budget in place of the Railway Budget: The Railway Budget is a colonial hangover. We need to replace this with an infra Budget day where there should be clear public accountability of performance vis-à-vis the huge public outlays and critical national development needs. The infra ministry should anchor this as well as prepare an annual appraisal and commentary much like the Economic Survey.
* Gross capital formation in infra (GCFI): From being an unknown statistic till a few years ago, GCFI has become the only yardstick for planning and measuring performance in infra development. The meticulous collection and collation of this measure requires serious attention. Its regular dissemination in line with the usual economic statistics of GDP, inflation, and fiscal deficit et al requires to be institutionalised. Moreover, quarterly updates on “time and cost” aspects of implementation of 50 projects (to start with) of national importance should be made public.
* Infra definition: On March 1, 2012, the Cabinet committee on infra approved a harmonised master list of infrastructure sub-sectors. In the notification, it provided for an institutional mechanism to update the master list on a need basis. The proposed infra ministry is best poised to anchor this role.
* Creating a project pipeline: The 12th Plan envisages investment of $1 trillion from 2012 to 2017. This means $200 billion every year, starting now. Assuming infra projects have a concept-to-implementation cycle of four years (a conservative estimate), then we require a $800- billion pipeline of “cooked and cooking” projects. Who will have the responsibility to create and track this? Why, the new infra ministry.
* Independent regulation: Recent public controversies regarding lack of transparency and good governance have reiterated the long-standing demand for fresh legislation to create truly independent regulatory authorities for various infra sectors. Draft legislation, adroitly prepared by the Planning Commission, has for long been awaiting political will. The infra ministry should steer the effort for creating a world-class regulatory architecture and then rightfully be the umbrella under which the infra regulators should perform and be accountable for their neutral duties.
* Other countries have it: Japan has a single ministry of infrastructure. It is called the ministry of land, infrastructure and transport. France has a ministry for infrastructure (covering transport, spatial planning, tourism and the sea). Israel, too, has its ministry of national infrastructure. Many of these countries have merged various infrastructure-related ministries into one.
So, what in summary is the recommendation?
Simple, refashion the ministry of programme implementation and statistics. Shift statistics to the Planning Commission. It could do with a line job and it is, in any case, the key interpreter and user of statistics. Then change the name to ministry of infrastructure. Let a dynamic minister head it. Have an action-oriented secretary and hand-pick 10 of the country’s brightest officers to staff it. In the spirit of public-private partnership, request the private sector to depute some of its nationally-committed executives to this new ministry. And load the infra ministry with this 10-point agenda.
Presto, The Economist may soon have a snake rising rapidly on its cover!
The author is Chairman of Feedback Infrastructure. These views are personal.
