What?s with all the infrastructure plans, Mr FM?
FM has not made any comments whatsoever on GCFI as a percentage of GDP, writes Vinayak Chatterjee, chairman of Feedback Ventures.india Updated: Mar 01, 2006 15:50 IST
The expectations of those in the infrastructure sector in the run-up to the budget could best be described in three words: Implementation, implementation and implementation. This is largely because a slew of initiatives have been announced over the last two years. These include the revitalised roads programme, airport modernisation, ultra-mega power projects, convention centres, five new AIIMS, Bharat Nirman, Jawaharlal Nehru urban renewal mission, special purpose vehicle (SPV), viability gap funding, rejuvenation of rural water bodies, rail freight corridor and a sprinkling of other initiatives that have largely been forgotten. Superimposed on all these are regular pronouncements peppered with references to publicprivate partnerships (PPP) and FDI attraction.
So the prevailing pre-budget mood was clearly "Hon'ble Finance Minister, please do not announce any new set of grand-sounding schemes but please tell us what is happening to all the plans, programmes and projects that were announced earlier."
Thankfully, Budget 2006 did not announce any new grand schemes and programmes!
The Finance Minister restricted himself to a spate of semi-action-taken-reports on mega-wattage, the roads programme, water bodies, the new SPV and the viability gap fund opening its doors to business and enhanced allocations (or should we say re-allocations) to Bharat Nirman, urban renewal, rural roads et al.
Some notes were also struck on PPPs in industrial clusters, roads and focused new townships.
A welcome development was on the restructuring of the National Highway Authority of India to make it a more 'multi-dimensional' organisation with greater capacity to deal with PPP, safety, new technologies, quality control and corridor management. The intention announced of having seven world-class access controlled expressways on a DBFO (design, build, fund, operate) basis is also a strong positive signal on how this sector is expected to grow in future.
Sadly, from the point of view of practitioners of the art and science of infrastructure, the finance minister has not made any comments whatsoever on the index that we were all looking forward to, called - the Gross Capital Formation in Infrastructure (GCFI) as a percentage of GDP. At individual levels and at the level of various industry associations like CII, we have be, 2006 en crying ourselves hoarse all through the last year that citizens of this country deserve to know from the government, and particularly from the ministry of finance, what is the actual and budget ed GCFI as a percentage of GDP. Certain sources tell us that it is at an all time low of 3.5% as compared to China's 11%.
The other area of serious and continuing discomfort relates to what the Economic Survey mentioned as the requirement of regulatory architecture for the infrastructure sector. Independent regulatory authorities are a 'must have' in an era where significant private capital is expected to come in. There is complete silence here… and yet we expect PPP to plug in.
(The writer is chairman of Feedback Ventures and also the chairman of CII's National Committee on Infrastructure)