INDIA GROWTH STORY: India Growth:Infrastructure: The underdog millionaire

THE INFRASTRUCTURE INDUSTRY IS SURELY TO BE WATCHED OUT FOR IN THE COMING YEARS, PROVIDED THE GOVERNMENT RECTIFIES ITS PAST MISTAKES, SAYS SREEHARI NAIR The unanimous view is that the bureaucratic approach to things will now have to be abandoned, with the government committing itself to some speedy work.

India's projected realistic GDP for the coming fiscal is estimated to be over the five per cent mark. With the infrastructure industry being the major contributor towards this growth, there is a need for a focused and sustained attention towards this sector.
    Sadly though, it is a known fact that the infrastructure sector in India is much neglected. Despite having the second largest road network, the country is still far behind countries like China and the US. In India, out of the proposed 31,755 km by the National Highways Development Programme, completion achieved is just 28 per cent, or 9,165 km. The Golden Quadrilateral, which was supposed to be operational by 2008, was rescheduled to the year 2012 and now has been further moved, to 2014, citing various reasons.
    "The government is trying hard to push the sector but the pressure is not enough," feels Jayesh Desai, national director, Infrastructure and Real Estate and Government Services. Desai points out that "There are various issues like approvals, land allocations and regulatory problems that need to be dealt with first. Unless we learn from the past, the future cannot be rectified."
    "The real estate sector has also been largely affected due to poor infrastructure development planning," says Anshuman Magazine, chairman and managing director at CB Richard Ellis. "Water supply and the power sector are problematic issues. When it comes to development, demand is high, while the supply is low, due to which land prices are high and there is no relation between the per capita income and property prices," he elaborates.
    Although the government has been trying to boost the sector with various stimulus packages, the fact remains that unless these projects take off, it wouldn't be of much help. "The government needs to have a vision for a better tomorrow. Today, it is functioning in a haphazard manner and if it continues this way, all bullish talks will remain boxed," avers Rajesh Vardhan, managing director, Vardhman group. The infrastructure developments happening around the city will work for the current demand but what about tomorrow? "Clearly, we are in a state of mess," laments Vardhan.
    As per estimates, funds required to finance infrastructure projects from the central government would be to the extent of USD 12 billion, i.e., one per cent of India's GDP in the next three years. Infrastructure financing through centrally owned public undertakings is estimated around USD 35 billion, which would be around three per cent of India's GDP by 2011-12. The state government and their enterprises could generate projects financing to the extent of USD 12 billion and the private sector contribution to it could work out to USD 30 billion, which would be around 2.5 per cent of the national GDP by 2011-12. In totality, the financing for infrastructure projects could work out to be USD 90 billion, or 7.5 per cent of national GDP in the next three years, says a report from the Associated Chambers of Commerce and Industry of India (ASSOCHAM).
    Though most projects are attaining financial closures, the costs are high, due to scarcity of funds. If India has to grow from the current slowdown, rates need to come down, says Desai. "The key is to make investments look attractive. Currently, there is a lot of red tape, which turns off prospective investors," adds Magazine.
    ASSOCHAM has even mooted the creation of an 'Infrastructure Financing Fund', through which states and central departments can access project financing.
    In 1994, it was projected that India would need an additional 50,000 MW, but the developed power as of today stands at 7,000 MW. "The key to growth from here is to have a master plan in place and a realistic timeframe for completing projects. The barricade to the country's growth has been poor planning and today, the time is ripe to crack the whip," says Sandeep Runwal, director, Runwal Group.
    The issues that India is facing, in terms of infrastructure development, today, are: a) Stricter regulatory mechanism. b) Implementation of projects and ensuring they run smoothly. c) Allocations and approvals. d) Easier land acquisition norms. e) Improving financial delivery systems.
    "The public-private partnership (PPP) model needs to be encouraged," feels Hemant Kanoria, CMD, Srei Infrastructure. There is a need to fix accountability, on the projects undertaken. "Policies should be reframed, so as to accommodate foreign investors and make investments in India look viable," adds Runwal.
    Adds Magazine, "It is not that we do not know what the problems are, or what can be the solutions. I would suggest the PM should have a direct monitoring system for major infrastructure projects." There should also be a mechanism wherein incentives are given for projects completed and penalties for those missing it, thus, making the authorities accountable, he suggests.