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| UPA keeps hope alive | | Building infrastructure | |
The Manmohan Singh government plans to launch infrastructure projects worth Rs 1 lakh crore in six months in partnership with private companies. This may surprise analysts who see the UPA in an election mode - more interested in vote-catching welfare programmes like the food security Bill towards the end of its term rather than undertake long-term development projects. But the reformers and economists in the government have apparently not yet handed over charge to poll managers. If kicked off as proposed, such projects can activate the economy by building roads, ports, airports and highways as well as generating employment. A steering group has been set up under the Principal Secretary to the Prime Minister to "guide and monitor" progress on proposed projects.
The UPA government's performance does not inspire much hope. Besides, the overall environment is not very conducive to capital-intensive ventures. There is also the fear that projects could hit ministerial, bureaucratic, environmental or judicial hurdles. Land disputes, litigation and delays in environmental clearances have held up projects amounting to Rs 7 lakh crore. What is the guarantee that the new projects would not meet the same fate? One may legitimately ask: why not push the projects already approved before taking up new ones? A major constraint to infrastructure building is capital. Interest rates are already high and the RBI has shown no inclination to cut them in the near future. Infrastructure companies reel under heavy debt and are abandoning projects already undertaken, frustrated by delays causing cost-overruns.
Foreign investment in development works is meagre. With the Federal Reserve hinting at raising interest rates, foreign capital parked in equities and debt is flowing out of the country. The Japanese have committed to invest in dedicated rail freight corridor projects, which are to speed up goods movement from northern India to eastern and western parts but progress has been terribly slow due to Japan's domestic problems and uncertain global conditions. Upgrading rail/road/air connectivity is a tough challenge, no doubt. Given the constraints, one hopes the UPA follows its announcements with action on the ground. |
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