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All that shines

All that shines

As it has been reported in the media, more than half of our country’s infrastructure projects are running overtime, and PPP projects are delayed more than EPC projects.

Why do infrastructure projects in India find themselves stuck in a quagmire, as though in the famed Indian flick ‘dream sequence’, showing the hero running on a sandy beach in slow motion? When the goals are clear, why isn’t the movement quick enough? Is there a reason the United States, the giant among infrastructure nations, has not aggressively adopted the PPP model in infrastructure?

The answer lies in the fact that growth in infrastructure and growth of GDP are inextricably tied in together. Just as GDP growth depends heavily on the growth of the social sector, so does that of infrastructure. On the one hand government agencies, as developers, often impose upon BOT players some seemingly unreasonable, because unviable, clauses. On the other, private participants look at each project from the so-called “bottom line” perspective, leading to apparent incompatibility: “apparent” because it is not irresolvable incompatibility. In the process, are projects that are commercially unviable being sidelined?

If infrastructure projects have to grow at a more healthy pace, the obvious conflict between commercial and social interests must be understood, imbibed and resolved, both by the public and private parties. Toll roads are a glaring example of extracting PPP—where the private participant is ever sceptical of recovering their cost in the foreseeable future. Even to this day, most roads in the United States are free of charge. Normally, one would pay a toll as a premium to make a point-to-point journey quicker, with fewer exits and no stops. It would have been myopic if they had extended toll to other roads because it would have defeated the social—and a larger economic—purpose of infrastructure. Our Vox Pop on accountability issues in EPC contracts (page 40) is a wonderful example of how the industry and the government are still struggling to mould themselves to our new commercial-social-economic realities, where responsibilities are not necessarily crystal clear.

Nowhere could that conflict be more evident than in the case of the environment and land acquisition. While acquiring land, how do we ensure that our economy is not impacted? Acquisition of agricultural land is an example. A 2009 (still inexplicably pending) amendment to the Land Acquisition Act of 1894 mandates that agricultural land should not normally be acquired. Is the government rethinking the Bill based on whether to accord precedence to infrastructure projects at the cost of economic and societal considerations? This larger question is the reason we chose our cover story (page 20).

The fact that government spending on social sectors has more than doubled over the past five years is an indication (not necessarily intent, though) of a focus on private partnerships in other sectors. To see only the projects part of infrastructure and not the larger picture would be fallacious. The government must make efforts to partner with the private sector in resolving the philosophically divergent interests. We are a learning, evolving projects nation. There is a need for more committees such as the one headed by Planning Commission’s BK Chaturvedi, which paved the way to smoother implementation of highways by an academic and practical understanding of public and private interests. It may be even more fair for ministries to set up committees with participation from both public and private parties, with the express purpose of a long term resolution of conflict between the developer and the contractor, between the social and the commercial.

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