Tarmac to Towers: The India Infrastructure Story
Pratap Padode
2024
Westland Business
373 pages
Rs 799/-
Pratap Rodode is a financial journalist and publisher of Construction Update, a magazine launched in 1996, followed by Infrastructure Today, Power Today and Project Reporter. This book comes favorably pre-reviewed by industry veterans Nandan Nilekani, founder Chairman, UIDAI, S.N. Subrahmanyan, Chairman Larsen & Toubro and policy maestro Amitabh Kant, the Prime Minister’s G20 Sherpa.
It stands out in the literature on infrastructure for two reasons. First, it is an industry veteran’s perspective on the domestic political economy, global drivers, and the industry response which shaped infrastructure from 1995 to 2024. Second, it is data heavy, which readers unacquainted with this sector might welcome. It also touches on macro policy issues, which impact infrastructure.
A monthly take on infra developments
Chapter Two extends to more than one half of the book. It is a monthly narration of key events and decisions 2012 onwards, based on the author’s editorials in trade magazines- a primer on how infrastructure evolved and the government’s supportive initiatives including, India Infrastructure Finance Company (IIFCL) constituted in 2006 for providing long term debt and the India Infrastructure Project Development Fund in 2007 to partially finance the considerable documentation cost of projects under the Public Private Participation model.
The growth story
Read together, Chapters One and Two provide, in the author’s words, “a ringside view” of the “halcyon days of growth to the logjam and policy paralysis reached in 2012” and thereafter “reinjection of fuel by Prime Minister Narendra Modi.” India’s infrastructure story became globally visible in 1998 when PM Vajpayee announced the Golden Quadrilateral – more a vision than a project – to link the country’s urban extremities in all four directions with highways. The length of four lane highways increased from just 556 km in 1998 to 14,000km by 2007, funded partially by a new cess on the sale of petrol and diesel- an appropriate new, revenue source, borne by owners and users of motor vehicles who also benefited directly, from lower fuel consumption and maintenance cost due to road improvement and widening, as did industry and trade from better connectivity.
The gaps
Chapter Three examines why “the pace (of development) is elusive” and annual cost overruns on projects are Rs 4 trillion, making private investment shy of new commitments. The exception is India’s demonstrated prowess in digital public infrastructure and applications for identity recognition, payments, information sharing and secure, privacy safeguards compliant, digital storage stacks, which are expected to find markets in developing economies. These are the stepping-stones to feed data hungry Artificial Intelligence sub systems.
Indian Railways has yet to live up to being the fourth largest global network by enhancing the quality of its services. A disproportionate share of passenger traffic and freight continues with energy and emissions inefficient, road transport, though new investments in ports and dedicated freight corridors are nearing completion. The glacial pace in privatization of public enterprises shrinks the space for private business, exaggerating the drain on public finances. The smart cities mission has yet to transform city planning mechanisms in states where shortage of urban planners, skilled, certified, and registered construction workers, and contractors, constrain small projects. L&T -one of the few Indian professionally managed companies- remains the dominant, engineering and construction company with a turnover 4X of the next company, illustrating that the scale of investment must expand significantly, to provide more room for other corporates to grow and to attract foreign competition.
Quick fixes and solutions
The last chapter, titled “Fast Forward to Viksit Bharat,” is expansive, delving into 15 suggested transformative changes. Some are a mite distracting from the narrower issue of why India does not excel at infrastructure development and how to improve it. Examples are the suggestion to jettison gross domestic product (GDP) for measuring development and adopt multiple dimensional indices instead, or the need to enhance women’s participation in the workforce — both needed but unlikely to boost infrastructure. Others are wishful, such as actualising cooperative and competitive federalism. The political economy barriers can only be overcome by devising new institutional mechanisms for power sharing in key decision-making bodies that face political economy barriers. Decentralisation is generally desirable for revenue diversification but could negatively impact projects via inter-governmental friction.
Some of the suggestions are spot on, like evolving a new strategy at scale for vocational training, improving i to technology for MSMEs, boosting tourism to enhance demand for construction and services, reducing the upfront public finance project commitment by adopting the Andhra model of “Land Pooling” and the need to reduce construction risk via contracts compliant with international standards like those of FIDIC, a Switzerland based international federation.
This book is recommended for its data-based insights into the problems and prospects of infrastructure development. One inexplicable exclusion is discussion on the unimplemented recommendations of the Kelkar Committee Report, November 2015. The public investment demands of the green energy transition and defense preparedness are likely to overshoot the sustainable level of public finance available. Enhancing private domestic and foreign investment via PPPs could fill that gap and induce the next phase of cost-effective, high infrastructure growth.
First published in Business Standard January 20, 2025
Opinion India 