Will India’s Power and Transport take that big leap forward?
A Special Report in a recent issue of The Economist hammered home the point that India cannot progress without a major step forward in infrastructure development. Well, the positive thing is that our government knows what to do, even if it is going about it very slowly. While red tape is a major hindrance, so is funding. Funding that has taken even a bigger hit with the slowing down of the economy.
The government’s plans are on track. There are plans to double infrastructure investment to $475 billion in the next five years, which amounts to about 8% of GDP a year. But the downside is that this year the expenditure was only 4.6%.
Here are a few of the government’s plans to boost infrastructure:
- A $100 billion plan to build a 1,500km road and rail network between Delhi and Mumbai by 2013 as well as plans to build improve road network across India
- Plans to modernize airports, a plan well on its way to completion. The cities of Hyderabad and Bangalore have opened new airports and the airport modernisation of Delhi and Mumbai will end by 2010.
- Metro rail services planned in about a dozen or so major cities
- Power projects
All phases of the Delhi Metro (Phase 1 is already complete) to be ready by 2020. Mumbai Metro’s first phase to be completed by 2010 and other Phases by 2021. (Kolkata and Delhi have a functioning metro rail, four city metro projects are in the pipeline, and about five more are planned.)
The worry isn’t the planning, but the delays that could come about as private parties behind these projects could develop cold feet due to the slowing down of the economy.
Delhi being the capital got considerable funding from the centre and will continue to get it and there is no reason to believe that Delhi Metro will not go as planned. Mumbai has been refused funds from the centre although the Delhi Metro Rail Corporation (DMRC) managing director E Sreedharan has openly said that Metro projects should be funded by the government to ensure that they are financially viable (reasonable fares for the masses) In fact Sreedharan doesn’t feel comfortable with even the state government being involved, whether in financing mass transport systems like the Metro or managing bidding by private parties, as there is a fear of “local manipulation and interference.” He has criticised the Hyderabad metro model, saying that the bidding by the state government was not transparent and also that it was a mistake to lease 269 acres of prime land to a private party.
And then the greater worry – will private parties bid for the new phases? One can only hope that the banks continue to lend money to the private parties and the private parties continue to work and bid in the hope that the project is financially viable.
In any case whether private parties should build mass transport systems or not seems to me a hypothetical question in India as the Indian government is not willing to fund them in toto. Apparently it has no money.
What shouldn‘t happen is what happened with the water transport project which the government had planned in Mumbai. 10 parties had shown interest in bidding, but now none of them seem interested! The last date to submit bids is over and the government agency had received none!! Now there will have to be a re-tendering.
When it comes to the road network, roads in the big cities are being rapidly concretised and major cities are well connected today, but country roads need a lot of investment. The Indian Road network (3.3m km) may be the second largest in the world, but to put things in perspective, the much admired national highways are a mere 2% of the total road infrastructure. And out of this, only 12% (8,000km) are dual carriageways.
China is way ahead of us. 2007 figures say that China had some 53,600km of highways with four lanes or more.
There is a severe shortage of power in India and there are plans to increase generating capacity by an annual 14%, or 90,000MW in the next five years. But just to compare with China, that country added 100,000MW in just one year, in 2007! India added only about 7,000MW in that year. McKinsey consultants have said that India needs to up its power generation targets.
Right now what we have are the Ultra Mega Power projects (UMPP’s), (Eleventh Plan 2007-2012). Nine power projects, each to cost Rs. 15,000 crores, will come up in the states of Karnataka, Chattisgarh, Madhya Pradesh, Andhra Pradesh, Maharashtra, Orissa, Tamil Nadu, Gujarat and Jharkhand.
Here again, the government expects private investors to participate but there are reports that red tape is putting off potential private investors, as well as fears of government interference once the project is completed. The power sector is controlled by the state governments and governments have this habit of giving power away free, or giving subsidies. Worse, any private party working with the state government has to allow for power theft, which happens most often with the connivance of state officials and linemen belonging to government bodies.
There are some successes though. Tata Power in Mumbai for example. At 2.4% the company’s transmission & distribution losses are the lowest in the country. Tata Power has a distribution joint venture with the Government of Delhi (the “North Delhi Power Limited” NDPL), and here too, as distribution has been privatised, the theft rate has dropped from 51% to 28% in span of five years. Now it is at 18%.
21 nuclear power projects are also being planned and these reactors could well give India what it needs. Each of these reactors is estimated to cost at least 2 billion dollars and all together will produce 30,000 MW of nuclear energy. The idea is to fulfill 25% of all electricity demand in India via nuclear power (by 2050).
Solar power for Gujarat
A $5 billion solar power project (world’s largest) is being planned in Gujarat and total power generation capacity is expected to reach 5 gigawatts. In fact, the U.S.-based Clinton Foundation is hoping to establish an “Integrated Solar City” which will produce the raw materials needed for solar-based power generation, including glass and solar panels.
All in all grand plans. I do believe they are going to happen but as everything in India seems to get delayed, these projects could get delayed too. There is no doubt however that unless we get these projects up and going our India is not going to shine as much as we want it to. What is critical is leadership at the state level. Without that projects will certainly flounder and/or get mired in corruption and red tape. In fact it is expected that some states will surge ahead and others will stumble along.
(Photograph of the Delhi Metro is from the Delhi metro site and the second photo is by me and copyrighted)
Related Reading: A comparison of city bus services and their websites
BRT in India – how great concepts can get ruined
Stealing power is getting tougher
A shining railway Budget 2008 – but at what cost?
Fame or money for Tata Nano?
Controversy over whether to use Broad Gauge or Standard Gauge in Mumbai Metro
India to refurbish railway stations
Projects planned for Mumbai
Read all posts on Development