Moving On The Infrastructure Agenda

Context: The discussions on Indian infrastructure are largely on how much the governments are spending on it. Ten suggestions deserve prioritisation and are presented as a consolidated agenda for action.

• Kelkar Committee Report and 3P India:
  • The Vijay Kelkar-chaired Committee on Revisiting and Revitalising the PPP (Public-Private-Partnership) Model of Infrastructure Development provides a road map of how to get private capital enthused and motivated again for PPP.
  • Suggestions include bespoke concession agreements, dispute resolution mechanisms, provisions for renegotiations, and insulating bureaucrats from harassment for decisions taken in good faith.
  • Reiterated the need for setting up a PPP incubation- cum-propagation institution called 3P India.
• A portal to track pending payments: Amounting to be between Rs.5-7 trillion across central and state entities.
  • Develop an entity-wise portal that transparently tracks invoices received, payments made and stock of unpaid bills.
• A water-focused public works programme:
  • Projects would include river-linking, multi-purpose irrigation-cum-hydel power and canals through arid areas.
  • A Rs 10 trillion National Renewal Fund has been suggested with a 50-year corpus that can be funded by consols and perpetual bonds.
• A national power distribution company (NPDC):
  • Can pick up stranded capacities and make for a robust alternate market that will reduce non-performing assets (NPAs) with credible sovereign backed power purchase agreements (PPAs).
  • It can offer a pooled-price regime encompassing thermal, renewable, hydro and nuclear and provide a credible pricing structure along with tariff rationalisation.
  • It can showcase a ‘demonstration effect’ of 100% smart-metering and lead distribution into the digital age.
• A new national highway services authority: Allow NHAI to focus on construction; and have this new authority take charge of all the softer aspects such as road safety, driving comfort, highway amenities, tolling technologies, intermodality, disaster management, value capture from land and the whole aspect of management of PPP partners and PPP formats.
• Coastal Economic Zones: To build world-class hassle-free enclaves to establish labour-intensive factories oriented to exports.
• Operationalising the Development Finance Institution(DFI): DFI needs to get quickly operational, with a board and management in place and its initial tranche of funding.
• Surety bonds: The Insurance Regulatory and Development Authority of India has recently circulated a working paper broadly aligning with the idea of surety bonds being issued by insurance companies.
  • These could act as a replacement for Bank Guarantees (BGs). This will ensure that insurance companies play a much bigger role in infra financing in India.
• Float municipal bonds: In the US, the size of the municipal bond market is over $3.8 trillion, but it is quite underdeveloped in India.
  • A conjunction of changes in municipal accounting, rating, and autonomy of civic institutions are required to be pushed.
• Completing the bullet train by 2024: The timely completion of the project will dramatically change perceptions of rail travel — be it speed, service, comfort or safety, and will cascade into demands for a new generation of rail travel across the country.