High level ministerial team for infrastructure

Infrastructure projects in India are now being executed in half the time it took some years ago. Well, that may well be the headline a few years down the line, if the government succeeds in yet another effort to speed up infrastructure projects in the country. The government has set up a big committee of ministers to oversee the process of approval and execution of infrastructure projects.

The government has set up a committee of cabinet ministers, headed by the prime minister Manmohan Singh. This meets a key demand of industry, of having a one-window approach for infrastructure projects. The committee has senior cabinet members on it (list at the end).

The committee’s mandate is to speed up clearances and monitor implementation. The committee will review and decide on all projects costing over Rs 150 crore. Sectors identified are: energy, railways, roads and national highways, ports, airports, telecommunications, information technology, irrigation, housing and urban development (rural housing and urban slum clearance).

The committee will decide upon fiscal, financial, institutional and legal measures for infrastructure investment. It will also give approvals necessary for private sector investment in this area. The committee will lay down annual targets for performance of all infrastructure sectors.

Infrastructure projects in India take a very long time for execution. Clearances take time to come, with multiple agencies at the state and centre involved. Differences in the interpretation of policy too create bottlenecks. Then, there are issues of getting both state and central government approvals. At times, accusations of rivalry between the two surface as reasons for project delays.

Finance is another critical bottleneck as projects take a long time to achieve financial closure. And, some of the blame should fall upon the companies executing these projects too.

Dragging their feet after getting approvals, asking for more concessions mid-way or taking on too many projects causes project delays too. The committee may, therefore, track contractors too and have a process of black-listing companies that go back on their commitments.

At one interaction on television, one business leader said that ministers normally seem to be in favour of a fast track approach. But the bureaucracy delays the file movement. Will the government committee be able to tackle this? Ultimately, in the case of infrastructure, it is not the vision that is lacking, it is the movement on the ground that has been found wanting.

Points to ponder
The Rs 150 crore target is a relatively low figure, meaning there will be a vast number of projects for the committee to look at. Could it have been more effective if they had chosen a larger threshold, fewer projects but which could have a bigger impact on the economy?

State governments are critical players in all these sectors mentioned over here, with perhaps the exception of telecommunications. A common Goods and Services Tax is on target to meet its April 2010 target, simply because a committee of all state chief ministers decides upon the broad policy contours and implementation. The government needs to also constitute a special committee of state chief ministers, to speed up key infrastructure projects. Without this, a central committee can achieve little, other than to speed up central government clearances needed for these projects. And, they will then go and get stuck at the state level.

Members of the committee (Portfolio in the government):

Pranab Mukherjee (Finance), Sharad Pawar (Agriculture, Food & Civil Supplies, Consumer Affairs and Public Distribution), Mamata Banerjee (Railways), Sushil Kumar Shinde (Power), Farooq Abdullah (New and Renewable Energy), Jaipal Reddy (Urban Development), Kamal Nath (Road, Transport and Highways), A Raja (Communications and Information Technology), CP Joshi (Rural Development), Kumari Selja (Housing and Urban Poverty Alleviation), GK Vasan (Shipping) and Pawan Kumar Bansal (Parliamentary Affairs). Special invitees to the committee are Montek Singh Ahluwalia (Dy. Chairman, Planning Commission), Prithviraj Chauhan (PrimeMinister’s Office) and Praful Patel (Civil Aviation).

The press release announcing the committee’s formation.

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