India hopes new roads will bring new mindset

In the blistering heat of northern India, cars and trucks speed along the smooth, four-lane, black-topped highway from New Delhi to Jaipur.

In many developing countries, it would be an ordinary scene.

But in India, the road is a marvel, part of a $14 billion National Highway Development Project to improve a clogged, rutted network of roads that has exemplified for foreign investors everything that is rotten about the country's infrastructure.

The scheme, one of the world's largest road projects, was dreamt up in 1998 by Prime Minister Atal Bihari Vajpayee. But the man turning it into reality is Highways Minister B C Khanduri.

"I have tried to inculcate in people a sense of urgency, and all along I have emphasised that you are not constructing a road, you are writing history," Khanduri told Reuters.

If Khanduri is executing the 13,300 km project with military thoroughness, it is not surprising. He spent 38 years in the army, rising to the rank of major-general.

With contractors spurred on by a system of penalties and bonuses, Khanduri is confident the first phase--the "Golden Quadrilateral" linking New Delhi, Mumbai, Madras and Calcutta--will be substantially completed ahead of schedule in December.

The project, which entails widening and strengthening two-lane roads to four or six lanes, has given a big boost to the economy, gobbling up more than three million tonnes of cement and some 300,000 tonnes of steel a year. The World Bank estimates users will save $2 billion a year: the driving time from New Delhi to Jaipur has been almost halved to just over three hours.

Changing mindset

Another big spin-off of the project is the expertise that the country's road builders have accumulated, said Santosh Nautiyal, chairman of the National Highways Authority of India.

"Our road contractors now are feeling quite confident about going anywhere in the world and executing road contracts, and I'm sure they will," Nautiyal said.

As notable as the road itself is the way it has been financed through a mixture of funds from multilateral development banks, a special excise tax on fuel and an array of public-private partnerships that are ground-breaking for India.

One method involves the government paying the road contractor a long-term annuity, possibly with an up-front grant to make the investment viable; in return the contractor assumes the financial risk of the project.

Officials are confident such deals will attract the private money needed to fund almost $13 billion in new infrastructure projects--including 10,000 km of roads--that Finance Minister Jaswant Singh announced in his March Budget.

"From my preliminary talks with people I find they're quite enthusiastic," said Ashok Lahiri, Singh's chief economic adviser.

Apart from the tangible benefits of the Golden Quadrilateral, Khanduri hopes it will lay to rest the pervasive assumption India cannot execute infrastructure schemes on time and on budget.

"The mindset of people, both the constructors and the road users, is changing," he said.

Power failure

Nowhere is new thinking more urgent than in the power sector. Power cuts are common and many state power boards, groaning under huge debts, are near bankruptcy.

Many Indians would no more think of paying for power than for fresh air. Transmission and distribution losses--a euphemism for theft--eat up 45 percent of all power generated.

Yet diplomats give the government credit for trying to clean up the mess. A bill passed the lower house of parliament last week that N K Singh, an influential member of the Planning Commission, says will usher in a transparent regulatory framework and deregulate power generation, transmission and distribution.

"These are sustainable reforms and they provide a good basis for sustained flows of investment, both domestic and foreign," Singh said.

Sceptics abound, noting that power falls under the remit of India's rambunctious states, not the central government in Delhi.

What's more, foreign investors have been scared off by drawn-out wrangling over Enron Corp's controversial $2.9 billion Dabhol plant near Bombay, which shut down in May 2001 following a row with the local state power board over costs and tariffs.

"Our track record needs a lot of improvement," said T K Bhaumik, an adviser to the Confederation of Indian Industry. "We need to make things more transparent and less cumbersome."

Back on the Delhi-Jaipur road at the Bilaspur toll plaza, Danie Steyn's experience is that change does eventually happen.

Steyn is the local manager for Intertoll ICS CEcons, a South African-Indian joint venture that won the contract last September to run that stretch of National Highway 8.

Steyn, a South African, rolls his eyes as he recalls how some drivers would do anything at first, including smashing through the toll barriers, to avoid paying the Rs 60 fee.

Just seven months later, drivers are much more disciplined. Traffic is up 30 percent and Bilaspur's toll takings have reached a million rupees a day.

"People are willing to pay providing they have good service," Steyn said. "Slowly but surely the concept is spreading that this is their own road. Having spent four years in Bangladesh, this is like a walk in the park."