Top 15 infra must-dos of the 12th Plan

The 12th Five-Year Plan points out crucial interventions to achieve 'sustainable and inclusive' infra targets.

The 12th Plan (2012-17) document, like all other Plans, is soaked in numbers. (These numbers were analysed in the "Infratalk" column last month.)

But an investment-led growth revival, driven by infrastructure, is not simply about projecting a set of numbers, and hoping and praying they will happen.

The mantra of the 12th Plan, "faster, sustainable, and more inclusive growth", requires crucial interventions towards creating the right ecosystem to achieve the Rs 56.32 lakh crore infra investment target.

Here is my pick of the top 15 "must-dos" from the 12th Plan document. (Italics represent my own comments.)

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<B>1. National Investment Board (NIB):</B> Chaired by the prime minister, the NIB should include all key ministers, and amend the Transaction of Business Rules, so that statutory clearances under various Acts for all infrastructure projects above a given size are granted by the board, taking into account the views of all ministries.

The Allocation of Business Rules could provide that such clearances would be issued by the Cabinet Secretariat, based on the decisions of the board. This would be a systemic change — ensuring a holistic consideration of complex issues and greatly accelerating decision-making.

<I>(Unfortunately, what we have got is a watered-down and relatively toothless Cabinet Committee on Investments. It could, however, still be made to deliver.)</I>

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<B>3. Managing natural resources:</B> In recent years, deficiencies in the way in which we manage natural resources have increasingly come under critical scrutiny and demand mainstream attention. <I>(At the National Development Council meeting on December 26, 2012, which adopted the 12th Plan document, Narendra Modi called for a "National Natural Resources Commission" on the lines of the Finance Commission.)</I>

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<B>4. Water:</B> The 12th Plan proposes the setting up of a national irrigation management fund to support the demand for irrigation management and institutional reform.

It also proposes to set up a national water commission to monitor compliance with the conditionality of investment and environment clearances given to irrigation projects. Water regulatory authorities are proposed to be set up in each state.

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5. Coal: The policy of nationalisation of coal needs to be reviewed, as was pointed out in the 11th Plan. If private sector producers are allowed in petroleum, which is a more valuable resource, there is no reason they should not be allowed in coal.

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<B>6. Discoms:</B> A debt restructuring plan has been approved by the Cabinet and must be implemented by all the affected states, combined with credible steps on the part of the states and the discoms to ensure the restoration of the latter's operational viability.

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<B>7. Infrastructure debt funds:</B> The present bond market lacks depth to address the needs for a long-term debt.

With a view to overcoming these shortcomings, infrastructure development funds are being set up for channelling long-term debts from domestic and foreign pension and insurance funds, as well as from other sources.

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<B>8. Roads:</B> There is no independent regulatory authority for India's roads and highways sector.

The current arrangement at the Centre and states (the ministry of road transport and highways, the National Highways Authority of India, state road development corporations and public works departments) results in a potential conflict, since the rule-making body is also the implementing body.

Besides, there is no independent assessment of its performance across various parameters. There is, therefore, a need for a regulator whose key functions should include tariff setting, regulation of service quality, assessment of concessionaire claims, collection and dissemination of sector information and service-level benchmarks and monitoring compliance of concession agreements.

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<B>9. Railways:</B> It is estimated that the Indian Railways will not be able to generate sufficient funds internally, through borrowings and from Budgetary support for meeting investment requirements of the 12th Plan.

It is expected that investments of Rs 1 lakh crore would be made by the private sector during the Plan.

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10. Ports: The current institutional and regulatory arrangements are inadequate and deficient to achieve efficient and world-class ports.

Corporatisation is one way of achieving these by the conversion of major port trusts into truly commercial organisations.

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<B>11. India Infrastructure Finance Company Ltd (IIFCL):</B> IIFCL is expected to graduate in the 12th Plan from its existing role of a normal lender to a catalyst mobilising additional resources for infrastructure financing.

This could be achieved by IIFCL providing guarantees for bonds issued by private infrastructure companies rather than expanding its direct lending operations. This would enable mobilisation of insurance and pension funds, external debt and household savings.

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<B>12. Public-private partnerships (PPPs):</B> It is recognised that unless governance issues such as those related to competition in service provision, collection of user charges, institutional capacity, regulation, and dispute resolution continue to be adequately addressed, mobilisation of sufficient resources for the requisite infrastructure investment may not be possible.

<I>(The private sector has started demanding a new "PPP review and redressal board" to address concession-related resetting after the commencement of commercial operations. It is also stridently demanding that no government sponsoring authority be allowed to award projects till key sovereign clearances are first obtained.)</I>

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13. Urbanisation: The finances of urban local bodies (ULBs) should be strengthened with a three-pronged approach consisting of creating robust tax and non-tax based revenue streams for ULBs, attracting private capital, and systematically monetising land.

(The recommendations of the Isher Ahluwalia Committee on Financial Devolution to ULBs should be implemented.)

<B>14. Environment:</B> A multi-disciplinary autonomous body, National Environment Assessment and Monitoring Authority, is proposed to be set up for strengthening the processes for grant of environmental clearances and monitoring thereof.

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<B>15. Monitorable targets:</B> (i) Increase investment in infrastructure as a percentage of the gross domestic product to nine per #162<br>

(ii) Increase the gross irrigated area from 90 million hectare to 103 million hectare;<br>
(iii) Provide electricity to all villages and reduce aggregate technical and commercial losses to 20 per #162<br>
(iv) Connect all villages with all-weather roads;<br>
(v) Upgrade national and state highways to the minimum two-lane standard;<br>
(vi) Complete Eastern and Western Dedicated Freight Corridors;<br>
(vii) Increase rural tele-density to 70 per #162<br>
(viii) Ensure 50 per cent of rural population has access to 55 litres per capita per day piped drinking water supply and 50 per cent of gram panchayats achieve the "nirmal gram" status;<br>
(ix) Add 30,000 Mw of renewable energy capacity.

So, here is the action agenda.

With the setting up of the Cabinet Committee on Investments, the erstwhile Cabinet Committee on Infrastructure, which was anchored in the Planning Commission, got dissolved.

The nation would, however, still expect the Planning Commission to continue to act as the pressure point to ensure all these tasks are adequately addressed and to keep an eagle's eye on all that is happening, and more importantly, not happening!

The author is the Chairman of Feedback Infrastructure.