Infrastructure in West Bengal

West Bengal is one state that is running both ways. There has been lots of improvement in the last few years in the state. Be it IT, Incubation Centers & Venture Capital Funding, on road & off road communications, Real Estate development ; name and it is there. The New Town concept in Rajarhat area has shaped up really well. Hundreds of new constructions, new investments, new business developments have taken place in the last few years.

Though a late-starter, the state has achieved a lot in the field of IT and electronics in the last couple of years. The proactive policies of the state government—a dedicated department for IT, state-of-the-art facilities, world-class connectivity, uninterrupted power supply, physical and social infrastructure and a large pool of trained manpower—have hastened the growth of the IT sector in the state. Kolkata is also well connected to international destinations in Asia, Europe and the US.

The high investments in power generation over the last ten years have made West Bengal one of the few power-surplus states in India. In fact, in their recent surveys, both Nasscom and Gartner have ranked West Bengal as the best state in the country in terms of power supply. The high percentage of thermal power ensures that supply is not adversely affected during the dry season. In addition, the state government ensures the existing low-cost power plants in West Bengal feed all new IT units on a priority basis. Kolkata is well connected to prime locations overseas and in India. These include the prime Asian hubs of Bangkok and Singapore, as well as key Western locations like London, Amsterdam, San Francisco and New York. The city is also well connected to important locations within the country.

Apart from world-class infrastructure, connectivity and social infrastructure, the state has the largest pool of human resources. The city houses some of the most reputed schools and colleges in the country. Both Calcutta and Jadavpur Universities have been accorded a 5-star status by NAAC. Several private engineering colleges have been set up in the city, churning out engineers and technocrats.

But despite the changes, the perception about the ‘laid back attitude’ of the state still remains a major hurdle in attracting fresh investments. While it is partly due to its history, lack of information about the progressive work being undertaken in the state also adds to this negative image. Bengal has a lot of active politics going on. Everyday rallies and meetings, the very often bandhs (which WB is famous for) and many other factors add up to a lot of congestion in town. The city to have the first metro rail in India is definitely top notch when it comes to communication linkages but ask any resident of Kolkata and they would tell you - which traffic jams, shabby traffic structure & cleanliness are some of the major everyday problems which add on to the already laid back attitude and rigid bureaucracies of the state. It is these factors that are marring the fabulous infrastructure plans that WB started with a decade ago. There is a lot that people everywhere complain about; be it any state. In this case, it is not only the facilities which have failed to entice, but also the new name – Pochimbongo J

- - Ayush Nalotia

References:

Planning Commission, Express Computer Online

Telecom Revolution and the Customer

Telecom revolution was the next big thing that India could foresee back in the late 90s. And surely; it has been one without fail. From pagers to huge bulky mobile handsets to sleeker models; we have seen it all. Today it is impossible to imagine a life without a phone and a 24x7 network coverage responding to it. Kaizen in communication technologies & the never ending plans, schemes and offers by the telecom companies have literally made it to saturation levels. We have come a long way from incoming calls being chargeable on networks to now even roaming charges being wavered off (proposed TRAI regulation; yet to be implemented).

In short, infrastructure has done it once again – handset technologies (advent and mass use of smartphones – Nokia / Samsung / BlackBerry phones ) , networking softwares like Android , companies like RIM – all have hoarded the ever brimming telecommunications market. Yet, this is one area that is yet to hit the DECLINE stage on the PLC curve. The market just doesn’t saturate because every moment there are millions of people buying new cellphones and connections. As such, stalwarts like Bharti Airtel, Vodafone, Tata Docomo, Reliance etc are raking in moolahs. Then where is it going wrong ?

True internet at your beck and call is a great thing to have. But then, we cannot forgo the downside of things. Privacy gets compromised upon, ethicalities go for a six. The telecom infrastructure revolution has a bred a generation of people who are too tech savvy to see beyond their mobile phones. Try listening to a few jokes about BB addicts J … And, the telecomm companies are banking on these addictions. That is where there revenue comes from. That is where malpractices breed. Even the best of these companies have a horde of utterly dissatisfied customers because; somewhere during this evolution, the customer satisfaction orientation got left behind. Today these telecom companies have good names. But when we go talk to a few customers, the truth stands bare.

Airtel’s latest campaign “Har ek friend zaroori hota hai” was an instant hit among the teenage India; the reason being - teenage India is more obsessed with friendships than family ties. Yes, Airtel hit the bull’s eye with the campaign. No matter what kind of customer service they provide, people will shift to Airtel via MNP because ‘may be every customer is not important but every friend is important’. Talk to a Docomo user – all he will say is “All talk; no content” … these companies are on the right track when it comes to marketing themselves (remember Vodafone zoo zoos ) . but when it comes to technology upgradation, there seems to be a lacuna somewhere. All these customer issues are not a result of any other problem but technical problems – an area where the infrastructure sector needs to buckle up.

The bottom line for all this is – infrastructure should be there to make our lives easy. Inefficiency in the name of competition, blowhorn type advertising and no commitment/ content – telecoms are doomed to fail. Telecom is a growing market since ages, not nearing saturation as of now. It would be a worthy fight if they put in efforts at making themselves better rather than merely showing themselves to be better & ahead in the race. Because, newsflash – your customer knows the truth!

-Ayush Nalotia

References:

www.marketinginternet.com

TOI, The Hindu

Labour Industry of India

This is my first blog entry so please excuse me if there are any mistakes.Recently a lot of articles are making headlines in the newspaper on the issue of Labour Shortage, which is becoming headache for players in Infrastructure & Real Estate Sector. It is truly said that sometimes good things also bring in with them new set of problems. Same is true with India's Growth Story, factors like pool of cheap labour & untapped demand attracted many people within and outside the country post liberalization which has led to development in country.

Migrant Labour from Bihar contributes 50% of the Unskilled workers Nationally but this economic development has created peculiar problem for the Infrastructure & Real Estate Sector. According to Bihar Institute of Economics sciences, migration of labour has decreased by around 30% in the last few years and led to higher wages. Experts Says reasons behind this recent trend are private investment inflows after Nitish Kumar's entry in bihar government in 2005 & Mahatma Gandhi National Rural Employment Guarantee Scheme. They believe that scheme is luring away labour from work.

Development is good thing for the country and India was bound to loose advantage of cheap labour some or other day, but through this blog i want to pose this question whether Subsidiary/ Scheme are effective measures which are floated by the government of India. Some people in the government are in favour of it while others are against it. Agriculture Minister Sharad Powar has suggested to avoid applicability of above scheme in the peak agricultural season but the rural Ministry is against it. I would like to hear comments from the readers of blog

For Reference:

Labour Shortage, wage hike hits Indian industry hard: FICCI, Economic Times [Oct 9, 2011]

Bihar's Economic Growth causing Labour Shortages, Higher wages in other parts of Country, Economic Times [ Nov 8th 2011]

Nikhil Agrawal [CE08B055]

Infrastructure Debt Fund

The Infrastructure Debt Fund (IDF) is yet another effort by the finance ministry to acquire foreign funds and domestic insurance money into Indian infrastructure projects. The idea is that, Banks and NBFC will set up either mutual funds or another NBFC, which will sell either mutual fund (MF) units to foreign funds or insurance companies and raise money.

This money will be used to buy out infrastructure loans from banks and the loans should have to be for a PPP project. Also, the banks can sell these loans to the IDF’s only after one-year of commencement of the project, i.e., when they become commercially feasible.

Now the question is: Will banks set up such mutual funds or NBFC? Will foreign funds find it attractive to buy the bonds floated by the IDF's?

Check the answers given by Santosh Nair, deputy managing director of State Bank of India; Prabhakar, executive director of Bank of India and Vikram Limaye, executive director of IDFC in a discussion on CNBC-TV18 on:

http://www.moneycontrol.com/news/business/infrastructure-debt-fund-willfund%28a%29-work-_592872.html

-Bharath M

Social Groups influence on Infrastructure projects

The Conoco case study clearly proves that Social and Environmental Groups can influence major infrastructure projects at any point of time and will cause huge economical lose and ends with significant impact on future developments in the particular region. The Koodangulam Nuclear project is a lively example where now local village people went on indefinite hunger strike to stop the plant construction after Fukushima incident.

In order to promote better and knowledgeable social and environmental groups, the Planning Commission of India started a NGO partnership system in consultation with the various ministries and departments of Govt of India. According to the system, the Voluntary Organisations and NGOs are requested to register with the NGO partnership system to assess information on various schemes of the participating ministries open for grants. This scheme will really motivate the NGOs for a meaningful participation in Govt. Schemes and this can be further extended to all sectors particularly infrastructure development sector for having good relationship with voluntary organisations and for faster, better transparency, efficiency and accountability of infrastructure developments in the country.

Reference: http://ngo.india.gov.in/auth/default.php

K. Narayanaperumal

The Economic Hit Man in Congo

With relevance to our readings on Confessions of an Economic Hit Man and The Chad-Cameroon pipeline is another instance of private opportunism in the proposed Grand Inga Project in Congo. This booklet traces the project details, context and development of the world's largest dam in a rather persuasive and interesting format.

Conrad's Nightmare: The World's Biggest Dam and Development's Heart of Darkness

(I hope it loads, otherwise please google it)

Excerpts:

"PPPs have become notorious among activists in recent years for two reasons: they have a track record of massively inflating project costs, and they place the cost burden firmly on governments while retaining the profits, and very often the ownership of the project itself, for the private sector."

"Grand Inga is the perfect lens to bring many of the key elements of development capitalism into focus—the absurdity and inapplicability to local needs of the great white elephants the IFIs build; the unfulfilled promises to local people, and the social and environmental misery the projects inflict; the sinecure of subsidies, contracts and markets for Western multinationals, a scheme often described as ‘corporate welfare’; and the passing of the responsibilities and costs for the projects onto the hapless ‘developing’ country, while keeping the profits closer to home (what Chomsky describes as the essence of modern capitalism: the socialisation of risk combined with the privatisation of profit)."

Samyuktha

Does TEA is an active stakeholder in the Tirupur water supply project?

K. Narayanaperumal,

The active and meaningful participation of stakeholders are very much important for successful implementation of any PPP project. In the Tirupur water supply and sewerage system project, TEA is one of the important stakeholders. The project was designed for the benefits of both domestic and industrial consumers specifically textile exporters. Out of the total designed quantity of 185MLD, 85MLD would be supplied for the municipality and balance 100MLD would be supplied to industrial units. As such, the requirement of TEA would have been fulfilled.

But all efforts were gone on vain; as the actual demand from the industrial units is (40MLD) far lower than the estimated demand (100MLD). The door-to-door survey shows that the industrial units are unwilling to draw water from the new facilities for various reasons like Ground water is free though it is illegal; the quality of water supply is not good; Global recession; technology and monsoon is good etc.

The above reasons spelled out are more artificial. The main reasons for the failure of financial model of the Tirupur water supply project could be due to the following;

Ø  The industrial units are not much committed to the project. Since their contribution to the investment is very low.

Ø  The industrial units are not much bothered about the environment. Large scale violations of environmental regulations are more common and these resulted with closure of 750nos of dyeing unit until zero discharge was achieved as per the Madras High Court order for polluting Noyyal river. This requires huge amount of investment.

Ø  Global recession is not a fact as it is no way affected the growth of the Tirupur garment export industry except a slight fall in the year 2008; Refer Figure: 1.

Ø  Claiming good monsoon is not a valid reason, as the garment industrial units would be required plenty of water; this could not be met with few days of rain water harvesting.

The following are the few possible remedies to redirect the project into success path;

Ø  Expand the water supply network to the nearby areas.

Ø  Strict enforcement of environmental laws

Ø  Government should assist the dyeing units for achieving zero discharge.

Ø  Government should work out a special discounted water tariff for the large industrial consumers which are obtained zero discharge.

                   Noyyal river before and after pollution

I had the opportunity to meet Dr. Isher Ahluwahlia yesterday and learnt that she has written a series of very interesting articles on infrastructure in the Indian Express, along with Ranesh Nair who is currently with IDFC. The first article can be found here and if you are interested, you can google and read the other articles as well. They are excellent and provide a good overview of some very interesting infrastructure projects undertaken in India,

Status Quo of the Road Projects in India

Was browsing through Economic Times and found two really good articles which I think would be relevant to what we have covered in the class on “Transportation Infrastructure in India”.

The first article states the present Road Projects ongoing in Bihar and the other article outlines an overview of the current private sector participation in the domain.

I would briefly summarize what I read which I think would give a good picture of the ongoing road projects in the country.

Of course, thanks to group 1 and Prof. Ashwin Mahalingam for easing the understanding and now I think we can relate to the topic and understand the jargon even better.

One story which I think many of us know and must know is that of Satyendra Dubey an IIT-Kanpur Civil Engineering student who was working with National Highway Authorities Of India and was assigned the famous Golden Quadrilateral Project. While being posted at Koderma in Jharkand he exposed the corruption and other inadequate practices in the section by writing a letter directly to the prime minister’s office. More so, he clearly stated even the names of the companies involved. Thus to protect himself he asked for anonymity but no-one actually gave any sort of heed for his anonymity request and circulated the letter among themselves.

What do you think might have really happened after this?

He was murdered an year later at Gaya, Bihar. I respect and ofcourse everyone respects for what he had done but no one actually dares to go against the authorities involved. Well, you may ask what happened to the murderers? One of the three accused in the case escaped from police custody and the rest is history. Its all crony capitalism and I believe corporations are even more grievous and selfish than mafias.

I think India at this stage where we are hardly 65years post-independence is going through a very high amount of corruption, fraud and malpractices. Well we must not forget that all developed countries went through such a phase including US but some major reforms and policy changes took place after that which actually made them what they are today. I think it’s high time we also raise our voices against corruption and reject strongly the fact that someone’s life in India is considered so cheap. A little out of the way but I think “Jan Lokpal Bill” is a onetime opportunity which we all have and hence we all must support if we agree to it. To support Lokpal or not is ofcourse subjective and debatable.

The Satyendra Dubey story took place like around 8 years back but one good thing is that the situation in terms of “development” in Bihar now has turned around. Two of the projects are toll road projects in which the operator needs to be assured of returns by collecting tolls. And now we can see this spirit and confidence among corporations of taking up such projects. Bihar has become one of the first states in the country to use mobile tech for keeping a track on the progress of the projects.

The private sector participation is being seen not only in Bihar but also elsewhere in the country. The private sector is bidding aggressively for projects even which government is financially skeptical about. You may wonder what happened suddenly? Well, the changes in the bidding norms has led to an increase in participation of private players. Some even say it is because of the few offerings from the government. GMR infra won a 5700 crore national highway project connecting Rajasthan and Ahemadabad. Eight similar offer have been received by NHAI recently.

As discussed in class, the government offers upto 40% of the project cost viability gap funding to support projects in areas where returns may not be that fruitful.

So the summary of some of the key-points could be as follows:

1. 1. Bidders are now ready to pay a premium for the road projects
2. 2. Roads have put out a good policy helping it attract more and more investments
3. 3. Road traffic is expected to grow at 7-8% growth.

I have purposefully skipped the details of the project because I think the learnings behind the project are more important than the project itself.

Mayur