'Funeral Pyres' to protest land acquisition

 This is an interesting article I came across in Times of India on November 9. It is also interesting to note the relevance of social movements when developing infrastructure project. There was a verdict by the Honorable Supreme Court of India cancelling the Acquisition of farm lands in the name of public benefit which I came across in moneycontrol.com dated September 5th. Both the cases are related considering the fact that the protest  is due to acquisition of farm lands. Once Land Acquisition and Rehabilitation and Resettlement Bill is passed by the parliament, the land acquisition problems are supposed to get worse. "In the proposed bill, the percentage of land owners, whose consent is essential for acquiring land for private purposes, has been raised from 67% to 80%. However, land owners' consent is not required for acquiring land for public purposes." as cited by Times of India. This will make many of the upcoming power projects uncertain.

http://articles.timesofindia.indiatimes.com/2012-11-09/india/35015981_1_protest-land-acquisition-fertile-land-government-land
http://articles.timesofindia.indiatimes.com/2012-10-31/jaipur/34836689_1_land-owners-larr-bill-land-acquisition
http://en.wikipedia.org/wiki/Land_Acquisition_and_Rehabilitation_and_Resettlement_Bill
-Dickins John

Growth Potential: Rural Market

                   It is true that 70% of India’s Gross Domestic Product (GDP) is contributed from the urban part of the nation. But what about the rural population, that constitutes 70% of India’s aggregate population?  The rural market group offers an extremely strong potential for growth.

                   India still being an emerging market is on its way to become a major economic power, promising great sustainable industrial growth with compatibility in being environmentally friendly. All left behind, there are still major challenges being faced by the Indian economy-400 million people in India are not connected to the power grid, and more than 800 million are in the need for basic healthcare utilities.

                    The rural-contribution deficit in enhancing the economic growth is faced with barriers; top in the list being the lack of infrastructure services in the rural regions. Villages are sparsely populated and located with minimal infrastructure provisions, with most of the villagers solely relying on the agriculture production. Clearly, better distribution efficiency is imperative for sustainable and profitable growth in the Indian rural markets. 

                  Consider the telecom industry- India is one of the world’s fastest growing telecom sector, with the second largest wireless connectivity; though this peculiar scenario of the telecom industry, India has an untapped market on the rural level, which promises rapid growth in the rural uplift of the nation. Tele-density in the urban regions was nearly 75% as compared to 13% in the rural areas (in 2006); this rapidly widening divide between urban and rural tele-density can be attributable to the barriers that conflict towards the development of the telecom services in rural India, such as the uneven population spread and the huge network coverage required, which requires higher investment costs. These forbidden and untapped regions are being focused through various initiatives being implemented by the stakeholders.  “Wireless is the only way to reach corners of India”- Technologies like HSPDA, WiMAX, UMB, and LTE will play an important role for connecting rural India.

            The Government has been structuring the telecom regulatory environment in India since the incubation of the TRAI in 1997. Roaming charges will no more be applicable-most of you viewing this would have heard about it lately; the National Telecom Policy 2012 has been elegantly articulated taking corrective measures on the backlogs of the previous telecom policies and has aimed to boost transparency and revive growth in the telecom sector. The primary objective of this policy is to provide availability of 'affordable and effective communications' to the citizens. Rather than the direct revenue generation, which now shall be the secondary objective, directed by this policy.

                 The bottom line to this post conveys that the growth potential of the rural community in India can change the paradigm we live in and can serve the nation’s wealth by creating jobs, improving service delivery within and around the rural market, improving the macro-economic reputation of India. To enjoy a rapid growth in such markets, the rural market development must be persuaded, not just by the political decisions, but also through an entrepreneur’s perspective, looking to benefit every untapped opportunity. 

(References:

http://www.slideshare.net/deepakpareek/connecting-rural-india

http://www.medianama.com/2012/06/223-indias-new-telecom-policy-2012-whats-changed-additions-omissions/)

-Abhishek Deshpande

Phnom Penh: Some (two-rupees) Musings

Today's class prompted me to think along these lines.

 Phnom Penh Water Supply Authority (PPWSA) deserve praise for their efforts.

In 1992 it provided poor-quality piped water at very low pressure (0.2 bar) for only 10 hours per day to only 20% of the city's residents. Non-revenue water was extremely high at 72% due to illegal connections, manipulation of bills and physical leakage. Tariffs were extremely low, there was no metering and less than half of the amounts billed were collected. Staff were underpaid and demoralized. The utility then underwent a dramatic turnaround: Staff engaged in corrupt activities were fired, bill payment was enforced, illegal connections were regularized, metering was introduced and the utility gained autonomy from the municipality in financial and personnel matters. In the next fourteen years the customer base multiplied by nine reaching over 90% of residents, service quality improved from intermittent to continuous supply of safe drinking water at good pressure of 2 bar, and non-revenue water was cut to only 6%. Tariffs were increased and the utility went from being bankrupt to making a modest profit. It now has motivated, well-paid staff. According to one observer, in 2012 its "public image is excellent". The key to its success laid in "leadership, professionalism, integrity (and) commitment" as well as "community participation and information sharing (...), good governance, transparency and accountability.  (read more here)

So, does that answer the question regarding whether this can be replicated elsewhere?

Perhaps an easier way to understand this would be with a (rather painful) sports analogy. Apart from Shiv Sundar Das (2 Test match centuries; both against Zimbabwe; both at Nagpur; identical number of boundaries), no other example comes to mind of batsmen being able to reproduce a carbon copy of their efforts. Everything might click on a certain day, while it can all go wrong the next day, despite attempts to ensure that the circumstances are similar.

That precisely is the problem. It is easy to conduct financial analysis in the comfort of one's rooms with advanced modelling software - but the complex social milieu which consists of several inextricably intertwined factors (social, cultural, political, geographical to name but a few) make it extremely difficult to replicate real world situations. What the crude cricketer-example (no offence to S.S. Das) tries to illustrate is that (and I am purloining cricket commentator terminology) 'On any given day, anything is possible'. The best laid plans of mice and men often go awry.  

So, is it then possible to model a solution based on the experience in Phnom Penh, considering how certain things are beyond (even) our control?

That is probably not the question to be asked since such model-based solutions impinge on the space for creative and novel solutions. It is also not just a case of being dealt the best possible hand. A more relevant factor is how one looks at the options available, assesses the risks involved, and perhaps most crucially, plays the cards one is dealt. It can pay off- and people will praise you; or you can end up with egg on your face- and people will vilify you. But ultimately, if you don't sit at the table and ask for the cards to be dealt, you will never know the outcome. It is better to have lived and died than to have not lived at all.

Then what can be learnt from this experience if everything boils down to a high stake game of cards?

Well, (and this is the dodgiest argument of the lot) human resilience in the face of atrocious social conditions, coupled with the exemplary leadership of Ramon Magsaysay Award winner (2006) Ek Sonn Chan, can be seen as that perfect mix of elements that should encompass a successful project (apart from the numbers and economic projections; not to mention the expectations attached to the project). Without Ek Sonn Chan at the helm to orchestrate everything, would everything have panned out the way it did? As mentioned in class, (the delays in the Chennai Metro Rail Project), problems arise in the absence of such a maestro who can pull the strings and ensure steady progress. Capacity building should thus be a priority: Not just for any such singular attempt to be successful, but also to ensure that in the larger scheme of things, the institutional setup is in place to assure the success of future endeavours across all fields. Even if one particular project does not meet targets, a highly motivated and dedicated skilled workforce will be an embarrassment of riches and will never amount to surplus- if you play your cards right.

-Ranjeet

Ask not what you can do for your country, just shoot…

I came across this article the other day in the Economic Times, highlighting concerns over the toll collection systems generally implemented under BOT models in the transport sector. 

http://economictimes.indiatimes.com/news/economy/infrastructure/highways-why-toll-collection-is-sparking-conflicts-across-the-country/articleshow/16982193.cms

Although the article mainly discusses the larger issue of benefits of these revenue collection systems, I believe the inexplicable actions of an elected representative should not go amiss. As I read this, John F. Kennedy’s famous words come to mind” Don’t ask what your country can do for you but what you can do for your country”, a stark irony in comparison to the existing sentiment in our dearest nation.  At various points we have asked ourselves as to what exactly is India’s problem? What is this seemingly incurable disease that threatens almost every project into the abyss of unending chaos? I believe this general sense of lack of patriotism and national sentiment is part of this larger issue.  In over 60 years of post-colonial independence and democracy, we have managed to completely forget the fundamental principles on which our freedom struggles were founded on.  In the fourth module, we have predominantly been looking at a bird’s eye view of project governance and policy issues. However, I believe the need is for a more bottom up approach, to ensure the compatibility and implementation capacity of all developmental initiatives, infrastructural or otherwise. 

State of Railway Infrastructure in London and India

          As Ashwin sir mentioned in the class about the railway infrastructure in London, I wanted to add some more to it from my personal experience. The operators of railways in London viz, National Rail, Greater Anglia, Underground, and others operate together. In the sense, the railway lines can be operated by more than one operator. And while travelling between two stations, say, from a suburb to some place inside the city, even if the passenger has to change trains of different operators, still he can buy only one ticket for the whole travel. This facility eases the travel procedure for the passenger. But to maintain this, there has to be a proper structuring of the fare, and other parameters. This kind of system ensures a higher standard of infrastructure, also due to the competition set up due to involving more than one operator. The application of this system in India might not be viable unless private operators are allowed to operate. In my point of view, this can be achieved, given proper regulation of fares (set by the private operator) is done by the government, because the raise in fares is a potential roadblock to let the private sector enter the railways.
          Also, one more new thing I learnt about the railways in London is that they have “community rail” where, local people and organizations work together with the railway operators to improve their local railway infrastructure. This kind of a system aims to improve the infrastructure and at the same time involve the community. The benefits of this system are also proved to be high. This again is a difficult thing to implement in India, but not impossible. Awareness can be created in the local people to develop the infrastructure by their own. For example, the current status of MRTS stations in Chennai is very bad. A person who is new to Chennai, gets out of the train, can’t really understand which way to go to reach his final destination. Setting up proper sign boards can be done and the funding can be done by the government by dedicating some share from the ticket price. Improving the existing infrastructure is as important as creating new infrastructure.

Social-Environmental issues in Infrastructure Project

Polavaram Project

            The project, estimated to cost Rs.15,000 crores, is intended to bring 7.2 lakh acres under irrigation and produce 930 mw of power. Its Left Main Canal will bring 1.5 lakh acres under irrigation in Visakhapatnam district and 23 tmc ft of water to the city to help meet the growing industrial and domestic needs.

            In this project the cost for environmental disturbance was Rs.372 crores and it displaced 1,17,034 people in 276 villages besides submerging 37,743 ha of land – of farmland, forests and wasteland. However, with the strong political support it overcome all the bottlenecks and is in progress now. None have clear evidence that this is a socially and environmentally sustainable project, as the process was not transparent. It’s presumption is that the Godavari river has surplus flow and the water can be diverted to Krishna river so that it can be efficiently used. But, the IWMI (International Water Management Institute) challenged that the NWDA (National Water Development Authority) has falsely calculated the water in river Godavari without considering the environmental use of water which amounts for 8,200 MCM and the analysis procedure was ambiguous and at many instances there was no data available even. But, however with the strong political clout the challenges were fell on their deaf ears and the project was already given clearance and made free from all bottlenecks. In the context of the social issue in this project there were strong allegations that the Public Hearing which was quintessence of EIA was not done transparently and the real victims were not allowed to speak in such hearings using what illegal power the govt. have. The IWMI and many other NGOs working for the Polavaram project-effected victims strongly claimed that it was not a sustainable project and hence should be canceled consideration while analyzing the projects CBA. But, it was the political commitment that made a socially & environmentally nonviable project become viable, but in vein. In fact, it cannot be said as a viable project if one has taken the social & environmental aspects into consideration.

             This shows how lack of transparency, public communication results in expensive delays and also role played by political leaders.

NPM in Developing Countries (Comparing the Cases of Singapore and Bangladesh)

          NPM techniques have been imported by some developing countries and transition economies to reform the public sector and to provide sufficient public services. The NPM reforms succeeded in some countries and failed in others.

 There are some preconditions for successfully implanting the NPM approach.1) There should be a reasonable level of economic development, experience of the operations of markets, and a well-developed judicial system to ensure the rule of law.2) Political commitment 3) State capacity. I felt it is worth exploring two different results of applying NPM in developing countries – a successful example from Singapore and a failed example in Bangladesh.

        In the case of Singapore, this country possessed special economic, political, and social circumstances that were behind the success of the application of NPM reforms.  Singapore is a small country in size compared with many other Asian countries and this was a motivating factor in enhancing economic growth rapidly in order to be able to compete with other countries in the region. Thus, the government put attracting foreign investment and the expansion of private sector activities at the top of its priorities. New approaches were introduced, including accountability and anti-corruption policies.

           Unlike Singapore, Bangladesh had an unstable political situation. It also suffered from a highly bureaucratic system and many other barriers such as a weak economy, the absence of security and weak law and order, all of which undermined attempts to enhance economic performance and reform the public sector.

           On the one hand, Singapore had a strong stance and achieved considerable success in reforming its public sector through following many NPM approaches. It was well-prepared economically and politically to embrace and implement NMP. It should be also considered that Singapore’s implementation of NPM spread over several decades(1960s to 1990s). On the other hand, the political and economic circumstances in Bangladesh were not as favorable as in Singapore. Although Bangladesh succeeded in obtaining democracy in 1991, which was supposed to help combat corruption and end the bureaucratic system, the bureaucracy remains in existence and it resists any attempt to reform it.

              The commitment of political leaders to the reform of the public sector and their support for the wide application of NPM from the early stages of reforms was one of the important reasons behind the success of NPM in Singapore. In contrast, political leaders in Bangladesh used to call for reform but they did not undertake effective actions to achieve it. The wide gap between state capacity in Singapore and Bangladesh can also explain the reasons behind the failure of Bangladesh’s attempts at reform. Education is another strong factor that helped Singapore to achieve such success as Singapore has considered education the cultural and social base of the country

Ensuing Problems in Urban Transportation PPP Projects

I happened to read this article in the Economic times on PPP projects in the Urban Transportation sector in India, and I believe it is relevant to our discussion yesterday about the Vadodra Halol Toll Road Case study.  

Link: (http://economictimes.indiatimes.com/news/economy/infrastructure/ppp-projects-face-flak-experts-call-for-review/articleshow/16681219.cms)

I think the article summarizes the main problem with the Vadodra Halol road, i.e the demand estimations were way too optimistic. However, as we know, most of the urban transportation projects in the country have this in-built concern right from the moment the project is conceptualized.  The ridership estimations on almost all of the major Urban Transportation projects executed till date have been  much higher than the actual demand (Kolkata Metro is an excellent example in this regard). However, in projects executed under the PPP mode, these risks are generally, more as a rule than an exception, borne by the private player involved, which makes the returns on the investment very dicey.

We in India, have not implemented more Private-sector friendly” revenue models (like the Annuity toll model) extensively, and hence this risk continues to be a major concern for urban transportation projects executed with a Public-Private partnership. Private players, already rather wary of the multitudes of risk involved with PPPs  further get discouraged from bidding on these projects, and hence almost all of the “competitive advantage” that the PPP mode is supposed to bring in is lost at the very first step. The Mumbai MRTS project line II is a case in point, where no Private player bid for the project, and the contract was then given to Reliance Infra in light of its previous association with the MMRDA in the Line I of the same MRTS project ( a la IL&FS joint venture story seems to be emerging out of this practice, like Ashwin Sir mentioned in class yesterday). A perfect example of the private sector getting more and more disillusioned with these lopsided contractual terms in highly risky projects is Reliance Infra’s recent decision to exit many of the non-metro brownfield airport projects, citing unsubstantial returns as one of the major causes.

(Link: http://articles.economictimes.indiatimes.com/2012-09-07/news/33677051_1_airport-projects-reliance-infrastructure-lalit-jalan)

Hence, I believe it is time that the government of India take pro-active steps to refine the framework and policies enshrining PPPs in the country, and refine the contractual terms on these projects to have a Public-Private Partnership, rather than merely a Public-Private Mix, as Ashwin Sir’s research paper on the PPP experience in India mentions. Merely giving land-development rights as a sweetener and possible safeguard against lower than expected revenues is clearly not enough, as the Hyderabad MRTS project has shown us. It is high time that the government takes a firm stand on these issues, and with its new found confidence in face of increasing political pressure, finally remedies the major roadblocks plaguing the PPP chapter of the Indian Infrastructure story.