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.  

Waste Water Recycle & Reuse: A potential solution to water crisis in India?

In our last class, we discussed about the issues and current scenario of water supply in India. I feel a lot can be done in this regard if people change their thought and perception about reuse of recycled wastewater. There are many places in India, with no source of surface water. Hosakote, for instance, located at 30 km distance from Bangalore, is a town where the entire population is dependent on ground water. The excessive extraction of ground water had resulted in the water table going as low as 1250 feet, making the water unfit for potable use. The only solution to meet the water demand would be to reuse the recycled water. The secondarily treated water coming from STP at Bangalore could be further treated to required level to make it fit for potable purpose, but it’s not happening as people are not ready to use recycled wastewater for potable use. So, it has been decided to mix the recycled wastewater from STP to a lake (called Doddakere Lake) and then treat the water from Doddakere Lake in a WTP and then supply it (i.e. Indirect Reuse of wastewater). But even then, using treated water, extracted from source which has been directly mixed with secondarily treated wastewater will not be acceptable by the users. Therefore, it is planned to set up a TTP at the upstream of Doddakere Lake, to tertiary treat the secondarily treated water coming from STP  and then blend the tertiary treated wastewater (which is considered fit to be directly used for a no. of purposes) with the dirty lake water (which is also receiving direct wastewater from other sources). I feel this is simply waste of valuable resources and money. Around 25 crore of initial investment and nearly 7 crore (that will increase every yr) of O&M cost will be spent in the TTP which is hardly needed. And all this could be avoided if the perception of people about use of wastewater changes. Many countries (e.g. - Singapore) are entirely dependent on direct use of recycled wastewater for meeting the water demand of people.

There is another good project in the planning stage that envisages to further treat the secondarily treated wastewater from STP to tertiary level to meet the industrial water demand of Mysore. A very similar project was planned few years back in Surat, even the bidding was done & private player was selected for implementing the project. But then, with some political interference, it was cancelled. Now, I think it is happening in EPC mode.

Both the above mentioned projects are envisaged to be implemented in PPP mode. They are in planning stage now, and their pre-feasibility reports have already been prepared and submitted to the Govt. The reuse of recycled wastewater is a wonderful concept and has the potential of replicability in a no. of places (IDD, GoK has already decided to replicate these projects, if successful, in two more towns in Karnataka). I think, this concept if widely implemented, can revolutionise the water industry and solve the problem of water crisis in many parts of the country.

More mobile phones than toilets

 Hello. In lieu of today's class on power and telecommunications, this article came to mind.

- Ranjeet

(excerpts) 

 

 "Nearly half of India's 1.2 billion people have no toilet at home, but more people own a mobile phone, according to the latest census data. Only 46.9% of the 246.6 million households have lavatories while 49.8% defecate in the open. The remaining 3.2% use public toilets. Census 2011 data on houses, household amenities and assets reveal that 63.2% of homes have a telephone."
 
"More than half the population - 53.2% - have a mobile phone."

Source

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]