FE Editorial : The lost metro

The Financial Express
Posted: Thursday, Jul 09, 2009 at 2122 hrs IST
Updated: Thursday, Jul 09, 2009 at 2122 hrs IST

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: Speak of the state of India’s infrastructure and you are likely to invite a torrent of invectives about how it’s holding back the country’s economy. The finance ministry says that infrastructure inadequacies hack away about two percentage points from India’s growth rate. The minister of statistics & programme implementation says of the 925 infrastructure projects costing Rs 200 million or more being monitored by the government, about 423 are running behind schedule, with cost overruns of 15%. The latest project to become roadkill is the Hyderabad metro. An analysis of this also shows up the problems haunting India’s infrastructure development in general. When Maytas Infra—which was leading the consortium that bagged this rail project—emerged as the lowest bidder for it last year, prescient eyebrows immediately went up. While majority opinion celebrated a new dawn of PPP partnerships in India’s infrastructure development, a sceptical minority asked why the Maytas-led consortium was offering up Rs 30,311 crore to the state government through a 34-year concession period when competing consortia were in fact expecting monies from the government. Losing parties included the likes of Germany’s Siemens and Canada’s Bombardier, global majors in metro territory.

Our established metro man E Sreedharan expressed reservations to the Planning Commission: “Worldwide, the experience has been that no metro project has succeeded on build-and-transfer basis.” Sreedharan also questioned the allocation of acres of prime land to the operator for commercial exploitation, which he said was like selling the family silver. He charged that the BOT operator had a hidden agenda to extend the metro network to a large tract of his private land holdings so as to reap a windfall profit of four to five times the land price. But, even in early January, the Andhra Pradesh CM refused to couple the character of Maytas with Ramalingam Raju’s fraud: “Satyam is Satyam. Maytas is Maytas. Right now, we do not see any problem. Maytas will do it (Hyderabad metro).” For many, that just confirmed the political nature of the original contract awards. Going forward, we know that India’s ports, roads, railways, airports et al are all crumbling under increasing demand. We know that upgrades are necessary. If it takes 21 days to clear import cargo in India, but three in Singapore, that must change. But what we must also demand is greater scrutiny of contracts, to make sure they are not politically motivated. What is even more challenging...

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