Given the cost and scarcity of capital, and time, it is essential to provide facilities—industrial corridors, electronic parks, inland waterways, agri-zones and pharma clusters—but not duplicate them.
The planning and co-ordination that PM Gati Shakti seeks to bring in, to build multi-modal infrastructure in the country, is welcome. The importance of better logistics cannot be emphasised enough. Given the cost and scarcity of capital, and time, it is essential to provide facilities—industrial corridors, electronic parks, inland waterways, agri-zones and pharma clusters—but not duplicate them. And the returns on the investments must be maximised. Data on around 1,700 infrastructure projects suggests an average 20% cost-overrun and a 3+ year time-overrun. Commerce minister Piyush Goyal says the aim should be to reduce the cost of logistics to 8% of the GDP from 13% currently; that could translate into savings of a massive `20 lakh crore.
The lack of access to, say, an integrated industrial township or a textile park, and poor connectivity to ports or airports, could leave them operating at well below potential. It is also good to have visibility across all projects in one place. A digital dashboard, on a GIS platform, can make a difference to the speed of monitoring and, therefore, of action as well. However, that is only if the information is used effectively by the respective departments and those in charge, to make sure projects are cleared fast after being properly appraised, obstacles are quickly removed and any disagreements resolved. We could borrow some practices from other countries that have similar mechanisms.
The masterplan promises every aspect of planning—from working with all stakeholders to ensuring last-mile connectivity—will be taken care of. This is sought to be achieved by setting up an institutional mechanism, comprising experts from 16 infra ministries—the Network Planning Group (NPG)—who will study multi-modal infra projects worth `500 crore or more and will ensure things move as planned. The process does comprise a few layers, though. For instance, the projects cleared by the NPG will be sent to an Empowered Group of Secretaries headed by the Cabinet secretary for further scrutiny and approval. Also, the baton has been handed over to department for promotion of industry and internal trade (DPIIT) which will be the nodal authority and will monitor the progress of projects; this was earlier being done by NITI Aayog and the DEA and the line ministries.
Having all the information relating to the implementation in one place will make it easier for those in charge. Inter-ministerial co-ordination has never been a strong point; turf battles between various ministries and departments have left projects stranded. It is also important to reform the bidding criteria for awarding government jobs; these do take into consideration commercial aspects to an extent, but do not always adequately assess technical prowess. The practice of awarding a job to the lowest bidder—the L1 syndrome—isn’t necessarily the best one. That is because a cost-overrun—due to a delay—could kill the advantage of the initial lower estimate. Promoters that are better equipped to take on projects need to be encouraged.
It is no secret India’s indifferent state of infrastructure has made it hard to do business. Exporters, needing to meet strict deadlines, have been particularly inconvenienced. Improved infrastructure could encourage the private sector to invest. CMIE data shows new project-starts between September 2020 and June 2021 totalled `4.8 lakh crore whereas the December 2019 quarter alone had seen `4. 4 lakh crore. We need to use capital efficiently so the private sector is encouraged to invest.