India is emerging as one of the global hotspots for infrastructure creation, with the government, in the last few years, launching a wave of ambitious projects, spanning sectors ranging from transportation to energy, urban development, IT connectivity, and rural and agricultural amenities.
India is emerging as one of the global hotspots for infrastructure creation, with the government, in the last few years, launching a wave of ambitious projects, spanning sectors ranging from transportation to energy, urban development, IT connectivity, and rural and agricultural amenities. This year’s Economic Survey famously pegged India’s funding requirement for infrastructure creation until 2040 at $4.5 trillion, which is twice India’s current GDP.
The creation of public infrastructure is driven primarily by the government; it now accounts for around 70% of total infrastructure spending, despite ambitions during the start of the erstwhile 12th Plan period that half the resources needed would emanate from the private sector. The reasons for this recent declining trend in private investment are well known—ranging from the unwise investments and the debt-overhang problem of infra companies, to the mixed successes of the first generation of public-private partnerships.
Ever since late-1800s, which heralded the era of grand projects like the railways, dams and canal systems, successive governments have tended to focus on mega schemes like large hydel and thermal projects, steel plants and so on. But the opportunities offered by changing technology, the evolving nature of people’s aspirations, and changes in ways people undertake both economic and social transactions are leading to fundamental transformations in the nature of infrastructure, as well as in the manner in which it is created. In sum, there is a need to reimagine the infrastructure requirements of tomorrow, and to recalibrate our approaches to infrastructure creation.
There are three cardinal trends transforming the way in which we imagine public infrastructure. First, infrastructure is becoming intelligent, embedded with Big Data points that can make its maintenance effective, and its utilisation easier, safer and richer, as well as reducing its total life-cycle costs of ownership. When data is embedded in infrastructure like roads, rail systems, vehicles and power plants, the way is open for its utilisation in more cost-effective, elegant and safer ways.
The second trend is the disaggregation of infrastructure. On account of land pressures and adverse impacts on physical and social ecosystems, it is becoming increasingly difficult to set up land-hungry and environment-altering mega infrastructure projects, especially in sectors like power generation, heavy manufacturing and refining, where the benefits do not really flow into the immediate neighbourhood.
In sectors where it is technically feasible, like renewable energy or irrigation, the next-generation cohort of projects will become disaggregated—like rooftop solar generation, micro-irrigation projects or local watershed-oriented drinking water schemes. In other sectors, much thought has to go into how source-infrastructure can be disaggregated, and the project risks spread spatially, for obtaining the acceptance of the affected communities.
The third trend is the increasing permeation of what might be called ‘invisible infrastructure’. It is expected that, by 2022, there will be ubiquitous net access across rural India, and with the advent of 5G in telecom, there are expected to be radical transformations in the way business and social interactions are conducted. In sum, the universal permeation of connectivity and IT is expected to foster a multitude of frugal innovations and a flowering of entrepreneurial energies and creativity across the country, and will also go a long way towards overcoming India’s deficit in physical infrastructure.
Apart from these fundamental transformations in the infra landscape, there is also a need to undertake reform in the manner in which infrastructure is created. The cardinal guiding principle here has to be sustainability—which concept can be broken down into harmony with the physical environment, as well acceptability to the local community where the asset is proposed to be nested.
The days are gone when projects could be parachuted into greenfield locations, without attempting to ensure beforehand they are in harmony with the landscape, both in terms of land availability and environmental impact—as also in social and cultural acceptance by local communities. The aborted steel-making projects in eastern India, and the tragic events around Sterlite’s copper plant in Tuticorin, have thrown these concerns into sharp focus, with people having had to attain martyrdom to protect their local environment.
It is clear that, in the days ahead, as we become increasingly better informed and better networked society, it will become near-impossible to set up infra projects without the surrounding communities becoming convinced that project outcomes as well as its processes are in harmony with their concerns and aspirations. Moreover, people are increasingly alive to the credentials, and the purity of intentions of the infra project promoters, be it from the government or private sector.
We are in an era where increasing pressures on land, on water use, on air purity, and on neighbourhood infrastructure will make it more and more difficult to undertake creation of big-ticket infrastructure projects, unless it is seen as serving the needs of local communities first. In this age of VUCA—or volatility, uncertainty, complexity and ambiguity—India’s next generation of infrastructure projects need to be reimagined, both in terms of their nature and composition, as well as in the manner of their planning and execution.
By: Elias George
Chairman, Infrastructure, Government & Healthcare, KPMG India