Is infrastructure choaked with traffic?

Infrastructure capacity over-stretched in India?

India’s infrastructure, meaning Ports, Roads, airports, and railways, are they sufficient to meet the burgeoning demand of the economic growth of the Country which is expected to emerge as one of the largest economies of the World in a few year’s time?

Is India’s growth commensurate with the growth in automobile, bus, motor vehicle, two wheelers, three wheelers, four wheelers, six wheelers, and giant trucks that move Containers, passenger growth in trains, aero planes, and Container traffic through ports?

Has the Planning Commission estimated the normal growth and superfluous growth, and arrived at the forecasts that would accurately predict the demand: Supply? Year-on-Year, the Finance Ministers have worried about raising expenditure, bridging the gap, collecting taxes, and focusing on bringing down the fiscal deficit, and allotting a chunk of money for populist schemes with the Vote banks in view. Is there any sincerity in their spending for the downtrodden? Is it aimed at making their standard of living grow? With all the spending, the have-nots increase in geometrical progression. Why? Faint and half hearted attempts to give an impression that the Government looks at an egalitarian Society, when Laws are framed and passed to assist the rich grow to figure in the Forbes List!

You cannot plan growth of rural areas by experimenting with examples. Gross root economics is not what is visualized in the theories of master economists. Even Hayward and London School economists failed to come up with an alternate strategy when the world economy led by America and Europe fretted and fumed?

The Central Government can wash off its hands saying that Road Transport is a state subject. That is why, when they raise the price of petrol or diesel, they tell states to reduce the Commercial/Sales Tax. But it is a fact that the vehicle population, both existing and new, is out of proportion to the available infrastructure. India hardly spends 4% of the GDP when China allocates 9% of the GDP for infrastructure growth. Infrastructure capacity is wholly inadequate rather inconsistent. The supply has not picked momentum against demand. Sector has not achieved the growth commensurate with its potential. The Road usage should have been restricted to 70% of its capacity. In India, the Road capacity is stretched beyond 100%. Port capacities are extremely stretched which raise inefficiencies as the utilization has breached 100%. The traffic is growing at a Compounded Annual Growth rate of 20%, while new capacities created are sizably low. Strong domestic consumption and favourable demographies in terms of young working population in India has resulted in heavy growth of vehicles. To cite an example, the State Bank of India, Kerala Circle, (the smallest circle of the SBI in India) gave auto loans to the extent of Rs 354 Cr in 2009-10 against Rs 34 Cr in 2008-9. What is the percentage of increase? Can the roads in Kerala, limited as they are, accept this additional load?

Just to give comparative figures, the automobile population (including the two wheeler segment) in India during 1990-91 was 22 lakh against 8.59 Cr in 2008-9.

According to statistics provided by the Economic Survey (2009-10), 11,037 Kms of High way has been completed. The Survey says that 1, 45,000 Kms of rural roadways at a cost of Rs 37,000 Cr has been laid upto 2008-9. This year’s budget for the NHAI is Rs 6,972.47 by Cess Funds collected from petrol & diesel users. The Government concedes that it underwrites under-recoveries to the extent of Rs 20,000 Cr. The Cess collected through compulsory taxation is 30% of the under-recoveries. Government should explain that when such is the case, how they can say mathematically the oil Companies are in the red, even after an upward increase every three months. There is something wrong somewhere, taking into account IOC profit of Rs 10,000 Cr in 2008-9. This is a mathematical puzzle more complicated than Satyam. If we look at the budget of NHAI, Rs 6,942.47 Cr is collected through Cess, Rs 1515 Cr is ploughed by way of External assistance (in the form of grant & loan) Rs 379 Cr + Rs 1096.26 Cr borrowings, while the actual Government’s budgetary support is only Rs 159 Cr. Mr Kamalnath is right that when the planning commission coughs up just Rs 159 Cr through budgetary support while the Ministry’s fixture is to lay 20 Kms of highway totaling 7,000 Kms of national Highway per annum. That is to say Government spends Rs 2, 27,142.85 to build 1 km of National Highway.

Private Sector invested 19% of the total plan outlay as participation in the Highway Development Programme, while it has grown to 30% in the XI Plan. Only in the building of Roads, PPP has risen from 5% to 36%.

Term funding, both equity and debt, by Banks, is impossible for the simple reason that the gap in long term debt financing is largely due to asset: liability mismatch facing the Banking industry. Long term equity capacity is also difficult to come by. Permitting pension funds and insurance cos to invest in long term stabilized constructions like roads, directly and indirectly, would be cost effective. Indirect investment in infrastructure funds or creation of listed perpetual funds holding infrastructure assets where investors could invest with an annuity philosophy may be explored. Foreign Exchange Reserves may be deployed for asset creation at little costs but with high returns. If Planning Commission goes on singing in chorus as to the whereabouts of the funds, even though the deployment is in unproductive and unwanted sectors, the infrastructure development will halt the country’s progress.