Changing Conditions
In recent times however a lot of emphasis is being placed on Road development, this can be verified from the fact that the National plan had listed Road development as a priority area for economic development. The Golden quadrilateral aimed to connect the four major cities in India Viz Bombay, Chennai, Delhi and Kolkatta is close to completion and in pipeline is also projects like the North- south and East- West Corridor, Port connectivity projects. Increasing Competition between states in attracting foreign investments has also been an impetus for development.
What more can be done
Highway projects in India are handled through a government engine in the form of National Highways authority of India (NHAI). NHAI is responsible for executing all National Highway projects, similarly there are road development corporations (RDC) which operate in certain states, but their work force is very small and hence their reach. RDC's also have very limited power and restricted capabilities to manage. Considering the expanse of road networks in each state, the work force that these RDC's have are grossly insufficient.Additionally, they usually do not have enough funds to do studies on traffic patterns to suggest road improvements, most of their information is borrowed from studies by other organisations. This means they do not have enough data to advocate the need to build more roads and how to utilise them optimally.
The RDC's have no fixed way of income generation, and have to primarily depend on government allocations for funds. There is no transparency in the way that these RDC's handle their finance, since there is no form of accounting being done, hence there is no way to ascertain the returns on the investments made by these corporations. This puts them at a disadvantage when they go for borrowing, leading to higher rates.This also puts them at a disadvantage when showcasing their plans the common public since they cannot clearly establish a revenue model and cannot explain to tax payers as to why they are being charged acertain toll to cover for the costs of these roads. These are things that can be looked at the state level RDC's.
Another area of improvement is in involving more Private sector participation. Throughout the world the private sector financing model has been succesfully used to build road networks. A national level policy on Private sector participation should be created and a suitable regulatory and legal environment should be created. It would be very important to make sure that we do not have another incident like Dabhol when involving foreign and private participation.
And finally it is important to make sure politicians and politics don't hamper improvements. Anew government should not stop a good initiative started earlier or change policy matters introduced by previous governments. Road transport and road infrastructure are vital for accelerating the rate of economic growth in India, Unless major reforms as well as investment are made, India’s road infrastructure will be an impediment to economic growth and social development.
4 comments:
Suresh, didn't know about the RDC stuff.
But isn't it that it is usually the private sector which gets a contract (after tender etc.,) for road building?... correct me if wrong... but whether the money allotted for the project is being used appropriately is a diff. question (given the politics behind it)
But isn't it that it is usually the private sector which gets a contract (after tender etc.,)
Yes youre right, but the funding was still by government. The new model should allow to tap the funds of private sector, with the increasing competition among corporates for consumer mind space, they would sure be ready to grab this huge opportunity.
Oh okay, u are talking about privitization of the entire thing so that govt. need not fund... but why would the private players do it if they cannot make an income out of it?... unlike other products, the private players would have nothing to sell... may be collect a toll but this would not be an attractive invesment... in any case, if the private players come in, our govt. should be very careful not to sell the road land to them, which would lead to a disaster...
while privitization increases quality, competition and reduces prices, we need to be very careful when this is extended to basic necessities... like now, water is already privitazed (i mean not to a complete extent but we do buy water etc.,)... while people who can afford can buy, those who can't would have trouble... these things should be free by the government atleast for the needy...
roads don't come under a complete basic necessity, it should still not be let lose...
It would be a very attractive investment karthik. The government is not going to sell any land here. The contract is made in a BOOT (Build, own, operate and transfer) format, so that the investor builds, operates, makes profit from it and then transfers the control back to govt. This is common in the infrastructure industry.
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