The planning and coordination that Prime Minister Jati Shakti is seeking to introduce, to build a multimedia infrastructure in the country, is welcome. The importance of improving logistics cannot be stressed enough. Due to the cost and scarcity of capital and time, it is necessary to provide but not duplicate the facilities—industrial lanes, electronic parks, inland waterways, agricultural areas, drug clusters. Investment returns must be maximized. Data on about 1,700 infrastructure projects indicate an average cost overrun of 20% and a time overrun of over 3 years. Commerce Minister Piyush Goyal says the goal should be to reduce the cost of logistics to 8% of GDP from the current 13%; That could translate into a huge savings of Rs 20,000 crore.
Lack of access to, say, an integrated industrial town or textile complex, and poor connectivity to ports or airports, may cause it to operate at a level well below potential. It’s also nice to have visibility across all the projects in one place. A digital dashboard, on a GIS platform, can make a difference in the speed of monitoring and, therefore, work as well. However, this is only if the information is used effectively by relevant departments and officials, to ensure that projects are quickly cleared after being properly evaluated, obstacles are quickly removed and any disagreements are resolved. We can borrow some practices from other countries that have similar mechanisms.
The master planner promises every aspect of planning – from working with all stakeholders to ensuring last-mile communication – will be taken care of. This is being pursued by setting up an institutional mechanism, comprising experts from 16 infrastructure ministries – the Network Planning Group (NPG) – who will study multimedia infrastructure projects worth Rs 500 crore or more and will ensure things move as planned. However, the process consists of a few layers. For example, projects approved by the NPG will be sent to an empowered group of trustees headed by the Cabinet Secretary for further scrutiny and approval. The baton of command has also been handed over to the Department for Promotion of Industry and Internal Trade (DPIIT) which will be the nodal authority and will monitor the progress of the projects; Earlier this was done by NITI Aayog, DEA and line ministries.
Having all implementation related information in one place will make it easier for administrators. Inter-ministerial coordination has never been a strong point; Battles for influence between different ministries and departments have stranded projects. It is also important to reform the bidding criteria for awarding government jobs; These take into account the commercial aspects to some extent, but do not always adequately assess technical prowess. The practice of giving a job to the lowest bidder – L1 syndrome – is not necessarily the best. This is because cost overruns – due to delays – can eliminate the advantage of a lower initial estimate. Better equipped promoters should be encouraged to take on projects.
It is no secret that the indifferent state of India’s infrastructure has made it difficult to do business. The exporters, who need to adhere to strict deadlines, were particularly annoyed. Improved infrastructure can encourage private sector investment. CMIE data shows that new project start-ups between September 2020 and June 2021 totaled Rs 4.8 crore while the December quarter 2019 alone saw 4. 4 lakh crore. We need to use capital efficiently so that the private sector is encouraged to invest.