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Saturday, 04 February 2017 00:00
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Implementation and avoiding conflict of interest critical


Transport minister Nitin Gadkari is absolutely right when he said, after the Budget gave his department only Rs 64,900 crore against its demand of Rs 97,000 crore, that money was not the binding constraint. In an interview to Mint, he said that if the roads ministry monetised 100 projects, this could generate Rs 55,000 crore; and this was in addition to the Rs 70,000 crore of masala bonds that were given a tax exemption in the Budget. Indeed, by allowing airports to sell stateside land, finance minister Arun Jaitley potentially gave airports tens of thousand crores of more funds in the budget—airports that have been modernised in the past, on a PPP basis, such as the one in Delhi, have been based on precisely this model. If the Delhi metro is one of the few in the world that is profitable, it is primarily because of the huge tracts of land given to it by the government. In the case of railway station redevelopment—if all goes well, over the next 10 years or so, 20-25% of railway revenues will come from non-traffic sources—is being done the same way, by allowing the private sector to build hotels/commercial complexes on Railways land and share part of the revenues with the transporter.

Which is why, when it comes to infrastructure-spending by the government, money is not the binding constraint. It is implementation that is critical. In FY17, though it is true both the roads and the Railways have not been able to meet their targets, what has been achieved has been far greater than in the past—for FY18, even stiffer targets have been set by the government. Equally critical, if the charges of crony capitalism that have dogged most big projects in the past, are to be avoided, care has to be taken in how contracts are awarded and disputes resolved—it is very easy, for instance, to go soft on contractors in the new dispute resolution process that has been announced and change contract terms to the government’s disadvantage. Just last month, The Times of India (ToI) reported, NHAI had disqualified IL&FS for a Rs 1,200 crore highway since one of its independent directors, retired IAS officer RC Sinha, was also an advisor to Gadkari; last year, ToI reported another firm was disqualified on grounds Sinha was its director. While the roads ministry has done the right thing, things wouldn’t have come to this pass if it was careful in vetting its advisors as well as officials in companies being allowed to bid for contracts.


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