Pune: A significant increase in the investment going into the infrastructure sector and a complete overhaul of the country’s power sector will play a vital role in the journey to achieving 8-9 per cent growth of the economy and make initiatives such as “Make in India” successful, management expert and chairman of Feedback Infra Pvt Ltd Vinayak Chatterjee said on Saturday.
Re-orienting private developers as well as bankers to the peculiarities of financing and management of infrastructure projects and a more assertive stance of the centre in power distribution to liberate power users from the shackles of state power distribution companies who are currently struggling to cope with inefficiencies and mounting losses, Mr Chatterjee said.
Mr Chatterjee was delivering a lecture in a meeting organised by Pune International Centre, Indian Institute of Management Ahmedabad Alumni Association (IIMAA) and Mahratta Chamber of Commerce Industry and Agriculture.
PIC vice president Dr Vijay Kelkar chaired the meeting. MCCIA President Satish Magar and Pradeep Bhargava, director, Cummins India Limited were present on the occasion.
Mr Chatterjee listed substantial increase in the gross capital formation in the infrastructure sector, creation of a national market for electricity and revival of the public private partnership model as his three priorities for leapfrogging the country’s infrastructure. India has been investing about 3 percent of its gross national product in the infrastructure sector as compared to 8-11 per cent which other emerging economies like China Malaysia or South Korea invested when achieving two-digit growth, Mr Chatterjee said.
“There were good signs as we saw allocation to infrastructure rising to 8 per cent in the 12th plan but the plan did not see the light of the day. Now there is neither the plan nor the Planning Commission. So we don’t know the latest position. The Niti Ayog which replaced the Planning Commission works like a monitoring agency collating information and making periodical presentations to the Prime Minister’s Office,” Mr Chatterjee said, adding that if this (lack of plan) continues, Indian economy will not get its 8-9 per cent growth and initiatives like Make in India “will not happen.”
Mr Chatterjee said there is a need for massive reforms in the power sector to streamline the generating capacity and costs of generation, transmission and distribution. Creation of a national electricity grid is nearly complete and now the centre should assert its position in the electricity distribution segment, he said.
“Distribution companies of states are not buying power because they can’t pay for it. This has brought down generation to 59 percent though there is abundant availability of inputs such as coal. If the centre creates its own distribution company it can bypass the state ‘discoms’ and supply more efficient and less costly power to the users under the open access mechanism,” he said. “If the centre can set up generation companies despite electricity being a state subject why not a distribution company?” Mr Chatterjee said adding that It is ironical that the highly expensive and polluting captive power generation is growing faster than the grid generation. Creating a national market for electricity by allowing free movement of power from the generating company to the users will make great sense, he said.
Mr Chatterjee also made a strong case for overhaul of the country’s regulatory mechanism and delink the various regulatory bodies from the government, giving them the freedom to operate. He recommended abolition of state power regulators and create five national regulators.
Revival of the public private partnership model for infrastructure sector will be necessary to ensure that the country’s finances are not overburdened and for speedy implementation of projects, Mr Chatterjee said. “We must learn from the mistakes of the past and drive home to developers, government departments and, importantly, the bankers, the peculiarities of these projects such as their long term nature,” Mr Chatterjee said. “There is need to redefine the risk allocation in these projects, keep scope for renegotiation if circumstances warrant, facilitate raising of long term resources and offer the projects for bidding after all the permissions and clearances are in place,” he said.
MCCIA President Satish Magar said Pune city has a big opportunity to participate in the country’s economic growth but is struggling with issues such as air connectivity and traffic congestion. “If Pune gets its own civil airport it can connect much better nationally and internationally and will be able to attract more industrial investments,” Mr Magar said.
Dr Kelkar said we are an information starved nation and hence investments in data gathering and data analysis at national level will go a long way.
Mr Bhargava welcomed the gathering and introduced Mr Chatterjee. MCCIA director general Anant Sardeshmukh proposed vote of thanks.
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