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BW Businessworld

Defying The Naysayers...

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Our nation’s infrastructure is like our bureaucracy. Whichever way you look at it, almost nothing seems right. Both have been flogged endlessly for their ineptness. But this special package, put together to examine the state of infrastructure on India’s 66th Independence Day, is not just about what is wrong with our infrastructure; but as much about what is right. There is much to learn from those who have demonstrated that problems of infrastructure are surmountable.

Nations around the world (including the US) are grappling with the growing demands on their creaking infrastructure. At the heart of capitalism, which drives the global economy, is the concept of ‘consumption’. The fortunes of  global economy studiously follow the rise and fall in consumption. When population rises and its well-being improves, consumption grows. It boosts trade — within regions, between regions, between countries and between continents. The rise in trade has to be backed by commensurate development of infrastructure. It needs power to produce goods, roads and railways to carry them to ports and airports, ships and aircraft to carry them across continents. It needs humans, who enable both production and consumption, to be housed and it needs their commute to be facilitated.

According to the McKinsey Urban World Report released in June 2012, a billion people will be added to the global “consuming class” by 2025; of this, 600 million will be added in the  440-odd cities in emerging markets, including Shanghai, Mumbai, Sao Paulo and Lagos. About $23 trillion, or 47 per cent of global growth between 2012 and 2025 will be contributed by these cites. “We are observing the most significant shift in the earth’s economic center of gravity in history,” says the report. This is fuelling an unprecedented demand for infrastructure across the world. When this demand is not met, trade suffers — so do economies.

India is in the midst of a consumption boom, triggering one of the world’s fastest GDP growth rates, but our infrastructure certainly is not one of the enablers. Yet, occasional examples from this sea of gloom and doom in India’s infrastructure hold lessons for those that seem to be resigned to blaming ‘policy paralysis’ as their excuse for inaction.

Take the case of power, an industry where defunct and dying projects are a reality: some because of shortage of fuel supplies, some due to poorly conceived fuel policies and some due to their inability to achieve financial closure. But in a country where power plants manage a plant load factor or PLF (the average capacity of production round the year) of a mere 76 per cent (eight states have an average PLF of under 70 per cent), Reliance Infrastructure’s Dahanu thermal plant in northern Maharashtra has consistently reported an eye-popping PLF of over 100 per cent since 2007-08 (104.18 per cent in 2011-12). What’s the secret?

While other plants reel under the shortfall in supply of domestic coal from Coal India,Dahanu’s 2x250 MW units use an 80:20 blend of domestic and imported coal to keep the turbines running. It also deploys stringent yard management procedures for optimum stacking of coal and compaction. Close on the heels of Dahanu is the CESC-owned Budge Budge thermal power station in West Bengal which has also reported a PLF of over 100 per cent, though not as consistently. The duo’s performance, it seems, is infectious: in fiscal 2011-12, nine stations reported a PLF of over 100 per cent. Generation apart, there are gems in power transmission and distribution as well.

In roads, the ambitious Golden Quadrilateral project remains incomplete years after work began. Any Delhiite will vouch for the fact that the Delhi-Chandigarh and Delhi-Jaipur National Highways have been under construction for more than a decade and a half. In the past, there have been some successes in widening existing highways into expressways such as the Mumbai-Pune highway or the Mumbai-Vadodara highway. However, among greenfield projects, there is none like the 165-km Yamuna Expressway between Greater Noida and Agra that opened on August 9. Built by Jaypee Infratech at a cost of Rs 12,000 crore, it goes to show why the government must focus on building greenfield highways across the country to ease the burden on existing highways before embarking on expanding them to four- and six-lane projects. Besides, it’s a live example of a BOOT (build-own-operate-transfer) highway where private interest was sweetened by throwing in land for seven new cities to be built along the highway.

This special issue is led by the examples that showcase ways to tackle the biggest problem facing town planners: how to revitalise dying cities. Read about how Ahmedabad, Pimpri-Chinchwad, Hyderabad and Delhi battled the odds for urban renewal. And how they are inspiring cities such as Patna and Bangalore to kickstart their own re-engineering missions.

If ever India has to reap the fruits of consumption sprouting from its demographic dividend, it must overcome the infrastructure deficit. What we have here are barely the starters from the vast infrastructure menu. For the main course, read on. 

(This story was published in Businessworld Issue Dated 20-08-2012)