(Reuters)

After unveiling what is surely the first of more than one stimulus package, Deputy Chairman of the Planning Commission Montek Singh Ahluwalia told BW, “We are also looking at increase in public spending... all of which is directed to ensure that growth is maintained.” Ahluwalia is but echoing the views of the Prime Minister (PM) who, at the G20’s November conclave in Washington, noted that “investment in infrastructure will provide an ideal counter cyclical device” to the ongoing global financial crisis. “Investment in infrastructure today,” he said, “is perhaps the best signal for reviving private investment, including FDI, tomorrow.”

Opinion, though, is divided on the government’s performance in infrastructure. “The first three years did see some activity, such as airport privatisation, but that came to a halt this year,” says Amrit Pandurangi, who heads the transport practice for PricewaterhouseCoopers, in Gurgaon. Vinayak Chatterjee, chairman of New Delhi-based Feedback Ventures, disagrees: “I see the past three-four years a bit differently. We have compressed a lot of learning on many infrastructure sectors into a short period, which would have taken many more years in other countries.”

The Planning Commission’s projections show that India requires investments of approximately $580 billion (Rs 28.4 lakh crore) in infrastructure projects across electricity, ports, roads, metro rail, urban infrastructure and airports.

The government had begun well. One of the first tasks undertaken by the PM was to create a special Committee on Infrastructure (CoI) directly under him, for which the Planning Commission was to serve as secretariat. But a major hurdle, according to officials involved in the discussions, was that the Planning Commission’s views on infrastructure policy matters assumed significance even if other ministries, including finance, subscribed to other views.

“Normally, the line ministry or the administrative ministry, such as the power ministry for the power sector, should be given the freedom to decide, as it (the line ministry) would have a better understanding of ground realities,” says Pandurangi. “But having another power centre, such as the Planning Commission, to also decide on policy matters means that we are moving far away from reality.”
The facts bear this out.