The government has finally woken up. It has announced Rs 102 lakh crore programme for strengthening Indian infrastructure. This aims at transforming India with investments pouring in from Centre, States and the private sector.
Conceptually it is a good initiative. In principle, with the investment in infra projects, chain of activities begin in different sectors. A government that is facing slowdown and related problems expects to turn over the economy with increase in jobs, all-round activity and synergising funding. This is a sequel to the Independence Day speech of Prime Minister Narendra Modi, when he announced investment of Rs 100 crore in next five years in infrastructure.
Joint Secretary of the Finance Ministry’s National Infrastructure Pipeline (NIP) Kumar V Pratap says that funding would be done by the Centre, States and about 22 to 25 per cent by the private sector. A centralised funding body will be formed.
The investment pattern is traditional – 24 per cent for energy sector, 19 per cent roads, 16 per cent urban development, 8 per cent rural infrastructure and 3 per cent social infrastructure, including health, drinking water and 3 per cent for education. And it stresses on roads, railways, ports and airports. It has taken into account about Rs 42.7 lakh crore investments under implementation. The rest are being conceptualised.
The exercise is aimed at growing business, create jobs, improve ease of living and equitable access to infrastructure for all, making growth more inclusive. A good aim but flawed. The prescription is slightly away from reality. The country’s economic path since 1950s has been stressing this. The 1991 so-called reforms also veered around it. This has not served the people forcing introduction of MREGA and PM Kisan pension to help the deprived.
Prime Minister Modi’s broad vision is expected to look beyond. The funding pattern is also not novel. Once again depending on private sector to invest has a problem. The private sector somehow is a miser in using its reserves and funding or incentives means it would draw from the banks and drive them to penury.
The concept of a central funding body is also not new. The IL&FS was created with that aim for the road sector. It gave funds and had expected to be repaid with the toll fee. The toll was collected, but IL&FS was not repaid leading to its collapse with Rs 91000 crore losses. The nation cannot repeat the mistakes.
Job generation is the key. The overall corporate approach has been to replace manpower by the machine, employ less and make any facility accessible with a fee only. It would be wise on the part of the government to do a survey at Delhi’s railway stations only. The surveyors would find that at least 20 per cent of the poor and middle class people enquire about trains that are affordable – meaning there is no superfast charge, dynamic fare, ‘insulting’ penalties and other obstructive fees.
Strengthening railways is fine but everything like the toll roads is “access controlled” – as the 5 Expressway projects in Delhi-NCR alone are. It deprives more than serving all, the primary goal. Privatisation of public sector trains is adding to discontent.
The nation has to think beyond burdening the highly-taxed people living a marginalised life. It is the society’s responsibility to empower the growing number of deprived people. They have expectations from a kind prime minister, who has risen from their ranks. The rise in rail fare – Rs 40 for a 1000 km travel – hits them hard. It is inflationary too.
Similarly, the people are getting oppressed as every highway, good or bad, is being tolled. It is a direct tax on the farmers, villagers and every poor. Such taxes stymie growth. The NIP did not discuss why should there be toll after over Rs 1 lakh crore collection from fuel cess of Rs 10 per litre for road construction. The government is of the people and it is expected to help, not heap it with heavy taxes and bar them from using facilities created with their money.
The concept could have gone beyond the traditional. Energy from 1950s to 2000 was the greatest need. The country now in most parts is electricity surplus. If it means petroleum sector, the Indian basin does not have enormous resources as per various studies carried out National Geophysical Research Institute and others. Ostensibly the aim for doubling power generation to 619 GW is being based replacing thermal energy to solar.
The country is being divided between rich corporate usurping public utilities like road, rail, gas and infrastructure and making these inaccessible with high discriminating fees.
Let us get out of the myth that India is the least taxed country. An average Indian, a non-tax-payee, pays about 40 per cent in indirect taxes and an income tax payee loses 70 to 82 per cent in taxes. The taxation is rising as the last Budget’s 42 per cent I-T slab denotes.
The NIP has not discussed these core issues. It has also not taken into account that even bank financing to help the corporate is eroding savings and hitting the depositors hard as interest rate is being reduced. The NIP should look into it and suggest a corrected path.
It speaks of digital penetration from 40 per cent now to double it. It does not discuss the techno immorality of changing a software or insignificant hardware to “create new” rendering lakhs of crores of citizens’ investment redundant. It has also not discussed the recent violent protests in France, Germany and elsewhere against the stranglehold of banks and their oppressive charges. Instead in default it has allowed their anti-people perpetration.
Further, it has ignored the benefit of cash transaction, more so as currency note circulation rises by Rs 5 lakh crore since note ban, and creation of huge middle men of digital payment instruments making transactions expensive. The cost of digital is beyond affordability apart from its rising insecurity. It has to review why the investments of the Centre should lead to burdening people with high costs or tolls.
These various problems are hindrances in growth. The government can be well-intentioned but the prescription has many flaws. It needs to discuss and remove the problems before launching it. This can take six more months to study and launch it for wider access with no fee and empower the countrymen to walk on the path of development and progress. If that happens growth is assured.