The CEO of L&T Infrastructure Development Projects calls for a quantum change
If some hurdles are removed, India can create and maintain world-class assets.
K. Venkatesh, CEO & MD, L&T Infrastructure Development Project
In 2025, the population of India is estimated to be around 1.38 billion. Investments in physical infrastructure (i.e. Power, Rail & Road infrastructure, Ports, Airports, Telecommunication, Oil & Gas pipelines, Storage, Sanitation & Water Supply and Irrigation sectors ) over the past 10 years have grown from $ 204 billion in 2002-2007 to $450 bn (estimates) in 2007-12. . And another $1 trillion is estimated to be spent over 2012-17 going upto anywhere between $1.5 to $1.8 trillion between 2017-22.
Now on the demand side of infrastructure - growing population & purchasing power, industry drivers for power, logistics, import & export efficiencies, expanding global trade at increasing competitive levels and protectionism - all is well known.
The supply side factors include availability of Public and Private Capital - Debt & Equity , Land acquisition and availability, Domain knowledge, Planning, Design & Construction capability, Project Management & Supervision skills , Administrative process of procurements & approvals to ensure front availability for quick completion of construction and Operations and Maintenance skills to ensure optimum performance of Assets created.
Today there is enough capacity creation skills amongst Government Agencies, Developers, Contractors, and Suppliers in all realms of Financing, Engineering and Construction to create assets - some even in record time. The achievements of the National Highway Program (despite some setbacks lately) , the Telecom story, development of international Airports and some Ports , consolidation of Logistics business , buildup of Urban Transit programs (Metro Construction in 3 cities in addition to Delhi) , unique water supply schemes in select smaller municipalities and towns, etc. clearly showcase that given a facilitating and honest environment, there is enough potential in the country to build assets.
Integrity in all actions associated with the procurement, pricing and availability of all factors of supply need to be enforced. The costs of delays due to various reasons resulting in cost overruns or lack of integrity in procurement, supervision and payment processes and other inefficiencies is estimated between 10-30% - the figure depending on the sector. Substantial process improvements and enforcing higher levels of accountability alone will ensure addressing these extra costs and savings therefrom can be utilized to address the gap in resources.
Infrastructure creation requires consensus from the village / municipal levels to Government departments within states and between State and Central Governments. Given the democratic process involved in most of our decision-making and the increasing levels of political incongruity in addressing the asset creation programs, it implies that there is an urgent need for a uniform National Infrastructure Development Code driven by powerful and similar State and Central laws enabling all areas impeding development, to improve the efficiency of supply side deliverables. Archaic laws require 37 procedures and 195 days to obtain all Construction related permits to begin work. We pride ourselves of knowing English and in having a judicial system, but it takes 46 procedures and 1,420 days ( amongst the highest in the world ) to enforce contracts. Overseas Private Capital looking for steady returns is waiting to be invested in India since the demand is clearly foreseen for the next 10-15 years, but the costs and process of doing business in India deters investors.
Usage of Infrastructure assets will be priced - whether in the Private or Public sector. The absence of transparent pricing of Power, Water & Sanitation, Telecom, Storage, Road and Rail, etc. is one of the reasons for the slow development. This includes subsidies given in our socio-economic and political milieu, but it must show up clearly on the financials of Utilities with an appropriate funding mechanism and with unique identity tracking of beneficiaries to facilitate planning and control. Today it gets mixed with thefts, leakages and payment delays which bankrupt the involved entities - public or private. On the other side - Regulators will have to play a pro-active role ensuring judicial pricing and resolving disputes.
Although the processes and laws of Environment approvals are established, sustainability of environment with development has to be addressed practically, and delays and flip-flops are to be avoided. We have a challenge to adapt world's best practices of sustainable environmental laws to meet our growing needs driven by the aspirations of a young population ( which is seen as a demographic advantage ) by adopting a modern sustainability code driven by the State Pollution Control Boards, the Ministry of Environment and Forests and the Judiciary benches dealing with Environment cases. As in all other areas - legal enforcement has to be quick and non-discriminatory.
''Sare Jahan se Acha , yeh Hindustan Hamara'' - this expression was coined when the country was very young and with a population one-fourth the current size. If this expression has to mean anything now, there has to be a quantum change in all disciplines leading to the development of physical Infrastructure.
(The author is CEO & MD, L&T Infrastructure Development Projects. His views are personal.)
READ OTHER COLUMNS ON
SPORTS
By Viren Rasquinha
SOCIAL MEDIA
By Nimesh Shah & Sandhya Sadanand
ADVERTISING
By Santosh Padhi
ENTERTAINMENT
By Ronnie Screwvala
ENVIRONMENT
By Ajay Vir Jakhar
AGRICULTURE
By Kartikeya V. Sarabhai
PUBLIC TRANSPORT
By E Sreedharan
HEALTH CARE
By Dr Abhay Bang
NGOs
By Jayant Sinha
WOMEN
By Herminia Ibarra
CORPORATE PHILANTHROPY
By Shiv Nadar
PERSONAL FINANCE
BY Adhil Shetty
GLOBAL STANDING
By Arvind Subramanian
BANKING SYSTEM
By Bimal Jalan
EDUCATION
By TV Mohandas Pai
ENTREPRENEURSHIP
By Sasha Mirchandani
INNOVATION
By RA Mashelkar
SCIENTIFIC RESEARCH
By MGK Menon
MEDIA
By Paranjoy Guha Thakurta
CORRUPTION
BY B.V. Rao
POLITICS
By Chhavi Rajawat
PARLIAMENTARY DEMOCRACY
By Somnath Chatterjee
Now on the demand side of infrastructure - growing population & purchasing power, industry drivers for power, logistics, import & export efficiencies, expanding global trade at increasing competitive levels and protectionism - all is well known.
The supply side factors include availability of Public and Private Capital - Debt & Equity , Land acquisition and availability, Domain knowledge, Planning, Design & Construction capability, Project Management & Supervision skills , Administrative process of procurements & approvals to ensure front availability for quick completion of construction and Operations and Maintenance skills to ensure optimum performance of Assets created.
Today there is enough capacity creation skills amongst Government Agencies, Developers, Contractors, and Suppliers in all realms of Financing, Engineering and Construction to create assets - some even in record time. The achievements of the National Highway Program (despite some setbacks lately) , the Telecom story, development of international Airports and some Ports , consolidation of Logistics business , buildup of Urban Transit programs (Metro Construction in 3 cities in addition to Delhi) , unique water supply schemes in select smaller municipalities and towns, etc. clearly showcase that given a facilitating and honest environment, there is enough potential in the country to build assets.
Integrity in all actions associated with the procurement, pricing and availability of all factors of supply need to be enforced. The costs of delays due to various reasons resulting in cost overruns or lack of integrity in procurement, supervision and payment processes and other inefficiencies is estimated between 10-30% - the figure depending on the sector. Substantial process improvements and enforcing higher levels of accountability alone will ensure addressing these extra costs and savings therefrom can be utilized to address the gap in resources.
Infrastructure creation requires consensus from the village / municipal levels to Government departments within states and between State and Central Governments. Given the democratic process involved in most of our decision-making and the increasing levels of political incongruity in addressing the asset creation programs, it implies that there is an urgent need for a uniform National Infrastructure Development Code driven by powerful and similar State and Central laws enabling all areas impeding development, to improve the efficiency of supply side deliverables. Archaic laws require 37 procedures and 195 days to obtain all Construction related permits to begin work. We pride ourselves of knowing English and in having a judicial system, but it takes 46 procedures and 1,420 days ( amongst the highest in the world ) to enforce contracts. Overseas Private Capital looking for steady returns is waiting to be invested in India since the demand is clearly foreseen for the next 10-15 years, but the costs and process of doing business in India deters investors.
Usage of Infrastructure assets will be priced - whether in the Private or Public sector. The absence of transparent pricing of Power, Water & Sanitation, Telecom, Storage, Road and Rail, etc. is one of the reasons for the slow development. This includes subsidies given in our socio-economic and political milieu, but it must show up clearly on the financials of Utilities with an appropriate funding mechanism and with unique identity tracking of beneficiaries to facilitate planning and control. Today it gets mixed with thefts, leakages and payment delays which bankrupt the involved entities - public or private. On the other side - Regulators will have to play a pro-active role ensuring judicial pricing and resolving disputes.
Although the processes and laws of Environment approvals are established, sustainability of environment with development has to be addressed practically, and delays and flip-flops are to be avoided. We have a challenge to adapt world's best practices of sustainable environmental laws to meet our growing needs driven by the aspirations of a young population ( which is seen as a demographic advantage ) by adopting a modern sustainability code driven by the State Pollution Control Boards, the Ministry of Environment and Forests and the Judiciary benches dealing with Environment cases. As in all other areas - legal enforcement has to be quick and non-discriminatory.
''Sare Jahan se Acha , yeh Hindustan Hamara'' - this expression was coined when the country was very young and with a population one-fourth the current size. If this expression has to mean anything now, there has to be a quantum change in all disciplines leading to the development of physical Infrastructure.
(The author is CEO & MD, L&T Infrastructure Development Projects. His views are personal.)
READ OTHER COLUMNS ON
SPORTS
By Viren Rasquinha
SOCIAL MEDIA
By Nimesh Shah & Sandhya Sadanand
ADVERTISING
By Santosh Padhi
ENTERTAINMENT
By Ronnie Screwvala
ENVIRONMENT
By Ajay Vir Jakhar
AGRICULTURE
By Kartikeya V. Sarabhai
PUBLIC TRANSPORT
By E Sreedharan
HEALTH CARE
By Dr Abhay Bang
NGOs
By Jayant Sinha
WOMEN
By Herminia Ibarra
CORPORATE PHILANTHROPY
By Shiv Nadar
PERSONAL FINANCE
BY Adhil Shetty
GLOBAL STANDING
By Arvind Subramanian
BANKING SYSTEM
By Bimal Jalan
EDUCATION
By TV Mohandas Pai
ENTREPRENEURSHIP
By Sasha Mirchandani
INNOVATION
By RA Mashelkar
SCIENTIFIC RESEARCH
By MGK Menon
MEDIA
By Paranjoy Guha Thakurta
CORRUPTION
BY B.V. Rao
POLITICS
By Chhavi Rajawat
PARLIAMENTARY DEMOCRACY
By Somnath Chatterjee
