At the approach to any toll plaza on an Indian highway there is always a prominently displayed board listing the high and mighty people who need not pay the toll. The list openly tells you and me that paying for a public utility is a nuisance to be suffered and not an enjoyment of the facility,which has been created from that money. Each of those boards tells the public that user charges for infrastructure projects are meant to be avoided,if one can.
No wonder banks are baulking at any infrastructure project that hopes to recoup the investment made from user charges. It is also the reason the attraction for build-operate and transfer projects has come to a nadir since they depend on user charges. The alternative engineering-procurement-construction has now become the favoured route to build a road,a bridge or even a power plant.
With the example of the Delhi-Gurgaon expressway in the news for all the wrong reasons this week,it is worth mulling over the signals we are creating for the sector. There is a huge cost attached to those boards.
An RBI data set shows against a target of 50,621 km for awarding road projects from 2008-13 the total actually awarded till August 2013,is just 10,690 km. Of the 16 ultra mega power projects only one has become fully operational. Another one is coming up but way beyond the scheduled date.
Since it is the banks that carry the can when these projects get stalled,it is also rubbing off on financing of other sectors. Of the 251 oil and gas blocks allotted by the government since 2001,only six have become operational.
Yet by 2013 the banking sector has lent Rs 7,86,045 crore to various infrastructure projects. It was just Rs 7,249 crore in the year 2000. Of the total credit to industry from the banks,a massive 35 per cent is channeled to the sector. And of these infra loans nearly 17.4 per cent are now either non-performing or are restructured assets.
While there is a long list of problems created by policy logjams,this is one bit of policy that tells people the cost of financing a smart infrastructure shouldnt be theirs to shoulder.
While it may be too late for the current government to take any ameliorative steps now,but given the huge agenda of infrastructure backlog the new government will inherit it should make a point to dismantle this feudal relic as the deputy governor of RBI,KC Chakrabarty pointed out recently.
When the public sees the secretaries of various infra departments of government of India putting out their hand to pay cash at the toll points,then the message will percolate down. Even if the money is government-to-government transfer the demonstration effect is awesome. Else we will keep on debating financing obstacles to infra through this decade too.
Subhomoy is a Deputy Editor based in New Delhi.