Plugging a gap

Prime Minister Manmohan Singh has,in the past,used his Independence Day speech to signal political commitment to reform: for example in 2008,coming off his successful survival of the Lok Sabha trust vote over the Indo-US nuclear agreement. In this years speech,too,a development agenda has been laid out,starting unsurprisingly with our distressed food production scenario,a complex,many-layered problem that requires us to simultaneously tackle subsidy leakages,distribution gaps,climate change,and stagnating agricultural productivity. But theres another section of his speech that is of considerable interest to those looking to decipher exactly what this otherwise taciturn government has decided to prioritise. There is a large deficit in our physical infrastructure which affects our economic development adversely, said the prime minister,adding that the resources required to create good physical infrastructure are difficult for the government alone to mobilise.

This is certainly true on both counts,and it is a relief to see it spelt out emphatically in the prime ministers speech of record. He named roads,ports and airports,as well as electricity generation,as the most pressing of infra-related problems. Power is insufficient for our growing needs,and our transport is not of world standards. To this list could easily,of course,have been added the railways; the rail sector,along with ports and water supply,were recently picked by the Planning Commission,in its mid-term appraisal,as the most chronically short of investment.

The way forward is obvious. More and more private investment needs to be mobilised,and the government must facilitate it. And it must do so smartly,because there are a lot of ideas of doubtful virtue floating around tax-free infra bonds,for example,or badly-structured contracts for road building and operations. One idea that isnt bad at all is that the RBI be urged to review the sectoral caps that prevent big private spenders from going all-in with infrastructure investment. Pushing that through will require careful political skills. And that,indeed,is the case with all these priorities. Cinsider ports,where Shipping Minister G.K. Vasan has so far failed to impress. Perhaps the PM left out rail because it is difficult to imagine persuading the railways minister to reform anything. The role of the prime ministers office,and of the Planning Commission,which coordinates infra spending,must be to chivvy ministries along the path to ever-lower political barriers to greater private spending; and also to check that this precious investment is sensibly and properly channeled. And thats not a technocratic job,its a political one.