India?s economic growth is hobbled by infrastructural bottlenecks. In order to remove the bottlenecks, the government has envisaged a $1-trillion spend on infrastructure development in the 12th Plan, after targeting $500 billion investment in the current plan. But infrastructure development needs a new approach, feels Satyakam Mohanty, managing director, Louis Berger Consulting, which is a subsidiary of the US-based Louis Berger Group. The global consultancy offers services in areas like engineering, architecture, construction management, environmental planning and economic development. Mohanty shared his thoughts with FE?s Noor Mohammad.
Excerpts:
How can the government expedite infrastructure development?
There are key institutional issues that need to be addressed to keep the planned infrastructure development programme on track. One important area is the huge and ever-increasing gap between the demand and supply of skilled technical resources. Capacity building in this sphere should be promoted given the tremendous need for manpower. It is essential to encourage and budget for continuous training and skill upgradation. Industry lacks good managers and people with soft skills. This needs to be looked into in the longer term interest.
Project planning has not got its due importance in India. It is not given adequate time and importance owing to various compulsions. Planning and designing a project needs more time and budget than what is provided today in the Indian engineering industry. Time lines should be more realistic. At the same time, there needs to be greater accountability of all parties involved, and interests of stakeholders need to be taken into account from project conception to the final operation & maintenance stage.
I believe that a child who takes and exam without much of a pressure performs up to potential. You basically have to allow honest mistakes in a process. Only then can decision making be efficient and the engine can move at a greater speed. There needs to be greater stability and consistency in policies and proper institutionalisation of the project management process. The government must realise that this industry is as intellect-specific and technology-oriented as the software industry, and appropriate thrusts should be provided.
How do you see the progress in infrastructure sector spending? What are the roadblocks to investment?
The government?s big thrust on infrastructure spending was the biggest positive of the past 10 years. We must not let it down at any stage. Some degree of political uncertainty and instability; lack of clarity in roles amongst stakeholders and consequently accountability issues; and slow or almost absent decision making at various levels have prevented this sector from achieving better growth levels. The payment cycles for government assignments are far from ideal?smaller organisations have major cash-flow issues. On top of it, you have a new service tax regulation of making payments to the department when you raise your invoice, irrespective of payments received!
How can we make Public-Private Partnership (PPP) model effective?
The key letter in the PPP term is the third P?partnership. While we have the public and the private in full strength, what we are currently lacking is proper partnership. At the moment, it is more of a relationship of suspicion between the parties. Once this gets converted into trust and mutual benefit, the PPP model will be successful.
If the government does not have the money, it has to facilitate private sector funds to flow in?..and allow the parties to book profits. The government should realise that the gains from building the infrastructure is much beyond the physical asset—be it the road or the airport or anything else for that matter. The toll price on a highway should not be made into a political issue (the person who can afford a car can pay the toll) as long as a framework is in place to ensure an agreed level of service. For example, the government can enhance its revenue generating ability in stamp duty alone as real estate prices go up from the improved physical infrastructure.
At the same time, the private sector needs to sensitise itself to the realities of a country like India. One needs to look at the bigger picture down the line?service standards and quality needs to be maintained and the public at large will not mind paying for improved levels of service when they realise that it makes better economic sense due to the savings in time and effort.
You have worked in developed economies like France and the USA. Can you tell us the broad difference?
I think the biggest difference between the developed economies and developing economies is the level of importance given to project planning. In the West, detailing and project preparation is important. In India, I think we are more target-oriented and actually end up consuming more time (and hence, money) due to inadequate planning in the project development process.
There is also a big difference in the contract framework enforcement. I guess India and the South Asian economies have more of a master-servant relationship, which is not in the spirit of the contract although things seem to be improving with time. In the West, it is more a relationship of equals wherein ideas come in from both sides; implementation is done by one, and decision making and payments by the other. It is more about the work culture.
