about us
  areas of expertise
  our projects
  ideas & resources


  Index of Articles          Index of Perspectives            Next Article


The Great Indian Party Pooper

Omkar Goswami


On the face of it, there seems to be little doubt about India is transiting to a higher growth phase. With double digit growth in manufacturing and services plus a decent south-west monsoon, the country is all set to clock another year of over 8 per cent growth — which should take India’s compound annual growth rate over the last four years to 8.3 per cent. Corporate results for the second quarter and the first half of 2006-07 have been nothing short of spectacular. Entrepreneurial energies are on overdrive. The Sensex has crossed the 13,000 mark — a number that wasn’t even in the realms of consciousness four years ago. And the world is recognising India’s resurgence in spades.


India is rocking, and we should be proud of it. Equally, we need to seriously discuss and publicise the party poopers that can put a brake on this higher growth phase. Today, I’ll focus on my favourite bugbear — infrastructure. Let me share with you hard facts.


National Highways. Do you know that the 5,846 km Golden Quadrilateral — mostly four-laning of highways linking Delhi, Mumbai, Chennai and Kolkata — was originally slated for completion in December 2003? Since then, it has developed an amazing ability to consistently miss deadlines. December 2004 came and went; then to December 2005; and as we approach December 2006, more than 7 per cent of the GQ construction is yet to be completed. Since December 2000, when government gave the final approval to the GQ project, it has seen a niggardly completion rate of 2.6 km per day. Worse still, this has fallen further to a pathetic 0.6 km per day in the last four months.


The second major highways project, the North-South and East-West Corridors (NS-EW) involves connecting Srinagar to Kanyakumari, Silchar to Porbandar, with a total length of  7,582 km. As of 30 September 2006, only 15 per cent has been completed. The deadline has been extended by two years to December 2009. Given that about 1,300 km worth of  projects are yet to be awarded, the chances of NS-EW missing its deadline are strong. Indeed, at an average pace of 2.6 km per day, the NS-EW would take another six and a half years to complete.


The 380 km port connectivity project — linking ports to the GQ or NS-EW is only 30 per cent complete. That’s also the completion rate for another 980 km of key national highway corridors, including the 28 km Delhi-Gurgaon 8-6-laned access controlled highway.


Power. The power situation is even worse. We face a 12.8 per cent shortfall between peak demand and supply. Let me tell you a story of myth-making in modern India. In 2001, the Government of India produced a policy paper called ‘Mission 2012: Power on Demand’, which was detailed plan to supply power for all villages by 2007, and all households by 2012. It required producing an extra 100,000 MW of power in the next 11 years. Five and a half years later, the capacity addition has been a mere 18,000 MW. We will surely morph from sloth to jaguars and add the remaining 82,000 MW in the next five and a half years.


As for power to all villages by 2007, on 31 March 2006, 154,763 villages were still yet to be electrified. In the first five months of 2006-07, electricity was provided to 72 villages! Even if this completion rate increased ten-fold, it would still take another decade before all villages were electrified.


Every major manufacturing company is spending hundreds of crores of shareholder funds for captive power facilities, because none has faith in the grids. Over 60 per cent of our manufacturing units rely heavily on captive power of one form or the other. No continental economy clocking over 8 per cent growth for four successive years spends so much money and effort to secure captive power generation.


We need to shout these failures from rooftops to force the government to action. Or else, let’s kiss the 9 per cent dream goodbye.


Published: Business World, November 2006


                 Index of Articles          Index of Perspectives            Next Article