Infrastructure: B+

There was no area more critical to the liberalisation process thanthis,and the liberalisers’ infrastructure campaign has been dramatic: from allowingprivate participation in a host of areas like power, petroleum, roads, ports, railways,airways and, of course, telecom, to the bitter controversies that a lack of transparencyin the power and telecom sectors spawned. It is already clear that infrastructural reformsmust take centre-stage in the next phase of reforms. Says CII president Kaul: "Thehigh rate of growth of the industrial sector has increased the deficit we already had ininfrastructure. Power shortages have increased, pressure on railways, roads, and ports hasincreased. Perhaps only in the telecom sector, the growth rate is higher than theindustrial growth. India needs $200 billion in the next 10 years for infrastructure to betackled fairly and squarely."

It’s already difficult to imagine life before private airlines,which were allowed grudgingly and treated as second-class flying citizens, but which have,for-tunately, been permitted to soar relatively freely. By July 1995, the Government hadreceived 243 private proposals for setting up power plants for a total capacity of 90,368MW, involving an investment of more than Rs 3,35,000 crore.

Besides, we are witnessing the birth pangs of a vast new exciting industry—theprivate sector basic telephone services providers that promises to transform ourlives in the next few years.

However, in areas like roads, the privatisation process is in confused and suspended animation. And management of government-run utilities in most cases remains as bad as ever. As of December 31, 1994, out of 71 projects under implemen-tation in the coal sector, 22 were bedevilled by cost overruns of Rs 22 crore on an average and time overshoots of an average of 38 months. The power sector shows no improvement in efficiency. Stateelectricity boards are sinking deeper in the red: their commercial losses, Rs 4,117 crore in 1991-92, are expected to hit Rs 7,130 crore in 1995-96. The hidden subsidy for agricultural and domestic sectors, Rs 5,404 crore in 1991-92, may touch Rs 13,307 crore in 1995-96. And, stripped to their basics, the counter-guarantees that the Government has extended to nine fast-track power projects are hidden subsidies, too, to compensate—in a commercially unwise way for fundamental failures of cost recovery.

Says Bajaj Auto Chairman Rahul Bajaj: "Improving the infrastructure should be high on the nation’s agenda. The reforms will have to introduce transparency. The Government needs to set up independent regulatory bodies to balance between the national and international interests." Adds Anand Talwai, chief executive, Wipro BT: "These fundamentals should have been addressed earlier. But since that wasn’t done, what would have taken two or three years will take more.