Gati Shakti shows the intent, but hurdles remain
On Wednesday, Prime Minister Narendra Modi launched a national master plan for infrastructure and connectivity that he christened “Gati Shakti”. The stated ticket size for the plan is Rs 100 trillion, though it is not certain how this level of expenditure will be achieved. The crucial innovation to the programme, judging by the PM’s speech, is that it will ensure multi-modal connectivity and try to bring 16 ministries together to improve co-ordination in the implementation of projects. But it should also involve co-ordination in planning, which has often been the weak link when it comes to multi-modal connectivity. The Delhi Metro, for example, has poor links to other transportation networks serving the National Capital Region, which has reduced its effectiveness. The master plan, if properly designed by multiple stakeholders, will ensure that investors and decision-makers will have a clear road map.
The government’s intention is to be welcomed, as is the PM’s pro-business and pro-investment rhetoric surrounding the launch. His pitch for Gati Shakti focused on providing clarity and consistency to private players in order to catalyse investment and reduce policy risk. An empowered group of secretaries under the Cabinet Secretary is supposed to manage the implementation and alter the master plan as required. The crucial fact here is that the focus of the infrastructure master plan must not be state or other political priorities — of the sort that has derailed the Indian Railways’ planning — but creating productive linkages between internal and external markets. The dedicated freight corridors are an excellent example of the sort of private sector-friendly initiative that the master plan should enable. Yet proper implementation will need to ensure that all stakeholders, especially state governments and civil society, are brought on board. Previous infrastructure pushes by the Union government failed because of burdensome or contradictory approaches from state government regulators, and in some cases strong opposition by civil society groups. Planning should take these issues into account and therefore will need to be transparent and inclusive.
Some specific sectors will need particular attention. No infrastructure push will enthuse investors unless electricity supply is assured, available, and affordable. The power sector continues to be relatively unreformed and requires continual bailouts. This is clearly an unsustainable position and will affect longer-term growth. Also, the emphasis on consumer and industrial choice of power provider and last-mile competition must continue over time if the sector is to play its proper part in India’s development. The interface with the private sector has been another hurdle for infrastructure programmes in the past to surmount. The private-public partnership push in the 2000s was derailed by a problematic relationship between government and industry. There are signs of similar problems in the recent privatisation of the airport sector, which allowed the build-up of monopoly power and will cause troubles down the road. Some other sectors have suffered from excessive regulation, interference, and levies — telecommunications, which drove growth for decades, being one such. The recent decision to privatise Air India, alongside the National Monetisation Pipeline, and now Gati Shakti, do certainly inspire confidence that the government is seized of these problems and working to address them. No less important than the Rs 100-trillion target is the intent and action on the ground when it comes to deregulation.