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South Asia Monitor
India's Infrastructure at Breaking Point
By Gautaman Bhaskaran
South Asia Editor
The world’s cheapest car- ‘Tata nano.’ Tata Nano is being released by Tata motors India (pvt) limited.

India’s infrastructure presents a frightening scenario, and some feel that it is at its breaking point. Here are two glaring examples. The world’s cheapest car is about to be on the Indian roads. Called Nano, its most basic model is pegged at $ 2600. A little more expensive than a motorcycle in the country, the Nano hopes to capture a significant part of the two-wheeler market, fulfilling the dreams and desires of those who want to travel in the comfort of a car. But this convenience comes with a stiff rider. The men and women that several television channels have been speaking to fear that road congestion, particularly in the cities and larger towns, would worsen when Nanos replace many two-wheelers. This apprehension is more than justified.

The road space in Indian cities is woefully inadequate: it is 18 percent of the total city area in Delhi. It is 11.9 percent in Bangalore,10 percent each in Mumbai and Chennai and six percent in Kolkata (Calcutta). Ideally, the road space should be closer to 30 per ent.

Equally alarming is India’s road density. Hyderabad in southern India has the highest with 2337 vehicles per kilometre of road space that is merely six percent. With over 10,000 new vehicles being added to the city roads (at least they were till the global financial crisis hit India) the problem is being compounded. The figure for Mumbai is 448, while it is 345 for Kolkata and 184 for Delhi. This is a bleak scenario.

Now let us look at mobile telephony. There are 300 million users in the country today, and their number is growing. But lack of an adequate number of communication towers leads to poor reception. Connections snap ever so often. The picture is similar to what it was with the fixed or landline system of the 1970s India. Obviously, the existing infrastructure cannot cope with the increasing number of mobile connections.

These two examples are good indicators of how successive governments in India have neglected basic infrastructure with often greed driving profits. Mr Raju Nagarajan, Managing Editor of The World in Dubai, draws a similarity between the Gulf nation and his native India: “During the boom, Dubai’s crazy real estate prices and rentals were justified as market-forces driven…Now people are beginning to talk of greed and feel that things should not have been allowed to spin out of control”.

During the boom, which has now ended, India’s industry expanded faster than the electricity grid’s capacity to power it; its air traffic outgrew its airports raising issues of safety; and cars rolled out of factories quicker than what roads could accommodate. In some plush up-market urban localities, each flat owner was given space for three cars. But he bought more and parked them outside on the road, impeding the free flow of traffic. In a caustic remark, India’s Prime Minister Manmohan Singh, said “our cities have become living hells”. But who cared.

Now that the good times appear to be fading, a rethink on all fronts, especially the one on infrastructure, is extremely imperative. The Government has realized this. It plans to spend an additional $ four billion on schools, roads, powers plants and other infrastructure projects. It has directed India Infrastructure Finance Company, a Government-owned financial company, to sell bonds worth $ eight billion. The first tranches of bonds, offering 6.85% and a sovereign guarantee, were oversubscribed. The Company will lend this money to banks, which will then pass it to infrastructure projects.

However, now that the economy is slowing down, the onus is on the Government to push banks into a lending mode, though not as recklessly as they did in the past, but with a fair amount of caution. Otherwise, the infrastructure deficit is so critical that it could prevent India from achieving the prosperity that it has been aspiring for so long. Without adequate and reliable supply of power and water and a modern public (not private) transportation network, the chasm between India's moneyed elite and its 800 million poor will continue to widen, potentially destabilizing the country. Jagdish N. Bhagwati, a professor at Columbia University, has said that the gross domestic product growth will be up by at least two percent if India had decent roads, railways and power.

At Gurgaon in northern India, the Delhi Metro Rail Corporation is building an elevated railway that will connect this satellite city to New Delhi. The project is financed by the Federal Government and a few State Governments. The site is humming with men and material belying the economic meltdown. Maybe this is the beginning of India’s infrastructure boom.



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Gautaman Bhaskaran is a veteran film critic and writer who has covered Cannes and other major international festivals, like Venice, Berlin, Montreal, Melbourne, and Fukuoka over the past two decades. He has been to Cannes alone for 15 years. He has worked in two of India’s leading English newspapers, The Hindu and The Statesman, and is now completing an authorized biography of India’s auteur-director, Adoor Gopalakrishnan. Penguin International will publish the book, whose research was funded by Ford Foundation.

 

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