World-class physical infrastructure
Swarna Bharat Party’s infrastructure policy
These policies should be seen in the context of the broader reform agenda outlined in SBP’s manifesto. Free markets require strong and effective governance. Without governance reforms detailed in the manifesto, that will build capacity and honesty in the government machine, the policies detailed below will not deliver the expected results. [Download a Word version of this policy, here]
Along with good governance and the rule of law, good connectivity and availability of power and water is essential for a modern country. India needs big infrastructure to eliminate current bottlenecks and provide spare capacity for the future.
Construction of infrastructure needs to be greatly speeded up. There can be no compromise in capital intensity (e.g. the best possible machines) to build infrastructure. While constructing infrastructure can create some jobs, that is not its primary goal. Its goal is to facilitate economic activity which can yield returns far greater than the jobs it creates during construction.
Two key policy principles are outlined first below, followed by an outline of policies for specific infrastructure sectors.
It is sometimes taken for granted that infrastructure should be created and maintained only by the government. But even infrastructure should be subject to the laws of market and private initiative. Inefficiency and waste resulting from unnecessary government involvement has resulted in severely stunted infrastructure in India. Our railways, roads and energy deficits are a serious bottleneck to economic activity.
Wherever possible, we will hand over the creation and maintenance of infrastructure to private initiative and subject it to the normal laws of markets. Except in the rarest of cases, the direct construction and maintenance of infrastructure by government departments will be brought to an end. Even in areas of potential monopoly such as water, sanitation and laying internet cables, we will advance significant private sector involvement under regulatory oversight. We will also support high speed rail networks where these are economically self-sustaining and without taxpayer subsidy.
Where competitive ownership and/or management of infrastructure by the private sector is not feasible, we will procure work from private vendors through competitive bids, with accountability of relevant public sector managers to deliver results at more competitive rates.
Some local infrastructure will continue to be built through work created as part of emergency relief, although such emergency situations are likely to be fewer in the future, given our social insurance scheme which will kick in for those impoverished through natural calamities.
Significant amounts of money are spent on infrastructure projects, through proper scrutiny. We will ensure that all large infrastructure projects are publicly scrutinised before being funded.
We will embed a process through legislation to require (for large projects only – to be defined based on a range of characteristics) identification of the need and analysis of options to own, build and manage infrastructure and to increase competition, and a thorough social cost benefit analysis (CBA) assessed by an independent body, to ensure that taxpayer money is spent on viable projects. This analysis information will be publicly disclosed and widely consulted to ensure everyone is clear about the issues involved before a decision is taken.
The user pays principle (including market cost recovery) will be employed wherever possible, thereby reducing pressure on the general budget.
An opaque regulatory environment, delayed approvals, high cost of capital, and land acquisition delays are among the many reasons for India’s infrastructure deficit.
The Physical Infrastructure department would be responsible for coordinating all approvals in a time bound manner. The departmental secretary will have final authority over such approvals under the law, with power to over-ride other departments and regulators if they delay unduly.
Streamlined processes after the decision to go ahead, will include:
This will allow rapid creation of much-needed infrastructure while minimising any harm to wildlife or the environment. Through such policy principles we expect the emergence of world-class airports, ports, metros, railways, roads, bridges and power stations with minimal taxpayer support.
Urbanisation leads to economic growth, even as economic growth leads to further urbanisation. Instead of fighting this inevitable law (through appeals or policies to reduce urbanisation), we will build agile local government institutions that anticipate and respond to the changing structure of the economy and labour markets. Responsive urbanisation can also reduce entrenched social discrimination, such as of the caste system.
To get world-class cities that can accommodate rapid economic growth, we will support State governments in developing town plans in consultation with local governments. As a general rule, the minimum possible zoning restrictions should be imposed on the use of land. Planning rules should, however, allow sufficient space for roads, public amenities, green spaces, natural features and regulation of significant heritage sites, consistent with international best-practice. Where possible, we will delegate land planning and zoning partially to local councils (under detailed policy parameters specified by the State Government) who will employ professional land planners, environmental scientists and landscaping specialists to provide outstanding planning services. It may be useful, for larger cities, to create a central city planning commission that decides individual applications based on the strategic objectives of the State Government.
Jamshedpur was perhaps one of the world’s first privately built cities. We need many more such cities in India. Experiments are underway globally to involve the private sector in the development and management of cities. The key obstacle for India is land acquisition, given India’s population density. Since cities are (at a certain level) a public good, we will permit the acquisition by State governments of vast areas of agriculturally unsuitable land (but with sufficient drinking water) to be leased (through global tenders) for development into well-planned cities. The successful private developers could recover their costs from residents, and will also be required to pay a rent to the State government and an annuity to farmers whose land is acquired.
Despite reduced travel requirements in modern society due to better telecom and IT, efficient physical transportation of goods and people remains essential for a productive economy. Access to transport is particularly important for the poor and the disabled.
We believe that advances in IT technology are likely to allow the full privatisation of most roads in the future, but till that happens, there is a role for government in directly providing (or supporting private enterprise to provide) efficient transport infrastructure. In addition, there is an urgent need to improve transportation regulatory frameworks to cut red tape, loosen entry restrictions into the public transport sector, and enable creative approaches to fare setting and bargaining between suppliers and customers.
It appears that a range of – often – whimsical standards are applied to road construction, traffic signals and traffic signage in India. We will mandate that all roads meet international standards. We will require the usual features of good roads including special corridors/ lanes for public transport and high occupancy vehicles and overtaking turnouts on narrow roads.
India has one of the worst traffic accidents records in the world. The World Bank estimates that each year, road accidents cost India 3 per cent of its GDP. We will regulate dramatically enhanced car and road safety standards, subject to a cost benefit test.
In addition to terrible roads, deficient driving skills and deplorable traffic discipline are a major cause of road accidents. Driving licences are frequently purchased by paying bribes, sometimes without the applicant even taking a driving test. The licensing function will be tendered out to the private sector with regulatory oversight and stringent penalties for any non-compliance with regulatory requirements. Driving habits will be improved through advertising campaigns that make flouting of rules socially unacceptable, stricter penalties and stringent enforcement. Driver retraining and community service may be ordered in lieu of monetary penalties and punishments.
Cycling and walking are becoming risky in the cities, undermining everyone’s safety and health, and the livelihoods of the poor. For example, in Delhi, 80 per cent of the budgetary allocation of the Jawaharlal Nehru Urban Renewal Mechanism was allocated in recent years to roads and flyovers, with just 0.1 per cent allocated to cycling and pedestrian projects. We will create special cycle lanes and cycle stands wherever feasible. Pedestrian infrastructure (to be built accordance with international standards) will be given utmost priority: through better pavements, safer crossing points, pedestrian bridges, etc. Zebra crossing laws will be strictly enforced and those who do not stop for pedestrians will face very heavy fines.
We will deploy the latest technology (e.g. red light cameras) and information technology through the entire enforcement chain, including the licence issuing and challan writing agencies, traffic courts and compliance units. Historical records of drivers and permit-holders will be maintained and recalled at the time of disposal of challan. A network of CCTV cameras will be established to support law enforcement agencies.
Parking is a nightmare in most commercial, shopping and residential areas, largely because market-based solutions and regulatory standards are not being applied. We will motivate a significant increase in the quantum of off-road parking, particularly in commercial areas. All new buildings in residential and commercial areas will be required to include adequate parking. Since private parking slots in houses will be permitted to be traded or rented through appropriately designed property rights, this regulatory imposition will not harm those who do not use or intend to use cars.
The private sector is entirely capable of building and managing airports and ports, under competitive access regimes that prevent monopolistic behaviour. In particular, we intend to make India more maritime. We will support the building of large artificial ports. We will privatise as many of the existing airports and ports as possible, and competitively license many more. Where privatisation is not economic or feasible, we will place bounds on unnecessary subsidisation of loss making entities.
Railways have been successfully privatised in many countries, such as Japan, UK and Australia. We will do so in India through options that may include unbundling (1) the tracks, with potentially many track operators, (2) trains, with many train operators, and (3) the stations and coordinating systems to attract passengers and look after their amenities. This will subject the railways system to intense competitive pressures, thereby improving quality and reducing price. We will phase out all rail subsidies over time, and allow competitive (regulated) market prices.
Toilets in Indian trains are not appropriately designed for able bodied humans, leave alone for people with disabilities. Irrespective of any other railways reforms, we will require train toilets to be redesigned to comply with world-best standards.
We envisage cities in which a significant proportion of journeys are made on an efficient public transport network that is fast, safe, comfortable and affordable. This requires competition and consolidation that ensure minimal direct government management. Market based approaches will allow operators that are unencumbered by labyrinthine regulations and hostile policies, to create services with varying service levels and prices. Such solutions can include private buses, autos, taxis and rickshaws, with due regard to congestion effects of slower vehicles.
In the bus sector, competition without coordination can often turn out to be a curse, so in addition to bus rapid transport, innovative regulatory approaches like kerb rights will be implemented, to create a system that can respond to demand and continuously improve services and scheduling. Integration amongst different modes of public transport will be achieved through innovative market-based solutions, not through government coordination of the modes. Public transport reforms require the deregulation of fares. Without pricing freedom, there can be no demand-responsive public transport system.
There is a strong case for free entry into the taxi and auto-rickshaw sector, with some light-handed price regulation to avoid gouging, while allowing variable pricing during peak demand, on the lines of surge pricing. A light-handed licensing approach is most likely to match demand with supply, while maintaining service standards. Regulatory approaches will allow as much competition in the market as technologically possible.
Increasing the supply side of the transport sector infrastructure, such as flyovers, grade separators, toll roads and synchronized signals can only be a part of the solution to India’s transportation challenges. Demand side remedies will be needed to regulate the optimal use of spaces allocated for transportation.
Consistent with the user pays principle, taxes on vehicles and on transport fuels will contribute significantly towards the cost of roads. Taxes on passenger vehicles will be set based on factors such as the ratio of the number of seats to road space-time occupied, being relatively lower on faster vehicles since they occupy less road space-time. However, weight will be a factor. Particularly heavy vehicles will be charged a fee based on the combination of odometer reading (distance travelled) and truck characteristics (e.g. length, weight), to help compensate for the road damage caused.
This principle will help meet the cost of roads but also help manage demand.
Low occupancy private vehicles that are used in high traffic areas will be levied a congestion charge that varies by time of day. Modern technology makes it feasible to levy such a road use charge without any disruption to traffic flow. Where necessary, the simpler method that permits entry of odd and even numbered plate vehicles in congested areas on odd and even numbered days will be used.
This charge will cross-subsidise public transport and walking/cycling infrastructure, thereby increasing access to mobility for many commuters, even as the efficiency of the system is increased for high value users. Further, fees that vary by time of day will be used for roadside parking, thus allowing road users to achieve optimal travel speeds during peak hours.
If water is managed and harvested scientifically, India can easily become self-sufficient in water, even as the water table gets regularly recharged. Water is harvested unscientifically today due to the problem of the commons: something commonly owned is likely to be treated carelessly. Some exceptions might exist to this rule (such as a hundred thousand check dams and farm ponds built through people’s participation in Saurashtra) but in the longer run, appropriate incentives are needed to promote local water harvesting. In general, good water management requires the government create relevant regulations, commission relevant support and infrastructure, allocate property rights, build relevant markets for trading water, regulate for safety and (where necessary) pricing, and enforce penalties for violations of the law.
Large sections of our country do not have access to safe drinking water. We will privatise water supply wherever possible, based on the best international experience. At a minimum, we will facilitate private investment in water storage and distribution. In exceptional cases, we will subsidise private investments in water harvesting. Incentives, such as disproportionately higher prices for greater use will be put in place to encourage conservative use of water and motivate people to harvest (wherever feasible) roof top water for domestic non-drinking use.
The government has a key role in areas that have specific problems with their water sources. For instance, we will commission iron-reducing projects in areas with high iron content in underground water. Similarly, reverse-osmosis and de-mineralization plants will be established in villages that suffer from high fluoride and salt content in water.
We will promote and/or commission new irrigation infrastructure, and link rivers where feasible. Private irrigation and water harvesting initiatives, including through cooperatives and water users associations will be supported and strengthened, even as they are suitably regulated. Drip irrigation infrastructure will be facilitated in dry areas to minimise the impact of monsoon failure.
Tradable water rights that also take into account (a) traditional water rights that form part of the characteristics of an existing property and (b) water reservoir management to arrest water table depletion, will be introduced to enable efficient use of water. Allocation of such trading rights is an effective solution to pricing and scientific use of irrigation water. While variable pricing (based on quantity used) will be introduced, we will monitor prices through a price regulator to ensure that variable pricing does not become a means to gouge users.
There are numerous ways to create an effective energy system without the government directly producing and selling electricity. We will ensure energy security by opening up the energy sector to market forces. Anyone should be able to produce and sell electricity, subject to complying with relevant regulations.
This will involve the privatisation of the generation, transmission and distribution of energy, to ensure the stable, reliable and affordable supply in all parts of the country. In doing so, we will apply the best insights of market design to regulate the various industry segments based on their special characteristics, by establishing a market-rules based environment that motivates greatest productive efficiency and minimises market power. This will be particularly relevant as the energy internet comes into place.
Further, as a general principle, energy produced should be economically viable, and any ability to pay (e.g. poverty) should be addressed separately through the negative income tax. No energy subsidies will be approved in the future, and existing subsidies withdrawn in a phased manner, within three years.
Coal is a low-cost energy source with hundreds of years of supply readily available in India. Despite that, India is forced to import coal. As a first step, Coal India will be privatised and its monopoly abolished. We are committed to competitive private sector exploration and extraction of coal, oil and natural gas, in accordance with applicable environmental and health & safety laws. To support the environment, we will require that coal-fired electricity plants set out a transition plan to less polluting and more efficient ones. As soon as possible, even before privatisation is completed, all government controls on energy products and retail prices will be abolished; along with any subsidies.
We believe that nuclear energy needs to be significantly expanded, at least till alternative sources of energy become technologically and economically viable (such as solar or fusion energy). It does involve, however, addressing urgent issues regarding cost over-runs, operational safety, storage and disposal of spent nuclear fuel. We believe the latest generation of reactors are much safer than before, but will require the energy regulator to monitor this issue very closely. We will promote proactive approaches to manage spent nuclear fuel, including through reprocessing, and strengthen geological waste repositories (which must be managed directly by the government). Private sector involvement in nuclear energy will require extensive regulatory oversight, particularly regarding operational safety and the safe transport of spent nuclear fuel, and long term storage.
We will also continue to promote fusion research (such as International Thermonuclear Experimental Reactor), since the sooner it can be commercialised, the better for India and the world.
Solar energy is now very close to (or has already become, in some cases) being commercially cost-effective. This is good news for India, which has ready access to the sun virtually everywhere in the country. We do not see any role for the government in promoting solar technology, however. We would expect a natural uptake by the market as people start experiencing the direct benefits.
We will privatise the national transmission grid, with a small subsidy paid (until solar energy reaches all parts of India, on a commercial basis) for grid connections to rural areas. Any such subsidies to the grid will be phased out as villages urbanise or become more prosperous. Regulation of the grid will include penal provisions (payable by grid owners) for voltage fluctuations that damage significant machinery or plant.
We will facilitate a wholesale spot market from which retailers can buy electricity in bulk for retail supply to individual customers. Links with the grid that permit customers to sell spare electricity to the grid, and use of smart meters to enable variable pricing and demand based pricing, are expected to evolve on their own as technology evolves.
Only 46.9 per cent of India’s 24.66 million households have toilets, 49.8 per cent defecate in the open, and 3.2 per cent use public toilets. Public toilets are extremely scarce. In the whole of Delhi, for instance, there are 3712 men’s public toilets and 269 women’s public toilets. We will facilitate – under local government oversight (including, where necessary, through long lease for private owners of the toilets) – the provision of world-class public toilets in sufficient numbers across India.
27 million persons with disability were counted in India in the 2011 census. A large proportion of them can participate in the economy, with some support. We will aim to equalise their opportunities by reducing barriers that prevent them from reaching their full potential. In particular, we will incrementally make accessible all public places and transportation (irrespective of ownership) to the disabled through regulatory and other approaches.