I was reading the Businessline yesterday and found this very interesting article which quotes Mr.T.V.Mohandas Pai of Infosys. He does a very blunt analysis (as rightly put by the journalist) of the widely known crumbling infrastructure story in Karnataka. I have my own thoughts on this but wanted to first put this entire article and then give my thoughts on the same. Might be a long article but worth a read.
‘Restore confidence in industry’
Full Article: Source: Business Line Dated 03 June 2008
With change of guard in Karnataka and a BJP government assuming office, the obvious question is on the immediate priorities of the new dispensation. Over the last few years, Bangalore, once such a vibrant business destination, had been allowed to languish, with its infrastructure taking the biggest hit.
So what are the expectations of business houses from the new government and what should be its immediate priorities to steer the State through a new era of development?
Mr T. V. Mohandas Pai, Human Resources Chief and Director on Board of Infosys Technologies, does not shy away from a blunt analysis of the pitfalls, particularly in the infrastructure front, that have plagued the State, particularly Bangalore. “People have very high expectations from this government mainly because it has a majority and will hopefully last five years. That is very important as Karnataka has seen instability over five years and suffered.”
But over the years, he says, industry has lost confidence in the State government. “The morale of industry in Karnataka is very low. People are very unhappy because of what has happened in the last four years. Industry was taken on, people were abused, etc., and so investment has been going elsewhere. I don’t know how industry will work with the new government; it is up to the new government to restore confidence in the industry.”
For a starter, he says, “the new chief Minister should clearly send a message to all industrialists that they are welcome in Bangalore. Right now, they don’t get the feeling that they are wanted here.”
He explains that during the last three years “85 per cent or more approvals in the high-level committee for industry have all been for real-estate projects, most of them near Bangalore.” But nothing concrete happened. “Actual users — people who set up their own industries — have not been getting land. They should be told: Please come to Karnataka we will help you. Even if the government does not have the land to give industry, it must create a process whereby private people can buy land from farmers at market prices. They can then go to the government which can do a planned conversion of that land to industry. If I buy land from the farmer, I will pay a higher price and why should the government have any objection if it is done with his consent? I’m not asking the government to acquire the land for me or to force the farmers to sell to me.”
But the problem, he points out wryly, is that no government wants to let go control over land. “And the process of land conversion is so onerous, so painful and so corrupt that it puts off industry.” The ideal thing, he suggests, would be to enable conversion of such land within 30 days after which it can be handed over for industrial/corporate use. “But this is not happening, because the government approval at the high-level committee is not worth anything and you have to go through the process again and again.”
Land and corruption
A single change in policy on this front will get dramatic results. “Every government tells industry you go there and we’ll do this or that, but these days who believes the government? Nobody! But if this government can effect quick conversion of land, industry will do the rest in terms of power generators, water requirement, etc. But the most basic requirement is land. Give land to us at market value. Nobody is asking for subsidy. If this government can demonstrate commitment in this area, it will make a vital difference, because everybody makes money on land, whatever government it might be and hence they don’t want to part with control on land. If this government wants to restore confidence in industry, they must ease these restrictions and make the process open and transparent to show that it is serious and committed about industrial growth in the State.
Mr Pai says the CII had recommended to the earlier government to start an economic super corridor from Bidar to Gulberga, Raichur, Davangere, Tumkur and Bangalore, and taking one spur to Karwar, another to Shimoga and Mangalore on this road, and one more going down to Mysore and Bangalore. “It should be a 6-lane road expandable to 8 lanes, with land in the middle for the railway line to run. This would take care of the requirement of the next 30-40 years, and at every 50 or 100 km they should be about 2,000 to 5,000 acres of land which could be acquired for industry at market rates.”
If done, this would result in economic transformation in North Karnataka, through the creation of infrastructure for setting up industries in the region. And, since Bidar is only about 150 km from Hyderabad, just as Hosur is close to Bangalore, “Bidar can feed off the Hyderabad infrastructure; one could land in Hyderabad and reach Bidar in two hours, if we build a good road from Bidar to Hyderabad border. This might cost Rs 15,000 crore but has to be done because it will dramatically improve the infrastructure in North Karnataka.”
Bangalore Roads
Coming to the immediate needs of Bangalore, Mr Pai says the biggest challenge for Bangalore citizens is traffic, and if serious steps are taken, results can be seen within six months. “First, they must complete the Nandi road — 95 per cent of Nandi road is complete, only about 500 metres remain. The Governor had approved the entire scheme including the road to Mysore; this should be completed within 2-3 months as it will dramatically improve to the traffic flow in south Bangalore.”
Also, four roads leading out of Bangalore in various stages of work need to be completed. These include the road from Yeshwantpur to Peenya (“which is in a complete mess and traffic is crawling”); on the airport road the work that has been started from the Golf Course to the Hebbal flyover should be completed; as also the road to Whitefield and the Hosur road. “These four are the arterial roads for Bangalore and need to be completed to improve traffic conditions.”
His deadline is three months! When you express surprise, Mr Pai says: “Infrastructure work should be done in three shifts, seven days a week. But we have people working 5-6 hours a day, with no equipment 5 or 6 days a week!
Coming to the funds required, the former Infosys Finance chief says, “All this costs only a small amount of money. They have to push the contractors.” Next on his list are the peripheral ring roads; “about 160 km, which was talked about from Mr S. M. Krishna’s time. The land has to be acquired, orders issued and funding closed. This will take two-three years to complete. But at lest if they compete the acquisition which is at an advanced stage and take a decision, that will help. Also, tenders should be issued for the inner ring road at Bangalore, and they must redo the major arterial roads of Bangalore which are full of potholes, and muck.”
If the BJP government can show these results quickly, “traffic will improve dramatically and there will be hope in the hearts of people.
Education
Mr Pai says the government also needs to address educational needs in areas such as North Karnataka. “In the districts of Raichur, Gulberga and Bidar the pass percentage in Plus Two is only 20 per cent which is absurd. That shows the quality of education. Why should these children suffer?” More teachers should be appointed and government scholarships — about Rs 10,000 a year for a child — given for the poor children on a merit basis. A Karnataka State scholarship was also needed for students who could not afford to pay for higher/professional education, and irrespective of caste of gender. Like there are scholarships for SC/ST students, this should be for the general population.
Mr Pai adds that all this the people of Karnataka expect from the new government with “of course good, corruption-free governance”. Also, addressing the perennial debate on social equity versus growth, he says, “People ask should the government give subsidies or invest in infrastructure? I think the only way to settle this debate is by giving income support to the BPL sector. The government should run a massive financial inclusion programme, identify BPL families with less than Rs 60,000 annual income, and give a monthly grant of Rs 500 per person for 10 years. Open a bank account and transfer the money in the name of the woman of the house. They have the choice to use this for food, education or whatever. We should not give subsidy on rice, wheat, etc and distort the system. This will empower the BPL sector, and the remaining money can be spent on infrastructural development. We have to settle this debate for once and all. Or else you come out different schemes now and then and from most schemes the money is siphoned off.
But, Mr Pai cautions Mr Yeddyurappa and his team, people don’t have much patience. “The first three months is the honeymoon period; if in this period the government doesn’t take decisions, make announcements and show some results, the hope and confidence that people now have will be gone. Generally people wait for three-six months before giving up hope!”
My opinion
Karnataka is one of the blessed states in India with all natural resources – forests, climate, coastline, water (my home state fights virtually every year for water from Karnataka. That’s a different story and will write about it one day), mineral wealth. However the way the politicians in the city have been able to unsuccessfully tap any of the same is an understatement.
Tourist locations which can benefit from proper infrastructure development are innumerable – Coorg (plantation tourism), Hampi (Heritage structures), Gokarna (beaches), Dandeli (Adventure Sports), Mantralaya (Religious place), Murdeshwar (Religious place), Udupi (Religious place and Who can forget Udipi hotels), Kollur (Religious place), Kudremukh (Reserve Forest), Bannerghatta (Reserve Forest), Karwar (Beach and Adventure Sports) are just a few which come right to my mind. I Doubt if anyone can recall seeing so many beautiful places bunched together.
I don’t mind the politicians siphoning off some money provided they have put in place the infrastructure that justifies the same (Else the Singapore model of Government jobs should be explored – Giving high salaries but making accountability foremost. Think am right). Why look all the way to Singapore, Gujarat is a very easy example. The way new roads and infrastructure is coming up is mindboggling. I like Mr.Narendra Modi for this. Many might question his involvement in the Godhra issue and being a sensitive one I restrain from commenting on the same as I don’t know the details.
Mr. Pai has lucidly covered the areas through which these trunk roads can pass through which can bring accessibility to these places. This is one of the few ways one can provide mass employment. Today mass employment does not come in manufacturing as industries become more capital intensive rather than labour intensive.
The other point I liked was when he said give land at market value. Not only land everything should be bought at market values. This goes especially for electricity in India. Again I quote the example of Gujarat (correct me if the facts are wrong). It is supposedly the only state in India where power is not given for free to farmers. But it is given 24 hours. This solves all the issues. In most other states power is given for free to agriculturists (most beneficiaries, in terms of quantum of electricity, not number of agriculturists, are already wealthy). Whats the point in subsidising someone who is already wealthy at the expense of the taxpayer. Agricultural income, If I am not wrong, is TAX FREE in India. This wealthy chap draws power for his other requirements illegally and power theft is rampant. Add to it does not pay taxes whereas a service sector chap pays taxes diligently every year. Agriculturists (political interests effectively) even resist installing meters even though power would be given free to these farmers. The thought process is that these meters if installed are bound to catch power theft and hence tough resistance. Coming back if power is given at a certain market rate but on a reliable basis then people are more than happy to pay for it. Gujarat is a living example. Now that BJP (party in power in Gujarat is in power in Karnataka), I hope they replicate the same here too.
Infrastructure being done very slow is the other point that really irritates a lot of people. Contractors, as they aggressively bid to win the contract, finally end up finding that they are out to run losses and add to it the delayed payments from Government authorities (often cited, dunno how true) take the toll on the project execution. Until the project cost is revised and the contractor is given payment the project is in backburner. So work normally does not happen 24x7. Contractors doing so must be given serious punishments if one had the authority to. PPP models are improving this situation.
Last but not the least and infact the most important thing is education. It is in such shambles is an understatement if one were to put it. Ex the big cities most of the smaller towns (leave villages aside) have pathetic infrastructure. The way to improve this is to pay the faculty better. Unless that happens talent will not move into the sector. Education needs what IT did to core engineering sector in India. (I consider IT a low value add in comparison to the design engineering jobs which a lot of the engineers too like but don’t take up. But it never paid to be an engineer in a core industry. Bang came IT and in a decade the market forces have made sure these jobs today offer infact better packages and rightfully so). This reinstates my belief in the working of the free market forces theory. If teaching fraternity is paid well enough then the multiplier effect on education system is bound to be manifold is my firm belief. To attract that talent they need to be paid well. Today a large portion are in this occupation largely because they passionately believe in it and not for money alone. It is only a small consideration but for the incremental supply (if I can say so) to come in you need money. If you can reap the rewards by a multiplier effect then why not???
Think I have expressed too much of my opinion but still thought better express the same rather than remain silent. More Bakar to follow....please read on.....
