Letter from the Publisher

With this issue, we celebrate our twentieth anniversary. We take this opportunity to reflect on the journey of infrastructure development in India. The issue provides a view of the past 20 years – progress, setbacks, unresolved issues, emerging challenges, new requirements and potential solutions. We have featured the views of each stakeholder group – policymakers, developers, financiers and experts. We have also sought contributions from pioneers who have helped shape the sector. Especially gratifying is the contribution from old friends who supported the magazine in its early years.

This is a special commemorative issue, so it has special features – with “20” being the underlying theme. 20 events that shaped the sector, 20 best projects, 20 ideas for the future and 20 noteworthy financings. The selections are based on inputs from “friends of Indian Infrastructure” – sector experts who have contributed to the magazine over the years. I am sure that there are errors of omission and maybe some errors of commission, but I hope you will forgive us for those.

We also take this opportunity to reflect on our own journey. In the first issue, we stated that “the mission of our magazine is to help define the task at hand, provide a forum for the discussion of policy and share financing solutions…deliver world–class writing with an emphasis on accuracy and objectivity.”

In some ways, the core of our mission remains the same. In other ways, it has evolved. In addition to just providing the information, we now offer analysis, insight and opinion. Over the next few years, we also intend to have a stronger and broader digital presence to extend our reach.

We are supplementing the efforts of the magazine with a more direct contribution in the form of our latest initiative – India Infrastructure Forum, a platform to highlight key government initiatives, discuss the issues faced by developers and investors, facilitate partnerships and improve understanding among different stakeholders.

I would also like to take this opportunity to thank all our readers, contributors and advertisers. Whatever we have achieved would not have been possible without their support. And we hope that it continues.

Editorial

Twenty years ago, when this magazine first rolled off the press, the “average” Indian did not possess a mobile phone, much less a personal vehicle more sophisticated than a bicycle. He or she was most likely to be living in a rural setting, and earning a living from agriculture. Access to power was intermittent or non-existent for most people, the local roads poor, and there was no internet access. Hardly anybody had an email account.

The per capita income was Rs 17,211 per annum in 1998 (about $700 in the constant USD of 2010) and many people kept their savings under their mattresses or bought gold because they did not have a bank account. The 2001 Census reckoned that the total population was 1.070 billion, the literacy rate was 65 per cent and life expectancy was about 63 years.

Compare those indicators to 2018. There are now 1.2 billion Indians and life expectancy has improved to about 68 years. The literacy rate is now 74 per cent. Almost everybody has a mobile and over 400 million use smartphones with IP-based messaging services. Social media usage is popular across the country with India possessing the largest number of Facebook and WhatsApp accounts in the world. India is now the largest mobile data consumer in the world. There is internet connectivity available almost everywhere, even if the coverage is variable in terms of quality. Similarly, almost every habitation in the country is on the grid, even if power supply varies in quality from location to location and state to state. Villages have ATMs and metalled roads. One in three households possesses a two-wheeler.

While many Indians still earn a living from agriculture, there has been a great migration to urban locales, with close to 200 million moving into cities in search of higher-paid employment in manufacturing, or services. Urban dwellers enjoy access to running water, metros and covered drainage.

The per capita income rose to Rs 127,725 (USD 1,964) in 2017. The improvement in internet access has also meant improved access to banking and other financial services. Along with gold, even rural households have started investing in mutual funds. In absolute terms, India remains a poor country with low per capita income and poor quality of life indicators. But the improvement in all these indicators over the past two decades is remarkable. In large part, it has been driven by the improvement in infrastructure.

The focus on developing infrastructure began in the early 2000s when the NDA under Atal Bihari Vajpayee created new foundational policies that spanned several sectors. One commonality across these policies was that the government realised that it possessed neither the wherewithal nor the management capacity to create the infrastructure India needed. So, it started looking for ways to tap private sector resources and household savings.

That shift in attitude was a game changer. It triggered the creation of a network of national and state highways, and rural roads. It meant the beefing up of power generation capacity. It led to the development of mobile coverage across the country with fierce competition driving down prices. It led to better public transport services.

Private operators entered civil aviation and private developers built airports. Private ports developed huge capacities. Corporates prospected for oil and gas, and built refineries. Even Indian Railways – one of the largest bastions of the public sector anywhere – started to collaborate with private operators. The financial sector saw the entry of new banks and NBFCs that funded infrastructure projects.

There have been plenty of hiccups along the way and of course, capacity is still inadequate. First of all, the policymaking has been staccato, with two steps forward and one step back in many sectors. Many projects have been stalled because the sector policy was poorly drafted, and contracts were poorly designed and difficult to enforce in India’s extremely tardy legal system. There have been huge scams and scam accusations in sectors such as telecom and mining. Power projects have ended up with no fuel, or abandoned with no takers. Road works have stalled. There have been problems with land acquisition, and with environmental and regulatory clearances. As a result, the financial system has incurred mountainous losses in the form of unrecoverable debt. Nonetheless, policymaking has improved gradually as policymakers have learnt from their mistakes. Legislation has been reworked to plug loopholes. Importantly, new legislation like the Insolvency and Bankruptcy Code has helped speed up the process of debt recovery. There have been attempts to create flexible financing structures and increase the efficiency of the bond market.

This process of trial-and-error will continue. No country has got it right straight off the bat and India’s challenges are gigantic in scale. It’s important to note that the aspirations of citizens have also increased and the demand for better infrastructure has grown with greater urbanisation.

When this process started 20 years ago, “Bijlee, Sadak, Pani” (power, roads and water) was a winning slogan for any party that wanted to be voted in. Now, voters will demand this of every political party, and politicians will be rated on the basis of the quality of infrastructure they enable.

The demographic changes over the past 20 years will also shape the country for decades to come. Two out of three Indians is under 35, half are under 25. Assuming there is employment available, they will be in the workforce for decades, thus boosting growth. By 2025, India will be the most populous country in the world. By 2040, it could be the second-largest economy surpassing the US (in terms of PPPs). But the per capita income will still be only about a third of the US. If these projections are to be met, infrastructure creation and renewal will be essential to empower the workforce and cash in on the so-called demographic dividend. Infrastructure creation could, in itself, be a means for India’s young workforce to bootstrap out of poverty.

The past 20 years have been exciting. The next 20 could be even better.

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