Foreign investments are invited in building Indian roads according NHAI (National Highway Authority of India) official J N Singh, Reuters reported. Indian infrastructure is thought to be a biggest hassle for the development of India by many foreign and domestic analysts in recent years.
$18 Billion Roads
India is expecting 30 percent of the total $18 billion cost of Indian road projects in the present fiscal year would be met by the foreign investors. The NHAI official revealed in the ‘Reuters India Investment Summit’ that the government has so far awarded 3000 km road from April to August and looking to award 6000 km road in the remaining part of the present fiscal year up to March 2011.
India is awarding the road building contracts on BOT (Build-Operate-Transfer) model, a type of partnership model formulated for the convenience of private contractors. The BOT system is nothing but a veil to privatization of Indian infrastructure, stitched and embroidered some ten years back.
What is BOT?
“Build” term in BOT implies that the roads will be built by the private contractors. “Operate” implies the built roads will be operated by again the private contractors. It includes mainly the setting up of tollgates at different points of the highways and collecting toll tax from the users.
The users include everyone but 11 number bus passengers. The 11 number bus passengers are none but those who walk on their two legs. The number 11 represent two legs. Toll tax is the only revenue from road building and it is entrusted to the private players.
The final term “Transfer” denotes that the roads will be transferred after expiring an agreed term. The term usually lasts up to 20 years and above. By then the life of the roads built by the private operators will also expire, but private parties will leave the scene, leaving behind the expired roads for the government to operate. Toll tax period also may end by then, so no revenue left for the government firm NHAI.
BOT system was so framed and named because of the agitations and protests from various mass organizations against the privatization of the road sector.
Infrastructure Funding
In order to boost funding the infrastructure the government announced in its budget of issuing infrastructure bonds. It has plans to set up $11 billion debt fund by next year. It has taken a few steps to boost foreign funding. One such step is that it has lifted cap on foreign investments in debt market.
The government has set a target to spend at least $80 billion in next two years on highways only. Of course, India has a consistent practice of missing its own targets. India is currently building 13km road a day instead of targeted 20 km a day. It seems Pension and Insurance funds are eyed for funding though denials are there as usual.
No comments:
Post a Comment