Economy
Panagariya’s prescription - Part III: Infrastructure & Urban Development

In a speech in February last year Arvind Panagariya, the vice chairman of NITI Aayog had expressed rather radical ideas of reform for infrastructure sector and urban development. Will they be too hot for the PM? This is the third part of a multi-part series 

 

Prime Minister Narendra Modi appointed his long-time supporter, economist and professor Arvind Panagariya as the vice chairman of National Institution for Transforming India (NITI) Aayog. As we mentioned in the first part, Pangariya, as an economist is known for his radical views on reforms. Now, since he is the vice-chairman of NITI Aayog, it would be interesting to see, if PM Modi subscribes to these views and actually implement it.
 
Panagariya while speaking at the CD Deshmukh Memorial Lecture 'A Reform Agenda for India's New Government' on 11 February 2014, almost described a blue print for reforms and growth. Panagariya mentioned infrastructure as an important element in paving the way for the growth of manufacturing, but said this is a subject that requires separate consideration. Especially, for urban development, he suggested a relook into laws governing the conversion of land from one use to another, a generous floor space index, reform of rental laws, and sales of unused land held by public bodies.
 
INFRASTRUCUTRE 
The NITI Aayog’s vice-chairman had said, improved infrastructure including roads, railways, ports and electricity is essential for manufacturing growth. Because profit margins per worker are low in sectors where labour costs are 80% or more of the total costs, it is important that transportation and electricity are available to entrepreneurs at competitive rates, Panagariya added.
 
Highways
Highway construction, which had achieved great momentum under the National Democratic Alliance (NDA), fizzled out under the UPA. According to an affidavit filed in the Supreme Court by the United Progressive Alliance (UPA) government on 1 July 2013, half of the national highways constructed in the preceding 32 years have been constructed under NDA rule. 
 
With growth having expanded the need for transportation, businesses as well as ordinary citizens find bottlenecks on highways everywhere. The next government will need to return to highway construction big time again. It will need to work toward widening the existing highways as well as building new expressways.
 
Railways
Railways offer a far cheaper mode of freight movement than road transportation. Good progress had been made during the tenure of the first UPA government but the focus shifted almost entirely to passenger trains and keeping fares low under UPA II. The next government must return to building railway transportation on an expanded scale.
 
Ports
India needs to cut the turnaround time at its ports to international levels to allow companies to take advantage of global markets. In today’s world of just in-time delivery, delay of even a few hours can cost a company its contract.
 
Electricity
This is by far the most important sector in need of attention. A measure of how far behind India has fallen in the provision of electricity is that in 2003, per capita electricity consumption in India and Vietnam was equal but by 2008 the latter had pulled ahead by more than 40%. The gap today is probably larger. 
 
It is well known that according to the 2011 Census, one-third of Indian households lacked electricity. It is not possible for employment-intensive manufacturing to flourish without the steady flow of electricity at competitive prices. 
 
In 2003, the government had initiated a major reform of the electricity sector via the Electricity Act. Unfortunately, the reforms under this Act were never fully implemented, with some provisions reversed by the UPA government. The next government will need to return to completing those reforms. It will also need to ensure that bottlenecks in getting coal and gas to electricity generation companies are removed. Private companies must be given entry to mine coal with the eventual goal of privatizing coal mines.
 
URBAN DEVELOPMENT
Cities, large and small, are the ultimate symbol of transformation and modernization. They attract workers from the farm sector to industry and services in search of good jobs, as graphically illustrated by the experience of cities such as Delhi and Mumbai. However, often industrialization itself turns rural areas into urban areas, as exemplified by Gurgaon. 
 
The government has an essential role to play in promoting healthy urban life and the facilitation of urbanization. India must rapidly build many more new cities and also improve the living conditions in the cities. The latter requires rapid transit in all large cities.
 
However, India also needs to work on the provision of low-cost rental housing in urban areas so that it avoids the creation of new slums. As discussed in greater detail in Panagariya, Chakraborty and Rao (2014, chapter 7), this will require looking into laws governing the conversion of land from one use to another, a generous floor space index, reform of rental laws, and sales of unused land held by public bodies.
 
The ability of local bodies to provide water, sanitation and solid waste management services will need to be greatly strengthened. This will require some coordination across Central, state and local governments.     
 

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COMMENTS

Jyoti Dua

2 years ago

The article reflects the present situations and suggests the policies need to be adopted for future. Good one.

Krishna Tirath surprises Congress by joining BJP

Krishna Tirath is the third high profile woman to have joined the BJP ahead of 7th February Delhi assembly elections after former IPS officer Kiran Bedi and ex-AAP leader Shazia Ilmi

 

Former union minister and Congress leader from Delhi Krishna Tirath on Monday joined the Bharatiya Janata Party (BJP). This would embarrass Congress, which lashed out at BJP for importing leaders in desperation ahead of Delhi assembly election.
 
Tirath, a Congress veteran from Delhi, was welcomed in the party fold by BJP chief Amit Shah with a bouquet of flowers.
 
The former minister for Woman and Child Development in Manmohan Singh-led government was accompanied by in-charge of party affairs in Delhi Prabhat Jha and city unit BJP president Satish Upadhyay.
 
"It is a question of ideology. I met BJP President Amit Shah to serve the people.... I have come with this aim," Tirath, who was a member of the Delhi Legislative Assembly between 1984-2004 and the North West Delhi MP from 2004 till 2014, said after meeting Shah.
 
On what would be her role in the BJP, she said the party chief will decide that and added, "My role will be towards public service."
 
Congress appeared to be taken aback by Tirath's move to desert the party. Congress leader Ajay Maken said it showed the "nervousness and desperation" of BJP, which is ready to bring any leader in the party fold ever since Prime Minister Narendra Modi's rally evoked a "lukewarm" response.
 
"They have to import leaders from other parties because they have no faith in their own leaders," he said.
 
Tirath is the third high profile woman to have joined the BJP in the past week ahead of 7th February Delhi assembly elections after former IPS officer Kiran Bedi and ex-AAP leader Shazia Ilmi.
 
BJP welcomed Tirath's move with party's national secretary Shrikant Sharma saying, "leaders of other parties are inspired by Prime Minister Narendra Modi's agenda of development and want to see that Delhi develops as a world-class city and that is why they are joining BJP."
 
Tirath's joining BJP is viewed as an attempt by the party to woo dalit voters in the national capital.
 
Shah too had started his poll campaign by addressing a dalit rally.
 
Delhi has 12 reserved seats of which a majority were won by the AAP in the last assembly polls in 2013, with BJP winning only two while Congress got one.
 
Tirath was earlier a member of the Delhi Assembly and a Minister in the Shiela Dikshit-led Delhi government having portfolios of Social Welfare, SC & ST and Labour & Employment.
 
She has been a former Deputy Speaker of Delhi Legislative Assembly and a former Chairperson of Delhi Scheduled Castes Financial and Development Corporation (DSFDC).
 
Tirath was the North West Delhi MP since 2004 and has been Minister of State (Independent Charge) Women and Child Development in the previous UPA government.
 

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Bank strike: 10 lakh employees to go on four day strike from 21st January
The four-day strike of employees from nationalised banks will have the impact of six days as 25th is a Sunday and 26th January is national holiday
 
 
Employees from public sector bank (PSBs) have decided to go on a four-day strike from 21st January 21 to protest against the rigid and callous attitude of union government in resolving the long pending wage revision issue. However, this four-day strike would cripple the banking for six days with 25th January being a Sunday and 26th January, the Republic Day holiday.
 
Deepak Kumar Sharma, state secretary of All India Bank Officers’ Confederation (AIBOC), said, it was decided to hold one day strike on 7th January, which was deferred on the request of Indian Banks' Association (IBA) for finding an amicable solution.
 
The decision is in response to the strike call given by United Forum of Bank Unions (UBFU), which has more than 10 lakh employees and officers of banking Industry under its umbrella.
 
“As there was no fresh proposal of hike from the side of IBA during this period, UFBU has decided to go ahead with the four-day strike which will have the impact of six days as 25th is Sunday and 26th January is national holiday,” Sharma added.
 
The wage revision for bank employees is due from 1 November 2012, he said.
 
UFBU has been requesting, since the start of negotiations, a time-bound approach to hold the negotiations on its demands and for conclusion of wage settlement within a reasonable time but there is no significant progress in the wage negotiations despite a lapse of two years’ time, he said.
 
He claimed that despite disparity in wages and hardships of unlimited working hours, the employees of the banking industry, the backbone of the economy, are denied their due share.
 
Sharma said this was despite the workers being recognised by all for achieving all National/Social objectives set before them including opening of Jan-Dhan Yojana Accounts“.
 
He said the Public Sector bank employees have also decided to go on an indefinite strike from March 16 onwards and that the notice in this regard has already been served by UFBU to the IBA.
 

 

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COMMENTS

Pramod Chaturvedi

2 years ago

We don't mind if Efficient Bank Employees are paid well but go to any Nationalized Bank & notice how the employees work.

REPLY

Sandeep Moharana

In Reply to Pramod Chaturvedi 2 years ago

You do three people's work alone then speak about it
9 to 9

How do you think psb employees respond
Kahan kahan se ajate hain chutiye sale
Kuchh bhi bolte hain

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