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The Prime Minister is set to announce highly ambitious targets for power, road, coal etc. Will he succeed?
Prime minister Narendra Modi would review performance of all ministries related with infrastructure in first week of September, say media reports. During the review meeting, the union government is also set to revise targets for nine infrastructure ministries, power, road transport, shipping, civil aviation, coal, petroleum, railways, telecom and renewable energy.
Last month, the PM met with secretaries of these ministries to review targets of each ministry. During the meeting, Sindhushree Khullar, secretary of Planning Commission, made a 15-page presentation on performance of core infrastructure ministries during 2013-14 and the targets for FY15. According to CNBC TV18, Modi has fixed ambitious targets for each of the sectors. Are these targets feasible? What are the impediments to achieving them?
Coal production: 562mt vs 463mt of last year. Target: 21.4%+
Against the target of 483 million tonnes (mt), the coal production in India actually reached only 463 million tonnes last year. Part of it was attributed to the cyclone Phalin and the monsoon flooding. Progress has been hampered by land acquisition problems and dealing with environmental clearances and so, the chances of reaching a target of 562 million tonnes seems remote.
State-run Coal India Ltd (CIL), the world's largest coal miner, sits on the world's third largest estimated reserves of coal, in the region of some 250 billion tonnes and yet fell 20mt short of its mining target of 482mt in 2013-14. Coal India directly controls, as a holding company, seven collieries and produces 85% of the fuel mined in the country.
According to media reports, over 60,000 mining clearances are pending with various State Governments. Karnataka heads the list with 19,497, followed by Rajasthan at 13.893, erstwhile Andhra Pradesh 7,691, Madhya Pradesh 4,680, Gujarat at 4,517, and Jharkhand at 4,409. Indian mines need to be modernised too.
Narendra Singh Tomar, Minister of Mines, Steel and Labour therefore, faces the enormous task of clearing all these 63,395 mineral concession applications which are pending with various State Governments. In sorting out the mess, several ministries are involved. How can the Government go about doing this huge task?
Rural Electrification: FY15 15,000 villages against 12,468. Up 20%
During FY15, the government plans to cover 15,000 more villages under the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) project. This is an increase of about 20% compared with last year's coverage of 12,468 villages. How easy is this? Given that the government is cash-strapped, it remains to be seen how this would be achieved.
Road project target for FY15 8,500kms against 3169kms. Up 67%
This is one of the most ambitious targets of the Modi government. During FY15, the union government is planning to award projects of 8,500kms of road length. Last year, road projects for only 3,169kms were awarded as against a target of 9,683kms. The main reason was lukewarm response from bidders, problems of land acquisition and failure of public-private partnership (PPP) mode during 2012-13 and 2013-14.
During 2013-14, National Highways Authority of India (NHAI) had awarded 17 projects for a total length of 1,435.84kms of which two projects are on PPP mode. About 21 projects were bid out by NHAI through PPP mode, but none of the projects received any response.
Minister for Road Transport, Highways and Shipping Nitin Gadkari has said that he is trying to take forward road construction projects worth over Rs1.80 lakh crore rupees that are now being stalled by removing various hurdles. Gadkari said there have been huge Non-performing Assets (NPAs) in the banks relating to such road projects amounting nearly to Rs2.40 lakh crore. So, where will the new funding come from, to even complete stalled projects?
In all, the Modi government has set very ambitious targets for the infrastructure sector. Unfortunately, the government can no longer do it. It has no money, no expertise and no accountability. Who will do it, then? The sector is full of debt-laden businesses, run by crony capitalists. Public sector banks are weighed down by bad loans given to infrastructure companies. Where will Modi find additional money to pour into infrastructure? That apart, the rules set by the earlier regime that have hobbled infrastructure companies remain. There have to be fundamental changes in law, bidding process, monitoring and so on. Unless such changes happen, targets set from the ramparts of Red Fort will mean nothing.