The Adani Group’s port at Mundra becoming the country’s first ever to handle over 100 million tonnes of commercial cargo during last fiscal is testimony to the success of private sector involvement in infrastructure development in recent times. What is impressive is how fast it has happened. It is not only Mundra, which began operations in 2001-02; a slew of other private ports such as Pipavav, Vadinar and Hazira in the West and Karaikal, Krishnapatnam, Gangavaram and Dhamra on the East coast have also developed only over the last decade or so. Interestingly, many have come up in the vicinity of existing public sector ports — Mundra near Kandla, Gangavaram near Vizag and Dhamra near Paradip — forcing the latter to upgrade berthing facilities, reduce vessel turnaround time and offer discounts on wharfage charges. All this in order to retain customers, who now have a choice of where to unload and load their shipments from.

The same story extends to power, airports and highways. Private players accounted for 42 per cent of the additional power generation capacity created during the 11th Plan (2007-08 to 2011-12), with this share rising to 57 per cent in the first two years of the current Plan. The new airports at Delhi, Mumbai, Bangalore and Hyderabad, and the sheer number of highway projects taken up on BOT (build, operate-transfer) basis, are again proof of successful private sector-led infrastructure development. True, there are shortcomings in the current public-private-partnership models — especially with the level of transparency in the award of contracts and allowing levy of user charges not provided for in the original bid terms. Yet, the scale of private sector participation in infrastructure building in India is something that couldn’t have been imagined at the start of this century.

Unfortunately, that boom seems to have ended — temporarily, one hopes. Most infrastructure companies today are saddled with huge debts contracted against projects not generating sufficient cash flows. Rather than taking up new projects, these companies are seeking to sell existing assets in order to pare debts. In power, the main problem now is not of creating fresh capacity, but of ensuring that already commissioned plants have adequate fuel to burn. Resolving this mess — requiring expediting coal block auctions to enable private mining and making fuel imports feasible through automatic pass-through of prices to consumers — will take time. The same holds for BOT highway projects that are stuck and may require renegotiation or rebidding — both protracted affairs. Till such time these issues are sorted out, the Centre may well have to take up the slack by increasing its infrastructure spending, which means slashing subsidies and other wasteful consumption expenditure. Besides, it could set up special purpose vehicles for securing all regulatory approvals in specific projects, which can then be auctioned to private players.

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