Part 18 (1/2)

Such a continual value addition at each centre of economic activity can be achieved only when they are interconnected, by road, rail, waterways or air. For instance, exotic flowers may have to be flown in by air to fetch the best price. There was a time when jasmine flowers from Madurai used to be flown into Delhi from Madras (now Chennai) by the morning Indian Airlines flight to be sold in Delhi's Connaught Place!

Such physical transportation systems are a part of the enabling infrastructure.

Naturally, bus or truck stations, railway stations, airports and ports ( coastal and inland ) are also a part of the infrastructure. As better and better technologies are deployed in 219.

these infrastructure sectors, they can provide improved services. 'Better' means not merely having a good road without potholes! When goods move by truck, precious hours are lost at checkpoints and weighingposts. The hours spent in these posts are really negative value additions. In addition, some of the delays lead to loss of quality of agriproducts or even decay. Activities at such checkpoints can be speeded up tremendously through use of electronic aids such as electronic weighing machines, computers and electronically controlled signals and displays. Indians have a right to have good roads, quick clearing facilities and freedom from daily pinp.r.i.c.ks. Modern technologies can make this happen. At all levels we have to dream and will that India shall have such systems we have to change our mindset and, as important, change the obsolete administrative and legal systems.

We have looked at the important infrastructural elements of internal connectivity: road, rail and aviation. But in addition to moving goods within India we need to move them to other lands as exports and to receive goods as imports from other countries. Ports are crucial for this activity. In ancient times, Indian ports attracted many traders: Arabs, Persians, Greek, Chinese, Portuguese and many other Europeans. Indian traders also travelled overseas. Most of our ports today have not kept up with the technological changes taking place in the rest of the world. Much smaller countries like Singapore handle much more value added trade in their ports which are computerized and where many operations are automated. Our ports are considered very slow in comparison. If they are not upgraded India will become irrelevant as a trading country. Hence, ports form a very important element of infrastructure.

Both domestic and global economic and physical connectives (through road, rail, aircraft, ports and airports ) depend vitally on telecommunication networking.

Instant transfer of information is essential for any business today.

Telegraph and radio once gave a great fillip to speedier communication. Then came the telephone. Nowadays satellites, fibre optic cables and other improved forms of wireless communication and, more importantly, improvements in micro electronics and computers and revolutionized the way we seek and exchange information. Thousands of tones of different kinds of cargo and their movement can be monitored almost instantaneously, thanks to the advances in communications and information 220.

technology ( IT ). Thus telecommunications and IT are two of the most critical elements of the modern economy. That is the reason why many countries are concentrating on a National Information Infrastructure (NII ) and linkages to the Global Information Infrastructure (GII ).

These infrastructures and related technologies and services are evolving so rapidly as to form a completely different world in themselves. Some call it a virtual world. Of course, we cannot eat or have many other physical comforts in the virtual world. But this virtual world created by IT has become as real as the real world in all activities: agriculture to health to education to manufacturing to security. India cannot afford to ignore this newly emerging area. One is happy to note the significant national resolve to make India a major IT power.

All the above depend crucially on energy and especially the a.s.surance of quality electric power to all Indians and for all sectors of economic activity. Sometimes one wonders whether we can have such a vision at all! How many power cuts plagued us while we wrote this book! How many times the computers were down! Many in Delhi told me after the successful nuclear tests, 'Sir, when will Delhi be without power cuts?'

The problem, of course, is nationwide. The situation needs to be changed radically if we Investments in infrastructure are to realize the vision of a developed India.

The aggregate level of investment infrastructure increased from about Rs.

6000 crores in 198081 to about Rs. 29000 crores in 199091 and to about Rs.

50000 crores in 199495. As a proportion of GDP, the investments in infrastructure ranged from about 4.5 per cent to 6 per cent. Of the total annual investments in the country about 25 per cent are in infrastructure projects. It is estimated that the investments in infrastructure during 19972002 may be about Rs.500000 crores and about Rs.750000 crores during the next five years.

Figures of this magnitude may seem intimidating but the truth is that for all the inefficiencies of administration and even, one might say, a certain lack of commitment to make this a great nation, our economy has grown to huge proportions.

The share of the railways has been only about 0.6 per cent of the GDP and has remained stagnant over decades. There is a great need to increase it because railways are an extremely energy efficient mode of communication. Of late the number of railway 221.

accidents is increasing and it also appears that most line expansion projects are moving very slowly. There are a number of technologies for highspeed trains which are possible and have been talked of at various forra. It is essential to modernize many parts of our railway tracks, signaling system and even facilities for pa.s.senger comforts. For the movement of goods, it is possible to have multimodal containers, that is, containers which are standard for railways, roads, s.h.i.+ps or aircraft. Investments in road transport and waterways have ranged between 1.3 to 1.6 per cent of GDP. Investment in electricity has been on the average about 2.5 per cent to 0.8 per cent of GDP. How do we increase these rapidly is the question.

One way is to increase GDP. But without improving infrastructure GDP cannot grow! Without investments, roads or electric power or telecommunications or ports cannot come up. Does that put us in a catch22 situation? Not really. There are many private investors in India and abroad who would be ready to investigate projects that would yield returns over a long period. It is necessary to attract them to invest in these projects. Since 1991, the government has been granting several concessions to attract them. But much of this investment has come in bits and pieces. Some of these investors had unrealistic a.s.sumptions. Nevertheless, private investors do seek profit. It is necessary to a.s.sure them of reasonable profits and to give them cover for certain risks.

The government has to ensure that the long term interests of the country or the public are not unduly comprised. Considering the fact that the development of infrastructure is integral to speedy economic growththe only way our people can break out of centuries of povertythe country has to learn to be innovative in offering packages which will attract investments.

Investors complain that the path to investment is riddled with timeconsuming procedures. The only way to put in place attractive policies and make them work is to simply procedures. The authors are not unaware of the various vested interests that have been built up over time. Many in India believe that from the lowermost counter, which gives the important application forms which the government requires to be filled, to the highest levels there are a large number of avenues to convert ' authority ' into money. We believe a call for a new vision for India with a higher aim and sincerity, resulting in jobs for almost everyone, and with the makings of a movement, would 222.

remove many of the present cobwebs. In preindependence India, Indians were after all only viewed as fighting with each other over caste, religion, language and more. Did the people not join a great movement without any guns or arms to dislodge a mighty empire?

Coming back again to the investment question, even while private sector investment will be essential to build up infrastructure, the government has to invest too.

Estimates indicate that the funds required to improve the existing national highways as well as to expand them would be about Rs. 150000 crores. The private sector could contribute a proportion, but the remainder will have to come from the government ( both central and the states ). But here we need to question whether most of the funds indicated are really required. Some a.s.sumptions need to be reexamined: should widening of an existing road from single lane to double lane cost about Rs.50 lakh per kilometre? And is the same amount again needed for improving the double lane pavements of existing roads? Should the cost of widening double lanes to four be about Rs. 250 lakh per kilometre? Should a new expressway cost Rs. 800 lakh per kilometre? We are not questioning the capability of our engineers and accountants. Such estimates are worked out since n.o.body wants to be accused of not using materials of a particular standard, even when this is not exactly relevant. Therefore a lot of ' padding ' has been built into the system over the years.

It is time that these basics are questioned and some innovative methods are used at least in the short run, say five to seven years. In many areas where there are no roads or terrible roads, some improvement is much better than no improvement awaiting sanction of huge budgets. Some ' standards ' can be relaxed: some innovative mechanisms for reducing costs can be experimented with countrywide. Let us not wait for some special wisdom to emanate the capitals.Even with all these standards in place, has the country achieved what it wants? We ought not to be afraid of some initial low performance resulting from empowering various functionaries in different parts of the country. They couldconsult publicspirited citizens around their areas and help in decision making.The media has a special role too. Instead of only emphasizing failures and horrors,let them also play up a few successsome of them will serve as role models for others to follow.Let us spread hopelet us work with determination.The reason I am emphasizing these aspects is 223.

simple.India can launch itself into a developed status only when the economic machinery starts 'real movement' through the infrastucture.once the machinery moves, the process of economic growth will create more money in about five to seven years. That money can be reinvested in firther improvements. Those of traditional thinking may find this difficult to accept.But let us learn the lessons of the past fifty years.The poor people cannot wait for a whole millennium to pa.s.s to have a better and more secure living.If a reasonable infrastucture is in place,our innovative people would find avenues to a better life.Money in the hands of our hundreds of million Indians const.i.tutes a huge market.While the 250 million Indian middle cla.s.s may aspire for foreign goods,the Indians below the poverty line would be very happy with Indian goods.In fact it is the Indian industrialists who do not necessarily have major export ambitions who should spearhead the movement converting these 750 million into a new huge market.Once they become a force, India will be a billionplus market that will attract the whole world! It will be difficult to look at details of all the sectors of Infrastucture.Let us examine a ew.First,the electricity sector Which is so crucial.

Quality electric power for all No nation can aspire to be modern and developed without the availability of quality power for all.No modern machinery can run without uninterrupted and quality power systems.The whole magic wand of Information Technology.(IT)will be at naught if there is no electric power. Imagine New York or london or Tokyo having just one day without power or a week of interrupted power supply. It just cannot happen. If it did, It could bring down the government. When we look at the power situation in India, 'depressing' or 'gloomy' appear to be mild words to describe it. Hundreds of thousands of precious human hours are lost because of lack of quality electric power(not to talk of many others who have not been covered by electricity at all!).At a time when equipment models change so rapidly, an investor would want to obtain the maximum advantage from a particular kind of equipment, even with three s.h.i.+fts. But the quality of our power supply often makes sophisticated equipment lie idle for hours. Those who manage to 224.

continue production do so by investing in electric supply regulators and a standby power system. What a waste of productive capital resources! India's hydroelectric power plant of 130 MW was Commissioned near Darjeeling, West Bengal, in 1897. At the Time of independence the sum of installed capacities at various Pockets was above 1330 MW. A tenfold increase in five decades! The present installed power generation capacity is about 85000 MW, or a sixtyfive fold increase in five decades. The power transmission system which started with 78 KV has now matured to 400 KV grids and 500 KV HVDC (high voltage direct current) systems for bulk power transfer. Recently one of our major national laboratories in electric power technology, the Central Power Research Inst.i.tute (CPRI) with its main Laboratory at Bangalore, has testcharged a 1500 KV HVDC line. The higher the voltage of transmission in direct current the less the transmission losses. In the future we need to have many HVDC lines. Electric power distribution which had only a few circuit kilometers at the time of independence has now reached a length of nearly 2800 million circuit kilometers.

These figures are impressive in themselves. We remember how we studied and did our homework by the light of kerosene lanterns during our school days. From there it is a sea change!But is it enough or adequate? Let us look at china:in the 1950s India and china had roughly the same installed power capacity. Now china has about three times more installed capacity than India! Further, china has been consistently adding a capacity of about 1500 MW a year for several years now whereas our capacity is growing at a rate of 2500 MW per year. Why is this so? Is it because of lack of funds? We believe that major problem before the nation is that we have we have stopped thinking big! We are either getting bogged down in petty details, promises, and in political games. The latter is not merely limited to politicians but has also spread to several others in the bureaucracy, technocracy and industry. The moment we sincerely think big and start working hard, we can find solutions. Most Indian people respond when there is a lead, and when there is a call before them.We do not want to go into the details of efficiency of utilization of even the existing capacities, expressed as plant load factor (PLF). We are at about 60 per cent as against 80 per cent for South Korea. The reasons are many. But the stark fact is that of 225.

the installed capacity of about 85000 MW, only about 32000 MW reaches the consumer, that too not without interruptions and other variations in quality. Our first and foremost task is to rectify this situation it may mean that our state electricity boards and other generators should take various steps and also take a look at the transmission and distribution (T&D) systems. Our T&D losses are about 22 per cent whereas developed world standards are about 7 to 8 per cent. Technically and managerially, we have to find solutions.Let us not overlook successes even in this gloomy situation.Unchahar thermal power station was acquired by the national Thermal power corporation (NTPC) from the government of Uttar pradesh. Performance was improved dramatically by using debottlenecking techniques. Prior to the takeover the Unchahar station had a PLF of 18 per cent in six months thereafter it went up to35.5 per cent in twelve months to 73.7 per cent! The availability factor which was 27 per cent at the time of the take over went up to 49.5 per cent six months later and about 79.5 per cent after twelve months. Specific oil consumption, which is an indication of wastage and inefficiency of operation, which was at 21.8 million litres (MI) per kilowatt hour (kwh) at the time of takeover went down to 6.3 MI / kwh in six months and 3.3 MI / kwh in 12 months.*these dramatic results have been obtained under ordinary or even oppressive circ.u.mstances, and despite the absence of recognition by the system. While a day's power breakdown or an audit report on delay or excessive project costs. .h.i.ts headlines, n.o.body even bothers to mention these achievements in a small column of a news paper. Nor even is such achievements talked about by politicians or bureaucrats! We don't know who are the heroes and heroines who made these achievements possible through teamwork!

Now imagine a situation where we create a national climate to think big and praise every small success which contributes towards the big goal and where every team which attempts improvement and succeeds is recognized nationally. When we give the teams at least the attention equal to that given to Prithvi, agni, insat, PSLV, pokhran or that of a major national or international award for an eminent scientist, we will have maximum utilization of existing capacities as per developed country norms. Let the electric power stations do it themselves or let them be taken over by public or private ent.i.ties to make this happen. We would even say that let some enterprising companies from anywhere take them over to set an example of standards,if they can trigger our 226.

inherent pride and mobilize it for action! Of course, early enact ion of relevant legal measures are required to allow private and local initiatives.

Similarly, improvements in the T&D systems require priority attention. With the present level of installed capacity, and a.s.suming they work very efficiently on the lines discussed earlier, every 1 per cent improvement in T&D losses would mean availability of an additional 600 MW to the consumer. As we have discussed earlier, there is scope to bring down the transmission loses by about 14 per cent if we consider world standards.

Part of this has to be achieved through reconductoring with better materials, installation of shunt capacitors on the distribution system to correct power factors, use of better transformers, use of high voltage distribution systems (single phase),systematic planning during the addition of substations and lines, and partly through better management to avoid pilferage. All these are well within the capabilities of Indian industries and laboratories. But there is no sense of urgency in the execution of projects. If the T&D losses are cut down to the world level, almost about 70 per cent of the peak power deficit will be wiped out and there will be no average power shortage which is estimated to be about 10 per cent. The economic advantage is obvious: the cost of establishment of a 10000 MW power generation unit could easily be Rs.60000 crores.

There has been an overemphasis on generation relative to transmission and distribution. As a result of this, T&D losses continue to be high. Even if new capacities are added, they will reach the consumer with a 10 to 15 per cent cut over what is acceptable internationally. What a way to waste a capital intensive and precious resource!

There is also a real danger that plants put up with great difficulty and expected to go on stream in the next few years, will not be able to operate optimally due to absence or inadequacy of these T&D evacuation systems. Here again the resource scarcity of the state electricity boards figures in deterring immediate investments for the renovation of T&D systems. There is an urgent need to enact laws to enable private sector entrepreneurs to enter the T&D business.

On the power generation side we need to set up the contribution of nuclear power generation as well. The pollution generated is minimum compared to that from thermal power generation. According to the DAE's projection, 2000 MW will be added by 2020.

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Our view is that this projection should be doubled in view of the urgency and magnitude of our power needs.In the vision for the electric power sector, we are thus dominated by much needed shortterm measures which relate to immediate capacity additions and increased power availability.

The crucial ones are: .

Setting up many small projects in the range of 25 to 100 MW.

Refurbishment of the existing power plants. These will Be on the lines done by the NTPC for the Unchabar station.

Attention to all the T&D systems on the lines discussed above.

In the medium and long term: .

Our hydro power capacities are not fully utilized. The country should augment its hydrogeneration capability as it is crucial in the long run.

Several cleaner energy generation technologies like the Integrated gas combined cycle (IGCC) are necessary.