The State Secretary for the Ministry of Urban Development Details His Roadmap

By Chris Devonshire-Ellis, Senior Partner, Dezan Shira & Associates, Delhi

Often the first thing that is mentioned about India today – especially when compared to China – is the shocking state of much of its infrastructure. The problem is estimated to cost India about 2% of its GDP growth, and to be serious enough to potentially derail the development of the entire economy. We met with State Secretary Shri M Ramachandran, of the Ministry of Urban Development, for his views on what needs to be done, and how it is going to be achieved.

Chris Devonshire-Ellis with Shri M Ramachandran State Secretary, Ministry of Urban Development 

Ramachandran:
“Firstly, we have identified several areas of immediate concern to us in national redevelopment. These include:
Provision of drinking water
Waste management and drainage
Water management
Transportation
Housing

Additionally, we are targeting an initial shortlist of 63 Indian cities nationally, which are being fast tracked through the seven year plan which commenced in 2005, for immediate attention. To enact this, we have also made changes at government structural level, with now a three tier level of approvals for the expenditure of funding. Funds will come from the National government to an amount of 35% of all required expenditure, filtering down to local state levels and then city levels, who will make up the balance.

Responsible for auditing this are State level Financial Commissions, as well as the National regulatory audit and finance watchdog.

We have let these cities decide which of the immediate areas of infrastructure they require, however on a State level this will be organized so all are implementing investments jointly and in coordination with each other. There are ten national infrastructure project plans to be completed over the next five years, meaning two must be approved and underway, with regular progress audits and benchmarking taking place for each prior to additional funds being made available.

Additionally, we have changed the accounting mechanism to permit double entry accounting of these funds, again with a unified national approach in finance and indeed in our IT management systems now in place.

To correct some of the state cronyism we have had to deal with in the past, and to promote better inter-state competition amongst Indian same State cities, we have also removed 18 functions previously belonging to state level and empowered city level decisions to be made. This includes the election of city mayors, which will be finalized in all cities rather than being state appointed, in the next three years.

To enable us to attract further investment into these cities, we have engaged our own national accredited credit rating agencies to assess the value of each of these 83 locations. 28 are currently at investment grade, we may issue non taxable bonds to raise money for these locations, and encourage others to follow. We now are far better aware of the extent of our cities assets and liabilities.

We have also pushed through legislation to unify our national land reform policy, which will see unification in two years, and over rent control legislation, which has been reduced to 5% and is now nationally unified.

Essentially we are creating a system of replacing an old model of thought with an entirely new model, where there are checks and balances and accountability. We are pushing through service sector improvements, and benchmarking. India has to get used to this, and the States, cities and people used to actually paying for services instead of just taking them from the nation. Our task to implement this is the education and training of government officials away from their traditional models to models of government better suited to today’s environment.

Our path to infrastructure development lies not just in funding, but in a fundamental change in government process and in the way of thinking of the Indian people.”

This entry was posted on Wednesday, March 26th, 2008 at 9:58 am and is filed under India, Government, Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.