Infrastructure is an essential ingredient of inclusive growth strategy:
Salman Khurshid

New Delhi, July 17, 2009

Speaking at a policy seminar on “Achieving Inclusive Growth through better Infrastructure Regulation” organised by the CUTS Institute for Regulation & Competition, Corporate Affairs Minister Salman Khurshid said that infrastructure development is the key to achieve inclusive growth in India. He highlighted that a large section of Indian society remains deprived of the benefits of economic growth which the current government has identified as a key issue to be addressed. In his address he raised a question: regulation for what purpose? Inclusion has to be a definite objective of the regulation. He quoted un-regulated growth in certain sectors for sometime and some people benefit from it and then the question of regulation arise. Thus, it ends up in being either regulation for exclusion or regulation for a select few. He encouraged research on regulatory impact assessment and see if inclusion is achieved. He underlined that in India there is need to reforms the political system and that will bring greater benefits.

A policy document titled Developing Infrastructure through an Ideal Regulatory Framework was released by Salman Khurshid. It discusses various contemporary issues in infrastructure regulation facing the Indian economy and offers insights and solutions taking into account best regulatory practices.

Speaking at the outset, Pradeep S Mehta, Secretary General of CUTS International opined that “infrastructure is like a ‘ploughed field’ on which crops are grown.” He further added that provision of infrastructure has to be complimented with the creation of human capital in a broader economic growth perspective. This would presumably bring “real trickle-down”.

Bringing in the debate of India and Bharat, noted journalist Swaminathan S A Aiyar, highlighted that the key difference lies in connectivity. If Bharat get connectivity in terms of roads and telecom, it can very well match up the progress achieved by India during the last two decades or so. Highlighting the misplaced emphasis of governments in India about ‘job creation’, he suggested that if governments focus on creating infrastructure jobs will follow. Rural roads are critical to leveraging agricultural productivity, he added. Citing the example of ITC’s e-choupal, he discussed how they overcome the basic issues of electricity by resolving to solar panels and to satellites for achieving data connectivity. Turning to the port sector, Mr. Aiyar spoke about Gujarat’s innovative approach to port regulation. Gujarat’s success in developing a good port sector was possible due to phased privatisation followed by fully private ports. Additionally the state ensured connectivity by building rail network up to the nearest rail track.

Saumitra Chaudhuri, Member of the Planning Commission, said that there is infrastructure deficit in physical and social sectors but creating a regulator for every sector is a slippery path. Regulation per se is not a bad idea but it has to be selective and need-based, he added. He cited the example of SEBI (Securities and Exchange Board of India) which indicates India’s ability to create robust regulators. From nowhere it could steer the process of developing world-class equity markets.

Nitin Desai, Chairman of the CIRC Managing Committee underscored the importance of focusing on the “last mile” as well as onward connectivity to achieve inclusive economic growth. He emphasised that “public investment in infrastructure at central and state will continue to be critical for achieving inclusive growth through infrastructure development and PPP model may not be enough to achieve the desired policy outcomes”.

CIRC is an independent body which has been set up in Delhi to provide research-based capacity building solutions to infrastructure regulation, among other issues. Dr. C. Rangarajan, MP is the President of this Institute.

For further details, please contact:
Bipul Chatterjee, +9198719 95921
Navneet Sharma, +9192127 23123

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