We don’t envy China, will rather emulate it, says FM

Infrastructure: Need an incentive system for those in charge of project execution

Recognising China’s prowess in attracting and implementing infrastructure projects, finance minister P. Chidambaram today said India needs to “emulate” China in infrastructure development.

Despite having a different political environment, he said India can learn from China about execution of projects on time. This according to the FM includes enforcing a disciplined on those leading project execution, along with a reward-punishment incentive structure.

Speaking at a seminar on India’s infrastructure and the need for private public partnerships (PPP) Chidambaram said, “There is enough room in the world for both China and India to grow.” Pointing out that “China and India in many ways complement each other,” he said “in many areas, we (Indian and China) compete with each other.”

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However, he also said that there was a lot to be learnt from China: “We believe that we can learn from China about execution of projects within time, strict discipline and reward-punishment system for those who are in-charge of project execution.”

Pointing out that the country needs $320 billion for its infrastructure sector to clock the high growth rates of 9-10 per cent over the next five years, the FM listed out a list of four constraints that needed to be resolved for ensuring that these projects bear fruition through the PPP mode.

• A need to develop a shelf of credible, bankable projects which could be offered for financing to the private sector.

• Developing adequate financial instruments and capacity to meet the long-term equity and debt financing needs of infrastructure projects.

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• As the concept of PPP is new, there is a need to develop sector policies and a regulatory framework that was PPP-friendly.

• To develop managerial skill sets to manage the PPP process

Highlighting the encouraging signs seen in the current savings and investment rates that in the latest data shows have gone up by 2 per cent, the FM said that these must be raised further to in order to sustain a growth rate of 9 per cent over the next five years. He said he was confident that India would receive more investments after the upgrade in sovereign ratings.