Sucheta Dalal :Enabling infrastructure development Andhra Pradesh st<x>yle
Sucheta Dalal

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Enabling infrastructure development, Andhra Pradesh style  

March 28, 2002

The difference between Andhra Pradesh and other State capitals is that they don't need government spokespersons to argue to the world that their infrastructure development efforts have not lost steam.

In Hyderabad, the changes don't need announcement. They are there for everyone to see. Roads have been broadened and they lead up to glittering new show rooms. An army of private contractors sweeps the streets every night and all public spaces - pavements, road dividers and even the space under the flyovers - have been beautified with tasteful greenery and well-maintained street furniture.

When I visited Hyderabad last week, I was actually biased to see a reversal in the development process. Recent media reports have been suggesting that N Chandrababu Naidu's reforms were running out of steam.

The self-styled CEO has been accused of not getting a grip on the continuing suicides by his farmers and provide relief; he is charged with too much emphasis on urban development and information technology at the cost of traditional industry; and it is said that his 'misplaced' emphasis has kept the rural poor outside the reforms framework.

All these allegations were more or less what I had heard during my last visit, over a year ago, and they could well be true.

But it is equally true that the relentless pace of reform towards the goal of "Swarna Andhra Pradesh - a State that is economically and socially viable in all respects by 2020" continues, even if it is a little lopsided in its focus.

Unlike Maharashtra, which is repeatedly forced to lay claim to its position as the India's leading investment destination, or Gujarat, which stands bloodied by natural calamities and virulent, fascist bigotry, Andhra Pradesh is powering ahead with its actions.

Naidu's leadership lies in his ability to spot the best people, gather them around him and then give them freedom and opportunity to deliver. Another asset is his willingness to cut through red tape in order to achieve results. One example is a new piece of legislation called 'The Andhra Pradesh Infrastructure Development Enabling Act, 2001' (AP IDEA 2001) which has been enacted in order to spur growth.

The Act is the answer to all the doubts and frustrations that infrastructure developers face in dealing government departments in India. This is especially true of foreign direct investment, which is crucial to big-ticket projects such as airports, ports, highways and waterways.

But the story of getting this legislation together starts well before its conceptualisation and drafting. As usual, it starts with having the right people in place.

A couple of years ago, when the Congress-Nationalist Congress Party government took charge in Maharashtra, it gave the marching orders to a man called R C Sinha - an IAS officer who was then in charge of the Maharashtra State Road Development Corporation. Sinha is among those rare IAS officials who have blazed new trails at all their postings while their colleagues have merely pushed files and served their political masters.

In the MSRDC, Sinha (with an extremely supportive minister in Nitin Gadkari) constructed the spectacular Mumbai-Pune Expressway, which snakes through the Western Ghats, halving travel time between these two cities to just over two hours through the most modern tunnels, flyovers, bypasses and viaducts. The super-highway draws gasps of astonishment. It is on par with best turnpikes around the world.

Similarly, a series of 40-odd flyovers constructed in record time and with minimum displacement have bought some crucial relief for Mumbai's roads that are groaning under the explosion of private automobiles. Both these projects were independently funded through the levy of toll and a cess on petrol and diesel.

Sinha was removed when he refused to accommodate the impossible demands of his political bosses, almost on the eve of the expressway's inauguration. But Maharashtra's loss was Andhra Pradesh's gain. Naidu quickly snapped him up and made him the Director General of the National Academy of Construction at Hyderabad (with the rank of Special Chief Secretary). A man whom even the West Bengal government was wooing to help with their infrastructure development.

The AP IDEA 2001 was born out of Sinha's efforts to remove the hurdles to infrastructure development in Andhra Pradesh. In fact, his success with the Mumbai-Pune Expressway and the flyovers is largely due to his ability to work with Nitin Gadkari to change to process of bidding, technology, payment procedures and incentives for early completion.

In Andhra Pradesh, Naidu's support allowed for a more ambitious plan - leading to the infrastructure-enabling legislation. For starters, the drafting of the legislation itself was outsourced to a law firm Nitish Desai Associates with consultancy inputs from the rating agency, CRISIL. This is a first for India.

The initial draft was thrown open for discussion with lending institutions, industrialists, consultants and others; reshaped to incorporate their concerns and finally approved by the state law ministry before it was ready to be passed.

The Act attempts to anticipate every contingency relating to infrastructure projects and their bidding process. It lays down precise rules for a variety of development models and concession agreements - the permissions that would be required, operating conditions and controls, payment modalities, penalties for lapses and abuse of development rights or pollution of the environment by developers.

The statute specifies how sole bids would be treated or how a limited response would be dealt with or consortium bids would be evaluated. The allocation of generic risks and their disclosure is laid down along with the facilities provided by government.

A conciliation board with precise proceedings for arbitration, settlement and judicial proceedings are spelt out. For the first time, the penalties specified under the Act for omissions and contraventions by developers are as high as Rs 10 million (Rs 1 crore) - although it is not clear to me why a finite limit on penalty has been prescribed instead of linking it to the size of the project and the nature of the offence.

And Infrastructure Authority has been created which will administer an Infrastructure Projects Fund established by the government. Nitish Desai, whose firm drafted AP IDEA 2001, says the Act ensures that a developer faces no nasty surprises after the project has begun.

All rules, clearances and permissions to be sought or complied with have to be disclosed upfront by the government, so that no transgressions can be imputed later or occur because nobody knew about the requirements in the first place.

Also, by making it an overriding statute, a serious attempt has been made to provide a genuine single window for all project clearances.

Once the Act was redrafted, Naidu wasted no time in activating it - it was first promulgated through an ordinance and later passed by the legislative assembly. If speed and transparency are the driving thoughts behind AP IDEA 2001, then it is surely working. The statute is itself making waves around the country.

According to Parimal Shah of Nitish Desai Associates, several states, including Rajastan, Punjab, Madhya Pradesh, Chhattisgarh and Maharashtra are working on similar legislation.

R C Sinha says that even the Union government is examining the possibility of introducing a central legislation on the lines of AP IDEA 2001.

Hopefully, Andhra Pradesh will lead the way for all of India to develop its infrastructure at an equally swift pace.

-- Sucheta Dalal