May 17, 2012, 10.45 AM | Source: CNBC-TV18

No policy paralysis, India is used to boom: Kamal Nath

One of India’s top policy makers and a man who can also be referred to as ‘Mr Infrastructure’, the minister for urban development, Kamal Nath believes the Indian industry has got used to the boom.

No policy paralysis, India is used to boom: Kamal Nath
One of India's top policy makers and a man who can also be referred to as 'Mr Infrastructure', the minister for urban development, Kamal Nath believes the Indian industry has got used to the boom.

In an interview with CNBC-TV18, Kamal Nath, union minister for urban development said, taking into consideration the fact that infrastructure is a huge sector, the government itself needs to go through a learning process. Therefore, the talks of policy paralysis or government inaction do not stand true for the minister of urban development.

Below is edited transcript of the interview on CNBC-TV18. Also watch the accompanying videos.

Q: This is your third ministership that you are holding in this government. You were earlier the minister of commerce, you pushed the SEZ concept with passion. If you had succeeded in achieving everything that you wanted to do, you would have possibly made India far more competitive than it is today.

As the minister of surface transport, you set out very challenging targets. Although, you may not have achieved them but at least, you gave us that direction and hopefully we will get somewhere near that in the future.

As minister of urban development are we seeing a bit of quietness in you? Is it because of general paralysis that affected this government or is it because this is a ministry that is an enabling ministry, where most of the work needs to be done by the states?

A: There is no silence because there is no paralysis either. What has happened is that the Indian industry has got used to a boom. Whenever the boom disappears, they say it is gloom. So, everybody got used to it, every sector got used to it.

For example, if you take the auto sector, they are used to 35% growth and they think that it is normal. When it comes to 25%, they say things are very bad. A similar thing has happened in the construction sector also. I don’t think there is any paralysis.

The point is that infrastructure is something which is very wide. Since the time we started this huge thrust on infrastructure, it has just been about 5 years. There is a lot of learning process in the government what do we do? What is the best model? What works, what flies, what government thinks is the best and which will stand to scrutiny, which will be fair and transparent, there is a lot of to learn for the government itself.

Q: Because we are really giving away national resources in a sense, we have got to be very careful?

A: Absolutely. You take any sector. You work on a model. It comes in for criticism. We are not only the largest democracy, we are the rowdiest democracy. And being the rowdiest democracy, everybody has a question and everybody has a point of view. That is in fact good, because it happens with a large amount of consensus and that consensus sometimes becomes slow.

But for the government it was a learning process five-six years ago when they understood what the best models are. For example, what are the best models, if you want to do ports or if you want to do mega power plants?

Q: You are now Urban Affairs Development Minister. It’s possibly one of the most interesting trends that is happening in the country. Today, we have about one-third of our population living in urban towns. Almost 64% of our GDP comes from urban areas. Soon that could go up to 600 million people living in urban areas.

But, the state of our urban areas is incredibly poor. Safe drinking water is available to less than half of urban India, sewage and sanitation available to less than a third. The task is enormous. What is holding it back? Is it policy? Is it money?

A: As I said that growth has preceded infrastructure in India. Just because growth is preceding all sectors, particularly in urban infrastructure, with that growth you find cities mushrooming. You find that we are looking at urbanization and not at suburbanization.

How do we have this in India unlike some other countries? You can't stop anybody from moving. All our physical and urban infrastructure has exceeded its carrying capacity. Because it’s exceeded its carrying capacity in terms of sewage, water. There are these ad hoc arrangements made, which are really in the first stage. Now, this is being planned.

We are planning with proper numbers and the idea of the government of India is to assist the state governments. In this reform, the Urban Renewal Mission funding which we do is based on certain reforms. It is contingent upon reforms the municipalities must make. That was the whole idea.

How do we induce municipalities and municipal corporations to undertake reforms? One of the reforms was you must have proper accounting. You must have IT enabled services. Another reform which was again mandatory was that you try and meet your O&M cost. Today, municipal corporations and municipalities can't meet their salaries and all their money is not for capital cost, it's for salaries. They can’t meet their O&M cost. We are trying to induce reform like this.

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