Indian Infrastructure – Corruption and Employment
A Hobson Choice
Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development. For the Indian economy Infrastructure sector is a key driver. The sector is highly responsible for pushing India ’s overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world-class infrastructure in the country. India ranked 44th out of 167 countries in WB Logistics Performance Index in 2018. India has a potential of investment worth Rs 50 trillion (US$ 777.73 billion) in infrastructure by 2022. India is getting significant interest from international investors in the infrastructure sector. The Government of India is expected to invest highly in the infrastructure sector, main highways, renewable energy, and urban transport.
India’s national highway network is poised to cover 50,000 kilometers by 2019. National highway construction in India has increased by 20% year-on-year in 2017-18. India has been the fastest-growing major economy in the world for the most part of the last few years. Foreign direct investment (FDI) in India increased by 2.5 times from $24.3 billion in 2013-14 to $60.1 billion in 2016-17. It is worthwhile to mention that the private sector is emerging as a key player across various infrastructure segments, ranging from roads and communications to power generation and distribution and Airports.
Now the big question arises why every government gives massive priority to infrastructure, 4 reasons can be cited here;
- The infrastructure projects are difficult to monitor progress wise and quality wise.
- These are having enormous sizes, both financially and geographically.
- There is enough scope of employment generation.
- It boosts up the economy.
Interestingly these factors are having the other side of coin equally dirty in the form of corruption. All these big infra companies are either directly run by politicians or indirectly by their kith, kin, relatives or their reliable friends and acquaintances. The present infra companies if are dig a bit, 90% chances are that these firms have been and are digesting the politicians’ ill-gotten wealth in a legal way. The army of Chartered Accountants is employed to provide the legality to their investment which has made the career of Chartered Accountant as the most sought after and a lucrative profession. The details of this shady deals shall be covered in some different blog which shall also cover the role of lawyers and advocate who are kept in ready condition to fight these cases if unfortunately, some leakages enter in the public domain and in various courts.
For monitoring progress and quality, a trend has started to shift the responsibility from Government organization to PMC (Project Management Consultants) who are themselves reporting to the same Government organization as a subservient to the client which employed them. Now the cycle of corruption is complete with no responsibility and that too brazenly.
These projects are ballooned by increasing their sizes financially to maximize the commissions to officers and subscriptions to the political parties especially to the party in power. The infrastructure projects in far-flung areas are preferred to avoid their doings from public, press, media and agencies gaze.
The major advantages of infrastructure development in India are governed by the huge demand as it has a requirement of investment worth Rs 50 trillion (US$ 777.73 billion) in infrastructure by 2022 to have sustainable development in the country. The total allocation for infrastructure in the Budget of 2017-18 stands at US$ 61.48 billion and the major sectors covered are Railways and Metro Rail, Construction, Telecom and Energy, Roads and Airport. This has the potential for catapulting India to the third largest construction market globally. The sector is expected to contribute 15 percent to the Indian economy by 2030. The recent policy reforms such as the Real Estate Act, GST, REITs, steps to reduce approval delays etc. are only going to strengthen the real estate and construction sector.
Please observe the gaping holes in the above Para. Is the demand real or jacked up artificially to maximize the gains in the form of black money it generates. For example in the case of 12 lane/16 lane highway through the villages on which boundaries are fenced and there is not even a single scope for Bullock carts. These highways are used by high-speed Audis, Jaguars, Lamborghinis, and Mercedes which are mostly driven by spoilt and drunkard children of wealthy and politician families.
It is widely accepted that investments in infrastructure can lead to direct and indirect jobs, and usually have spillover effects into other economic opportunities. However, the anticipated benefits of these investments are not always fully realized, or sometimes they happen much later. The social sector is important for ensuring a productive workforce. Job creation will also happen in education and health other than agriculture and industry. In a big new initiative, the government said it would introduce health insurance for 500 million Indians under the National Health Protection Scheme. Under the scheme, 100 million vulnerable families will be provided health insurance cover up to Rs 500,000 a year.
However, economic progress has not seen a commensurate reduction in corruption. In a survey released in March by Transparency International, among 16 countries of the Asia-Pacific region, India has the highest bribery rate of 69%. Corruption is a multifaceted phenomenon which makes it difficult to have a single definition.
However, every Government tries to control the corruption at least by declarations and statements especially the present NDA government has started a war against corruption at least at lower levels and in some Infra sectors. For example, the realty sector, every property sale or purchase linking to Aadhar card whereby a click of mouse, how many properties is held by any individual, can be found easily. The result is a sudden drop in demand of properties and reality infra firms crashed on the floor. Therefore the lesson is either let black money holders absorb their black money in properties or else this sector will be doomed. In another example, the GST provision dried up the business profits of some sectors who are getting closed. Either let them loot the Government and people or else they shall close their shops. However, unless anti-corruption institutions are strengthened and supporting infrastructure put in place, e.g. e-governance, skilled manpower, simplified procedures to reduce discretionary powers of the bureaucrats, etc., an increase in income alone would not help much in the reduction of corruption. Unfortunately, the govt effort to stop the corruption runs large only on Government employees.
In addition to development and additions in the economy, the main attractions are job creations which give greater satisfaction to the society and contains the hopelessness from Youth which constitutes about 40% of Indian population. Right from 1947, all successive Indian government have been promising jobs for youth but could not be successful in spite of honest efforts. There must be certain reasons especially in Infrastructure sector which is being given the highest priority.
The reasons are very simple. The Infrastructure sector dictates to the governments that they should be given free hand in looting the society, government and country then they shall be able to create jobs. Their demands are not without basis since they themselves have to grease the palms of politicians in a personal capacity and has to contribute to the party coffers. This may not be possible until they are given full opportunity to loot the country but these steps no doubt creates the job but in the long run damage the country and social fabric. If this is not possible and the Government tries to stop corruption, then they shall close the company and so many Youths shall be unemployed. Sometimes Governments comes under their threat and backtrack their steps to stop the corruption.
So the threats from Infrastructure companies are real to the point that the Government understands it in the fear that not only new jobs shall not be created but also old jobs shall be lost. Certainly, the Infrastructure companies are presenting a Hobson’s choice and that is either you allow us to be corrupt or face the electorate in the face of rising unemployment. This Hobson’s choice shall be before Government but tomorrow it shall present the same dilemma before Indian people, Indian society and the future security of this our own Country, India.