Matthews Asia Weekly
Technology and Transparency
Week of July 03, 2015
Lack of quality infrastructure in India has been a significant bottleneck in the country’s growth. It results in significantly high logistics costs and hampers manufacturing competitiveness. Until the mid-2000s, India spent about 3% to 5% of its GDP on infrastructure each year. That picked up significantly due to private participation before tailing off again in recent years. There has been vocal dissatisfaction over this lack of progress on many projects, and rightly so. Over the last five years various reasons have been given for the delay in progress of these projects, including lack of regulatory clarity on such sensitive topics as land acquisition. This is precisely the area in which some recent data caught my attention.
About 10 years ago, India passed a valuable Right to Information Act (RTI) that allows its citizens to request information from the government. Recently, an activist who obtained government data via an RTI request concluded that, contrary to conventional wisdom, less than 15% of the projects (by value) are stalled because of land-related controversies. Many projects are actually mired in the approval process due to issues with regulatory clearance, unavailability of raw materials, and such factors as fuel supply problems.
Fortunately, a government group set up to help coordinate various stalled infrastructure projects, the Project Monitoring Group (PMG), has been making progress. Last year in Delhi, I met Anil Swarup, who at the time was head of PMG. Perhaps indicative of his penchant for organizing things digitally, his desk was quite notably clutter-free (save for a computer and perhaps a pen) and quite contrary to the typical Indian bureaucrat’s office. While his group had neither control over finances nor any regulatory authority, it nonetheless was making a huge impact in a unique way by publishing online every project that was greater than approximately US$150 million. Swarup believes that the Indian public has the right to see progress updates and know why projects have met obstacles. He has traveled every Monday and Friday to a different state to coordinate, mediate and increase transparency on different projects, and was focused on “facilitating dialogue between adversaries rather than blunting them,” as he put it. In this way, he sought to harness available technology to create better efficiencies through transparency on the group’s website, the Online Project Management System.
In mid-2013, there were 435 projects (worth approximately US$350 billion) that were stalled in the system—a significant number given India’s GDP of about US$2,000 billion. I was initially skeptical of the broader impact of Swarup’s actions, but over time we have seen similar initiatives to increase transparency on projects via electronic platforms taken up by many state governments. When I met Swarup in August 2014, he mentioned that about 156 projects worth about US$100 billion had been cleared as part of the his group’s efforts. No doubt there’s still more to be done but the increased transparency and resulting progress is cause for optimism.
Swarup has since been appointed to handle different challenges as India’s Coal Secretary. The country’s coal production growth has been anemic for a long time, forcing downstream industries to run at lower utilization levels and leading companies to buy coal from abroad. With Swarup at the helm, employing his efficiency programs, India is already beginning to see some improvement in coal production. Those who want to know more about progress in Indian coal production or anything else that may be top of mind for Swarup, don’t need to look much further than his active Twitter feed.
The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Matthews does not accept any liability for losses either direct or consequential caused by the use of this information. Investing in small- and mid-size companies is more risky than investing in large companies as they may be more volatile and less liquid than large companies.