II. Approach of the Plan Committee
- The Tenth Plan of the State is being formulated in the context of severe financial difficulties faced by the State Government. The White Paper on the State's finances brought out by the State Government highlights, as no other official document has done in recent times, the extremely severe crisis engulfing the States's finances. An already difficult situation has got further worsened by the general economic slow down and the global recession triggered by the September 11th incidents in USA. Therefore any formulation of a Plan for the sectors covered by the Plan Committee, as indeed the whole Plan of the State, has necessarily to take into account these harsh realities while estimating the capability of the State to invest in projects and programmes, however desirable they appear to be.
- The terms of reference or the guidelines received by the Plan Committee do not contain any indication as to the likely availability of resources for the sectors covered by the Plan Committee or its inter sectoral distribution. The Heads of Departments of Government who have formulated their 10th Plan proposals have also not apparently been given any such outer limits of resource availability. The result, therefore is that the various working groups and the departments giving inputs to the working groups have come up with very ambitious programmes and projects. These have to be taken as a need-based Plan, divorced from resource availability. The following tables give the Plan allocation under different Plans of the sectors covered by the Plan Committee and the outlay proposed for Tenth Plan by the Working Groups ( Tables 1&2).
Table - 1
Sectoral Outlay - Plan-wise
(Rs. in lakhs)
Tourism Roads & Bridges Road Transport Ports & Harbours Inland Water Transport
Note 1. The percentage of outlay in the total plan outlay of the State is given in brackets
Table - 2
Outlays proposed by Working Groups
(Rs. in lakhs)
Sector Tourism Roads & Bridges Road Transport Ports & Harbours Inland Water Transport Other Transport Services
- The task of the Committee has been defined by its terms of reference and therefore no detailed exposition of the task is necessary. The importance of adequate infrastructure for the development of the economy is well known and needs no reiteration. Infrastructure is not only a derived demand arising from development programmes and projects but also is a catalyst which induces and promotes economic development.
- The infrastructure sector requires a lot of co-ordination among various agencies having a role in it. Central agencies like the Railways, National Highways, National Waterways, the Major Port of Cochin, Post & Telegraph & Telecommunications and Civil Aviation, all play a significant role in providing infrastructural facilities. All have their own regime for formulation of Tenth Plan schemes and these are under different stages of finalisation. While these proposals of the Central Agencies are not within the purview of the Plan Committee, we have taken note of such developments as are known and tried to integrate them with various State Department's proposals for the Tenth Plan.
- The Tenth Plan outlay recommended by the Plan Committee, consists of outlay on spill over schemes and on new schemes. Obviously priority needs to be given to the completion of spill over schemes. The desirability and feasibility of terminating some of the schemes under implementation in the Ninth Plan and which remain incomplete is one of the Terms of Reference of the Plan Committee as well as the Working Groups. But very few schemes have been identified by the Working Groups for such closure.
- With the constraints on resources which the State is facing, priority needs to be given to projects which will attract external assistance or private funding. At the same time a note of caution needs to be introduced as regards the feasibility of private funding for infrastructure development. Most infrastructure projects are capital intensive and also have long gestation periods. The pay back periods of such investments may not coincide with the period of the financing package available for private sector for such projects. It is perhaps for this reason that Government of India, through its National Highway Authority of India, is offering private entrepreneurs coming forward to take up road development projects, various incentives such as 40% grant on the capital cost of the project, land for right of way
acquired at the cost of Government etc. besides other concessions. The Plan Committee is of the view that while the departments should be encouraged to identify projects which will attract external assistance and private funding where private sector participation is sought in capital intensive and long gestation projects, the State Government should bring out a policy document spelling out clearly the facilities and incentives which State Government would offer to those coming forward to invest in infrastructure projects. The Plan Committee is also of the view that capital investment, while important, is not the be all and end all of the pre-requisites for development. It is possible to promote development or at least expedite the process by a series of measures involving little or no additional capital inputs. Some examples of such possibilities are promotion of tourism by a tourism friendly Abkari policy, removal of irritants to tourism promotion such as harassement by hawkers, beggers, unscrupulous taxis, removal of encroachments on roads, better traffic regulation thus increasing the road availability for road users, prevention of ribbon development on the margins of roads, appropriate changes in labour law etc. Above all, within the Government a lot can be done by introducing transparency in dealings, rooting out corruption, introducing single window facility for various Government clearances, entrusting execution of major projects to Empowered Committees which will be given full freedom to implement projects along with adequate resources and which also will be held accountable for the timely completion of the projects.
- The Plan Committee came across instances whereby Plan schemes are proposed for construction of office buildings. In one day's sittings itself we had two proposals, one from the Motor Vehicle Department and another from the Ports Department proposing office complexes in two places in Thiruvananthapuram city by the respective departments. Both departments have the requisite land in their possession. If the Government is serious about tapping private resources as an alternative to State funding, they should seriously explore the possibility of attracting private investment in the construction of office complexes required by the departments. Bids can be invited from the parties for constructing office complexes with Government offering to enter into a long term agreement to pay rent and bids can be settled on the basis of the rent per sq.ft. that is demanded by the tenderers. If Government desires to lower its rental cost they can also offer as part of the tender document a facility to the developer to develop additional space which he can use for his own purpose. There could be other variations also and the most cost-effective option can be chosen. In any case there seems to be need for a central agency within Government which will look into all proposals of building up captive office accommodation by various Government departments with a view to pooling their requirements and maximising the use of available land as well as the possibility of private sector participation in this area.
- Unpaid bills of construction contractors pending over long periods have snowballed into a serious problem by the closing of two years of the Ninth Plan. It is estimated that as on September 2001, the amount owed to PWD contractors alone is Rs 342.34 crores. This problem will affect construction programmes of all sectors across the board. These delays, apart from delaying the implementation of projects, also push up the cost of construction as fresh tenderers would no doubt factor in the cost of delays in payments. The Plan Committee is aware that the State Government is seized of the problem and has taken some steps to liquidate the arrears. Wherever time bound execution of the projects are required, guaranteed payment to contractors for work done need to be ensured without which serious cost and time escalations will ensue.
In the absence of indication about overall resource availability, the Plan Committee has not gone into pruning the schemes recommended by the various Working Groups to any great extent. The recommendation of the Working Groups essentially reflect the proposals of the various Government Departments and as mentioned earlier, they are a wish list without reference to resource availability. A number of projects included in this Report may not be capable of accommodation in the 10th Plan purely for lack of resources. Each Department should prioritise their programmes and once the resource availability and the inter sectoral distribution is known, they can prune their proposals appropriately, giving priority to those on which preliminary work such as project preparation etc. has been done and which can be completed during the 10th Plan.