A sound infrastructural foundation is the key to the overall socio-economic development of a State. This acts as a magnet for attracting additional investment into a State and thus provides a competitive edge to it over other States. Availability of adequate and efficient infrastructural set up not only promotes rapid industrialization, but also improves the quality of life of the people of the State. This sector includes railways, roadways, ports, aviation, power, telecommunication, etc. All such services, by connecting the State with other parts of the country and world, ensure the progress and growth of the whole nation.

Until recently, the State Governments had been creating infrastructural facilities in their respective States out of their own budgetary resources, supplemented with some assistance from other Governmental and international agencies. But with the opening up of economy and the resulting increase in competition (both domestic and abroad), there has been a depletion in the resources available for infrastructure development and maintenance. Hence, the State Governments have been making all efforts for attracting capital inflows into the infrastructure sector. The most important step in this direction has been the initiation of 'Public Private Partnership (PPP)' programme. PPP refers to a long-term contractual partnership between the public and private sector agencies, specifically targeted towards financing, designing, implementing and operating infrastructure facilities and services in the State. These PPPs aim to achieve the twin objectives of high growth and equity on a sustainable basis.

The State Governments have identified a whole range of sectors for public-private partnership, including roads/highways, tourism, industrial infrastructure, shipping, etc. Some of the key infrastructure initiatives undertaken by the States using PPPs are:-

• Karnataka:- The major PPP project under implementation in the State is the 'Bangalore International Airport'. This is the first airport in the country being executed through the PPP route. The airport is being developed through a joint venture of the Airports Authority of India (AAI), Karnataka State Industrial  Investment and Development Corporation Ltd. (KSIIDC) and private promoters (Siemens, Zurich Airport, Larsen & Toubro). Some of the other such projects are the Hassan–Mangalore Rail Line for Rs 310 crore (completed); the elevated expressway to E-City (Rs 600 crore, under construction); etc.



• Andhra Pradesh:- The major PPP project in the State is the 'Hyderabad International Airport', being executed under the build own operate (BOO) format. The other such projects are the Kakinada Deep Water Port, being developed on the operate- maintain- share-and-transfer (OMST) format; the Gangavaram Port, in the build own operate and transfer (BOOT) mode; FAB City; Hyderabad Outer Ring Road; Kakinada SEZ; Integrated Township and Convention Center; Jawaharlal Nehru Pharma City; Hyderabad Integrated Trade and Exposition Center; Hitec City and several knowledge, IT and biotechnology parks.



• West Bengal:- The major PPP initiatives in the State are the Salt Lake City Center and the Hiland Residential Project (under joint venture). The other proposed PPP projects include four-laning of Kalyani–Dum Dum Expressway; Water Park-cum-Entertainment Center along the Eastern Metropolitan Bypass; as well as transport, residential, commercial and entertainment/leisure infrastructure at Asansol, Howrah, Durgapur and Kolkata. Besides, the housing projects coming up on the outskirts of Kolkata City are a good example of PPP model in terms of delivering quality housing.



• Kerala:- The major PPP initiatives under way in the State are the 'Trivandrum City road improvement project' and the 'Vizhinjam International Container Transshipment project'. The former encompasses ten city road corridors and three National Highway bypasses of around 42 km as well as one underpass and two flyovers at junctions of strategic importance. The project is being implemented under build-operate-transfer (BOT) scheme on an annuity basis and its total cost is estimated at Rs 145 crore. While, the latter has been planned as a futuristic port facility which, upon completion, would be able to handle 4.1 million containers of twenty-foot equivalent units (TEUs) and vessels of the order of 12,000 TEU size with a total berth length of 2860 meters.



• Madhya Pradesh:- The State is a pioneer in PPP projects in the road sector. It has developed 1500 km roads under BOT. Other sectors with PPPs are water supply, city bypass, mobile medical units, bus stands, etc. The major PPP projects are the Dewas town bypass; Dewas industrial water supply project; mobile medical units and special economic zone (SEZ).



• Gujarat:- The concept of PPP was introduced in the State in the early 1990s, when the Gujarat Maritime Board commenced construction of the Pipavav port. Since then (as per the available information), twenty-one projects amounting to Rs 13,672.50 crore have been implemented through private sector participation. The State has proposed several projects under Viability Gap Funding (VGF) scheme, namely, Ahmedabad Bus Rapid Transit system; Rajkot–Jamnagar–Vadinar Road; Ahmedabad Convention Center; Dahej SEZ; Four-laning of Halol–Godhra–Shamlaji Road and Ahmedabad– Viramgam Road; etc.

For all such PPP projects, the State Governments have identified a well-defined regulatory framework. It includes enactment of legislations for clearly defining the types of infrastructure facilities, the governing authorities, the procedural requirements and the scope of private sector in execution of these projects. For example, States like Andhra Pradesh have enacted an Infrastructure Authority Act, which aims to facilitate private developers in securing the mandatory administrative approvals and lays down the provisions for arbitration and fiscal regulation. It covers all the infrastructure sectors in the State.

Infrastructure policy

Many State Governments have framed an infrastructure policy with the aim of adopting a co-ordinated and integrated approach towards infrastructure development. The policy spells out specific incentives and concessions for infrastructure projects, including upgradation of the existing facilities as well as encouraging private investments in the sector. It also provides guidelines for a speedy procedural set up and a transparent administrative support. For instance:-

• The infrastructure policy for the State of Karnataka aims to expand, broaden and deepen private investment in infrastructure as well as establish Karnataka as a role model for infrastructure development in the country. It applies to township development, waste management, tourism, energy, industrial infrastructure, agricultural infrastructure, education, healthcare, etc.



• The infrastructure policy for the State of Orissa provides a roadmap for attracting private participation in the infrastructure sector by identifying new projects and inter-sectoral linkages; deciding on the form / extent of Government support; prescribing datelines for clearances and rules; etc.

At the same time, several State Governments have framed separate policies for the individual infrastructural units. These include power policy, road policy, port policy, transport policy, telecom policy, etc. These policies aim to promote competition, foster a suitable regulatory and institutional framework as well as protect the interests of consumers in the concerned sector. For instance:-

• Power policies have been announced with a view to promote rapid development of the power sector in the respective States. Generally, their objective is to:-



1. Build adequate capacities in generation, transmission and distribution of power through efficient and cost effective means



2. Achieve optimum utilization of existing equipments through renovation and modernisation



3. Rationalize the tariff structure to ensure reasonable rate of return to power utilities



4. Improve delivery of services and efficiency through technical, managerial and administrative restructuring of the utilities



5. Conserve energy through efficient utilization and demand management; etc.



• Port policies have been framed for the development of ports in the respective States. The objectives underlying such policies are to:-
  
  
1. Increase the State's share in the national and international trade and commerce



2. Decongest the overall burden on existing ports in the State and thus cater to the needs of increasing traffic



3. Encourage ship building, ship repairing and other such facilities



4. Attract private sector investment in the existing and new port locations; etc.

Infrastructural development corporations

State Governments have also established several agencies which look after the development and maintenance of infrastructural facilities in the particular State. They have been set up with the objective of facilitating higher flow of funds into the infrastructure sector; encouraging private sector participation; removing all the procedural bottlenecks and thus increasing the pace of implementation of infrastructure projects. For instance:-

• Andhra Pradesh Industrial Infrastructure Corporation Ltd is the premier organisation in the State of Andhra Pradesh, vested with the objective of providing industrial infrastructure through the development of industrial areas. It is the principle facilitator in mega projects like Special Economic Zone, Visakha Industrial Water Supply, Gangavaram Port, Convention Centre, Mega Industrial Parks at Parawada and Pashamylaram Financial District Hardware Park at Hyderabad. It is the nodal agency for Government sponsored schemes like growth centres, export promotion industrial parks and integrated infrastructure development centres.



• Haryana State Industrial and Infrastructure Development Corporation Limited (HSIIDC) has been set up by the Government of Haryana as an institutional entrepreneur and a financial institution for promoting and accelerating the pace of industrialisation in the State, including infrastructural development.



• Gujarat Infrastructure Development Board (GIDB) has been set up by the Government of Gujarat to increase the flow of capital into the infrastructure sector; to ensure coordination among various Government agencies as well as to bring in private sector participation in the State. It identifies and prepares infrastructure projects; conducts feasibility studies; recommends risk-sharing mechanisms and monitors the progress of such projects.



• Maharashtra State Road Development Corporation Ltd has been set up by the Government of Maharashtra for accelerating the development of transport infrastructure facilities in the State by overseeing the completion of existing and new projects, with the active participation of the private sector.



• Punjab Infrastructure Development Board has been set up by the Government of Punjab as an apex body responsible for overall planning of infrastructure sector, including implementation of projects and formulation of policies, etc.

Thus, each State has been taking several steps for upgrading and enhancing its strengths in terms of infrastructural facilities. This in turn will attract more and more investors into the State and help in sustaining the competitiveness of the Indian economy on the global platform.

For more details visit our Section on 'Investment Opportunities and Incentives'

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