Indian Infra: Untold Stories, Lost Lessons

I always do a double-take whenever I spot an article or new item on the Delhi-Mumbai Dedicated Freight Corridor (DFC).  Call it nostalgia, or just plain curiosity that comes from close association a few years ago.

I was working with JICA in the 2000s when this project was conceived, and when the proposal passed through the labyrinth of North Block before being taken up by the Japanese government. As a part of the numerous surveys and site visits that resulted in the master-plan, I worked with various consultants and traveled extensively - especially in Maharashtra and Gujarat.

One thing that had always puzzled me was the insistence from Indian Railways that the dedicated freight line be "double stack" and "electrical traction". This meant that the engineers and planners had to work on Star Trek mode - to 'go where no man had gone before'. Such a combination had never been implemented successfully anywhere. Getting the electrified pantographs over and above the height of double-stacked containers, and then to get these trains to run reasonably fast across the baked scrublands of Rajasthan, seemed particularly difficult.

Another clear challenge was to get the freight lines through the super densely populated areas of Mumbai, to the JNPT Port.

After 2009, I had lost touch with this project since not much was coming into the public domain by way of news. I did read that the Japanese had - very strategically - limited their ODA involvement to the Western Corridor, and that too from Rewari to Vadodara, instead of going all the way till Mumbai. The Eastern Corridor was subsequently taken up by the World Bank.

Cut to 27 Feb., 2017, to a symposium organised the Centre for Policy Research (CPR) and the Embassy of Japan on "Quality Infrastructure: Japanese Investment in India". At this event, I was quite surprised to hear Mr. Amitabh Kant (now CEO, NITI Aayog) say that five new cities would be commissioned by 2018, along the DFC.

Was this my own Rip Van Winkle moment? What had I missed? Was the Industrial Corridor coming up faster than the freight corridor that supported it? How was this great development being ignored by our hyperactive media?

A subsequent presentation confirmed a long-held opinion that the focus of the Indian media remains firmly on negative reporting. Good news is no news.

Mr. Anil Kumar Dutta (MD, DFC 2014-15) spoke of the close coordination with state government that had resulted in smooth transfer of land to DFC. He talked of 'bombshells' that had been defused during his tenure. One had come from the environment ministry (MoEF) demanding that the route alignment be shifted 140km to save the Balaram Ambaji Wildlife Sanctuary on the Gujarat-Rajasthan border. Another one from the Archaeological Survey of India (ASI) that had objected to the use of a piece of land in the Rewari for the main rail-yard because it had traces of a Harappan settlement dating back to 3000+ years.

Contrary to popular notions about both MoEF and ASI, Mr. Dutta declared that they were "most cooperative...all you must do is to listen - and take action - on their concerns!"

In the case of the suspected Harappan settlement, the discussions had yielded a time-bound, pragmatic solution. DFC hired the services of IIT Kanpur and had the whole rail-yard zone scanned with special ground penetrating radars. A small portion was found to contain ancient remains and  ASI had agreed to go as deep as required to extract all the material it needed. Once this was done, all the clearances were promptly given.

This symposium had quite a number of takeaways. Clearly, we seem to be hiring the right people for the right jobs and they seem to be doing great work, far away from the glare of the Indian media.

Unfortunately, it is also clear that we continue to be pathetic when it comes to documenting lessons learnt from mega projects like the Dedicated Freight Corridor. Great lessons learnt by JICA, DFC and DFCCIL remain locked in project reports, and in the minds of the pragmatic people who cut the proverbial Gordian knot, and then moved on nonchalantly to the next task at hand, or just faded into retirement.

If the lessons we learn are not shared in the public domain, the task of pioneers in other sectors are bound to become so much more difficult.

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LINKS & REFERENCES

* DFCCIL - http://dfccil.gov.in/dfccil_app/Home
* Axis Capital PPT (Jan., 2016) - http://www.indianrailways.gov.in/Railways%20report%20-%208%20Jan%202016.pdf
* Balaram Ambaji Wildlife Sanctuary - https://forests.gujarat.gov.in/balaram-sanctuary.htm
* (2012) - http://www.financialexpress.com/archive/environmental-issues-may-delay-rail-freight-corridors/1030135/
* (2013) - DFCCIL PPT by R.K. Gupta -- http://www.i-cema.in/past_event/DFCC-Project-Status-Opportunities.pdf
* Nippon Koei India - http://www.nkindia.in/transportation.html

Two-in-One: A Borrower & A Lender

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Last March, we had wondered about the quantum of Chinese ODA and come across an intresting paradox -- even while continuing to receive concessional lending from multilateral institutions, China itself had become a big lender & ODA player, globally.

At the time, the actual volume of lending was not revealed even by visiting Chinese academics, but now, the Financial Times has come up with some dramatic figures. According to its `China Special` report published yesterday, `China Development Bank and China Export-Import Bank signed loans of at least $110bn (£70bn) to other developing country governments and companies in 2009 and 2010, according to Financial Times research. The equivalent arms of the World Bank made loan commitments of $100.3bn from mid-2008 to mid-2010`.

If one assumes that the `equivalent arms of WB` here refers to IBRD and IDA, it would be interesting to know what the bank thinks of its customer who is a bigger lender!

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LINKS

• China`s Lending Hits New Heights (FT 17 Jan., 2011) http://www.ft.com/cms/s/0/488c60f4-2281-11e0-b6a2-00144feab49a.html#axzz1BXYaHP4s
• A Strategy to Straddle the Planet (FT 17 Jan, 2011) - http://www.ft.com/cms/s/0/b852a826-2272-11e0-b6a2-00144feab49a,dwp_uuid=9c33700c-4c86-11da-89df-0000779e2340.html#axzz1BXYaHP4s
  (Excerpt - One Indian executive reflects that his country ships plastic pellets to China that are then made into buckets. If India cannot even make plastic buckets competitively, he implies, its battle will be tough.)

China`s Official Development Assistance

Q - How much is China spending in terms of `development aid` to Asia, Africa and Latin America?

A - Nobody knows – except the Chinese politburo.

If there is one million (or billion) dollar question that worries the Bretton-Woods Institutions (IMF, WB, UN), this must be it. Worrying, because nobody except the Chinese bureaucracy really knows how much money is really going towards propping up unstable regimes in Africa; how much aid is tied to extraction of oil & minerals for the Chinese market, and how much aid is actually going for building institutions and teaching poor countries `how to fish`.

Over the past half-century, development aid had become a cozy little game for politicians in the `developed` world. Set aside a small portion of the national budget for 'helping poor countries', get them to sanction projects in sectors where your own companies are competent; ‘persuade’ them to sanction projects and contracts to these companies, and everybody does home feeling happy – except, of course, the bewildered poor in the recipient countries.

Now, when the so-called ‘developing countries’ try to play the same game, they are called `neo-colonists`.

Last month (22 Feb.), we had a rare opportunity to interact with Prof. Jiang Shixue from the Chinese Academy of Social Sciences at a workshop titled, Comparative research of Chinese International Assistance to Asia, Africa and Latin America.

Here are some Q& A’s from the session:

Why is China so secretive about its aid programs?

There are two reasons for this - first of all, China continues to be a recipient of foreign aid so, for the time being, it wants to play down the numbers and keep an low profile. Secondly, it wants to avoid competitive comparison between its aid-recipients, and the diplomatic tussles that might follow.

What are the forms of Chinese Aid?

Grant Aid (free lunch), Zero or low-interest loans, technical assistance, training (over 100,000 trainees at present), disaster relief, debt relief (374 packages for 49 countries in 2007), medical aid (20,000 doctors in 65 countries), language-courses in Confucius Institutes (200 teachers in 10 countries)

According to the Chinese Ministry of Commerce (2008), over 2000 projects are being implemented in 160 countries worldwide.

What are the principles underlying China’s aid programmes? 

• Since 1964, Eight Principles underlie Chinese assitance to other countries - mutual benefit, no political pre-conditions, equal treatment for loal & Chinese experts, supply of quality equipment, etc.,
• From the 1980 onwards there have been some additions and amendments - there are fewer large-scale projects; Africa focus (Mao - `China was carried to UN on the back of African countries); emphasis on ‘south-south’ cooperation and in `teaching how to fish` (capacity building) rather than ‘gifting fishes’ (grant-aid)
• Countering Taiwan – Opposing Taiwan`s `dollar diplomacy` - especially in Africa and Latin America (12 or 24 countries which recognize Taiwan are in South America). Eg – In an African country China preempted Taiwan by providing ‘aid-money’ for paying salary for army personnel and a raise for its bureaucrats.
• Avoiding `Slapping own face to look fat` - avoid harming oneself by giving aid to other countries
• Not feeding the `white-eyed wolves` (reference to Vietnam which allegedly used Chinese armaments against the Chinese themselves!)

Landmark Projects?

• Public buildings in Barbados (GDP percap $12,000)
• National stadium in Bahamas (GDP pc $24000) with a capacity to seat 30,000 people (1/10 total population)
• Africa – The Tanzania-Zambia railway built using 56,000 Chinese technicians of whom 70 died.

The presentations and discussions that followed were unfortunately clouded by the mix-up between FDI and ODA.

Prof. Seifudein Adem (Binghamton Univ), in his paper, `China`s dual diplomacy in Africa and its consequences: Preliminary Assessment`, alleged that Chinese aid for the ICT sector is used by Zimbabwe to suppress information. He also noted that China is only No.4 in terms of FDI to Africa (After Singapore, India and Malaysia), and that only 3% of Chinese FDI goes to Africa - as opposed to 37% to Latin America. He pointed out that Africa suffers a huge infrastructure deficit (needs $22b) so any Chinese input gets magnified. In 2006, China provided $7b to Africa (France $11b)

Dr. Claude Sumata (University of Sussex), presented a paper titled, ‘The Challenges of Chinese-DRC Economic Cooperation: Is it a win-win partnership?`. He noted that in the Democratic Republic of Congo – one of the biggest recipients of Chinese aid - between 1980-1990 the GDP climbed by an average of 1.2% a year; from 1990-1994, it has been declining at the rate of 9.5% a year. Chinese FDI goes mainly to extractive sectors - oil and mining (Eg. In 2007, a JV Socomin signed a deal for 10mT of copper & cobalt)

At the end of the day it is the numbers that speak for themselves. China has the largest foreign exchange reserves in the world - over $ 2 trillion. A fraction of this - $ 763 billion -  is deposited with the US Treasury, and helps in propping up the budget deficit in the American economy. 

So perhaps it is only logical for the Chinese to spread around the excess cash to butress their own safety and security in a world where the only certainty is that the dominance of WW2 victors' is on the wane.

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LINKS & REFERENCES 

• Yao Yang participates in The Economist debate on China´s presence in Africa, Peking University - http://en.ccer.edu.cn/ReadNews.asp?NewsID=6799
• Economist Debates - China & Africa (18 Feb 2010) - http://www.economist.com/debate/days/view/468
• Bloomberg - China's Forex Reserves Exceed $2 Trillion (20 March 2007) - http://www.bloomberg.com/apps/news?pid=20601087&sid=alZgI4B1lt3s 

IN THE NEWS

• MPs clash over British aid to China (The Guardian, 12 March 2009) - http://www.guardian.co.uk/politics/2009/mar/12/mps-clash-over-uk-aid-to-china

Japanese ODA and India

The concept of Development Assistance has it roots in the aftermath of the Second World War, when USA poured in billions of dollars into Europe and Japan, for rebuilding shattered economies, and for creating friends and allies in a bipolar world.

As soon as the economies recovered, countries at the top of the heap formed the Organization for Economic Cooperation and Development (OECD) they, among other things, committed themselves to a certain level of assistance to the underdeveloped world – this was called the Official Development Assistance (ODA).

OECD has 30 full-time members, of which, 24 are classified as “high-income” countries. Within OECD, the Development Assistance Committee (DAC) sets the guidelines for ODA. Japan has been a member of DAC since 1961.

The objective of Japan’s ODA is “to contribute to peace and development of the international community, and thereby to help Japan’s own security and prosperity”. Since there is no pretence to altruism, during the past few years, stagnation of Japanese economy has resulted in a steady decline in its ODA. In 2004, the dip was 6.5%.

Two arms of the Japanese Ministry of Foreign Affairs (MoFA) implement ODA project – Japan Bank for International Cooperation (JBIC – yen loans) and Japan International Cooperation Agency (JICA – technical coop, grant aid). Both these agencies are set to merge under the JICA umbrella, by 2008.

Japan’s total ODA in 2003-04 was Yen 963 billion ($ 8.9b), about 0.19% of Gross National Income. Of this, India received $ 704 million and stood 5th among the top ten recipients. China topped the list at $1.4 billion.

India absorbs a little over 9% of Japanese ODA and its outstanding liabilities is Yen 1166.3 billion, as on March 2004 (Rs. 46,640 Crores / US$ 10 billion).

The OECD figure of $ 704 million to India translates in to about Rs. 3000 Crores. However, the “MoFA White Paper 2004” puts the total disbursement at $325.79 billion (~Rs. 1400 Cr). Where did this money go? – Mostly into Yen Loans (93.5%), and the rest into technical cooperation (5%) and grand aid (0.7%).

Over the past two years, there has been a steady increase of yen loans to India. In 2005, nine loan agreements were signed for Rs. 5200 Cr. ($1.15b). In 2006 10 ODA loan agreements increased to Yen 155.458 billion (Rs. 5910 cr; $ 1.3b) – a record hike of about 15%.

The yen loans come at a rate of interest (RoI) of 1.3% per annum (30 years payback) for general projects, and at 0.75% RoI for environment sector projects (40 years).

Currently 28 projects are being implemented in India, which includes major initiatives such as - Delhi metro, Vizag port expansion, improvement of Bangalore water supply & Severage (Rs.1078 cr), Bangalore metro (Rs. 1699 cr), cleaning of Hussain Sagar lake in Hyderabad (Rs. 294 cr), and a project for waste management in Kolkata.
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For more information, pls see - Yen Loan Projects in India (16 Sep., 2008) -  http://dinakarr.blogspot.com/2008/09/yen-loan-projects-in-india.html
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References:

Japan - Aid At A Glance Chart
http://www.oecd.org/dataoecd/42/5/1860382.gif

Organization for Economic Cooperation & Development (OECD)
http://www.oecd.org/about/0,2337,en_2649_201185_1_1_1_1_1,00.html

Ministry of Foreign Affairs (MOFA), Japan
http://www.infojapan.org/