Great public works require great leadership from public figures to bring them to fruition.
In the 1950s, the US famously found its champion in President Dwight Eisenhower, who signed into law what is still the largest-ever public works project the country has seen: the 46,000 mile Interstate Highway System. Its construction enabled an unprecedented era of economic prosperity and growth, similar to what the great imperial roads gave to ancient Rome, or the Panama Canal to the state of Panama.
In seeking to identify the Infrastructure Investor Minister of the Year 2009, we were looking for a senior government figure with the vision, passion and ambition to do something similar for his or her country today. After intense deliberation, and having consulted with infrastructure insiders around the world, we decided to bestow the accolade on Kamal Nath, India’s newly-installed Minister for Road Transport and Highways.
Nath cannot point to an achievement matching Eisenhower’s – at the moment, no serving minister, in any country can. But Nath is the recipient of this award because of the promise he is showing as a potential enabler of a workable solution to the infrastructure challenge facing India.
That challenge is oft-cited and well documented: according to official estimates, the country faces a need of nearly $500 billion of new investment in its infrastructure to maintain its targeted 9 percent GDP growth per year from 2007 to 2012. To help finance it, the country will need to spend 1.5 percent to
2 percent of its GDP annually, according to the Indian Planning Commission. Plenty of additional funding will have to come from private sources. The upgrading of the country’s transport infrastructure is therefore pivotal.
Until recently, however, it wasn’t clear how the work required to make this immense investment programme a reality would get done. With Nath’s arrival on the transportation scene, the lack of clarity has been markedly reduced.
Nath stepped over from the Ministry of Commerce, where he had won praise for his effort to promote Foreign Direct Investment into India, to the Ministry of Road Transport and Highways after the emphatic re-election success of the United Progressive Alliance, the Congress-led coalition, in this May’s national elections. Returning Prime Minister, Dr. Manmohan Singh, was quick to make a number of key appointments, and Nath’s move to Road Transport and Highways, although surprising some, was one of these. Since then, Nath has repeatedly and emphatically set out his ideas for India’s future building projects to audiences around the world.
“How do you create greater economic activity across the country in all parts, rural and urban, economic activity which encompasses industry, trade, agriculture?” he has asked. His answer is one word: “Roads.”
In a recent speech at French Business School INSEAD, he said: “The last decade was the decade of [information technology], of the knowledge economy. [In t]he next decade, the story of India has to be the story of infrastructure.”
This message has become part of Nath’s stump speech, which he has given in India, other parts of Asia and also Europe. As part of an ambitious road show to drum up investor interest in India’s ground transportation system, a visit to Washington to present to the US government is also planned.
The scale of Nath’s ambition can only be described as grand: he has said he wants to build no fewer than 7,000 kilometers of world-class roadway in India per year – about 20 kilometers per day – to enable “not just connectivity, but economic stimulus”.
To build the roads, he is eagerly inviting the participation of the private sector. Of the $70 billion of investment in the country’s roads Nath wants to accomplish in the next three to four years, he expects $40 billion to come from private sources. He’s confident this can be done: “The least difficult should be financing because there is a model, there is a market”, he has said.
Making all this happen is a big personal challenge, but Nath seems unfazed. He often smiles as he explains the plan to investors and the public, and his delivery will often be a powerful blend of rhetoric and passion akin to Pennsylvania Governor Ed Randell.
Can he deliver?
We think he can. As a veteran of Indian politics, Nath brings to his post pragmatism as well as a deep understanding of the tasks facing India in general and the roads programme in particular. At INSEAD, confronted by a naysayer who asked whether Nath wasn’t in fact talking about something well beyond the realms of feasibility, Nath accepted that there were big hurdles to be cleared, with land acquisition the most difficult of many challenges. To tackle it, the minister has vowed to secure 80 percent of all the land needed for a road project before inviting the private sector to bid on it.
Also, because he knows that capital follows certainty, Nath has committed the government to reviewing India’s model concession agreement that will be used for road investment so that it can be made more investor-friendly. “It’s a very large capacity-building exercise,” he told the INSEAD sceptic. “I hope it works,” the man replied.
So do millions of people in a country buzzing with expectation that the new government will deliver on the many tasks India needs to get done if the economic success story of the past decade is to continue. With Nath in charge of road transportation, one of these tasks looks in capable hands. And if he gets it right, favourable comparisons with past heroes of infrastructure could be part of the reward.
* In choosing to name this award the Infrastructure Investor Minister of the Year we have deliberately kept the definition broad. Although a growing number of governments have eponymous infrastructure ministers we want to be able to recognise any senior government figure from any ministry who we think is making the most impact on their country's infrastructure development.