DELHI: The government plans to revive an industrial infrastructure programme that's aimed at creating jobs and giving manufacturing a push besides having the added advantage of being concentrated in some of India's more politically crucial states, months ahead of a general election.
The Department of Industrial Policy & Promotion (DIPP) is likely to seek Cabinet approval for the Amritsar-Delhi-Kolkata Industrial Corridor (ADKIC) as early as next week, raising the prospect that it could be used as a vote winner. The renewed thrust comes after the Prime Minister's Office had asked ministries last week for status reports on various projects for some action to be taken before the election code of conduct kicks in.
"Hopefully, within the next week, we will send the ADKIC proposal to the Cabinet for approval," said the DIPP official, who didn't want to be named. The corridor will pass through Uttar Pradesh and Bihar, key to winning power at the Centre, apart from other populous states such as Punjab, Haryana, UP, Jharkhand and West Bengal.
Since these are the most densely populated regions in the world, housing about 40% of India's 1.2 billion population, the government has also decided to leverage the inland waterway system between Allahabad and Haldia, although land availability remains an issue. "The North and the East are very different from states like Rajasthan, where you have enough land. Therefore, we have planned it differently," the official said.
In June 2013, an inter-ministerial group (IMG) comprising officials belonging to the DIPP, department of economic affairs, highways ministry, Railway Board, shipping ministry and ministry of urban development was set up to decide aspects including structuring and financing of the project. However, officials within the IMG admitted that several important aspects of the project are yet to be resolved.
ADKIC will use both the public private partnership (PPP) approach and the non-PPP approach. This latter part of the trunk infrastructure will be developed by a special purpose vehicle or implementation agency through a grant-in-aid.
The funding details of the project and the implementation strategy will be firmed up once the Cabinet gives its approval. For the corridor to work, proper infrastructure including transport systems integrating rail, road and ports must first be put in place, experts said. "If you do not have properly planned infrastructure, the cost goes up and retrofitting is needed like in the case of Gurgaon where the city was developed first and then the infrastructure," said Abhaya Agarwal, partner, infrastructure and PPP, EY. "The corridor should be broken into implementable sizes of projects and not like huge ones which cannot be done."
In the first phase, each state is likely to promote at least one 10 sq km integrated manufacturing cluster, 40% of which will be earmarked permanently for manufacturing and processing activities.
The corridor, expected to give manufacturing a fresh impetus, emerged from the India needs to do a lot more to generate enough employment for the rising number of young people entering the job market over the next few years.
India's manufacturing activity has been sluggish for the past two years, expanding by just 1% last fiscal and contracting 0.2% in the April-November period in this financial year.