Thursday, 15 Nov 2018
Business

An imposing monument on the road to India has not been taken

What does the showman of strong men look like? In India, 25,000 tons of steel, 3,550 tons of bronze and 210,000 cubic meters of cement and concrete dominate the world at a cost of about $ 400 million.

Prime Minister Narendra Modi recently unveiled the statue of unity in his home country, Gujarat. Sardar Vallabhbhai Patel, leader of the independence movement known as the "Ironman of India", died in 1950. With its 182 meters, it is the highest structure of this type in the world. Statue of Liberty and more than 40% higher than the Buddha of the Spring Temple in China

At first glance, this ostentatious manifestation of nationalism is at the expense of other priorities. The cost represented about 90% of the central government's annual budget for the Ministry of Skills Development and Entrepreneurship; twice that of the Ministry of Navigation; almost as much as the planned spending of the Department of Biotechnology; and about 90% of the road and bridge development budget.

This amount could have irrigated 40,000 hectares of land, while all that cement and concrete could have been used to pave decrepit roads that cause thousands of deaths each year.

In spite of all that the statue did not do, it is a symbol of the Modi government's ability to advance spending on populist causes – even those that move villages, sugarcane mills and farmers – while meeting more urgent needs. Larsen & Toubro Ltd., the largest construction company in India, took less than three years to erect the statue. In comparison, it took 11 years for China to build its Buddha.

State-backed companies have spent money through their corporate social responsibility departments to support the project. The giant gas companies GAIL India Ltd. and Oil India Ltd. each injected about 250 million rupees ($ 3.4 million).

The effectiveness of the machinery of government contrasts sharply with India's modus operandi in infrastructure. Road projects have been stalled for years because of the government's inability to fund them. In recent months, companies such as Larsen & Toubro and IDFC Ltd. have reduced their spending on road financing. More than half of the 104 projects awarded do not have enough money.

A subway project as part of a public-private partnership in the city of Hyderabad was "executed against all odds," lamented Shailesh Pathak, CEO of L & T Infrastructure Development Projects, on Twitter in September, adding that the company would no longer bid for PPP metro contracts.

The clogged financial system and the banks' inability to lend aggressively partly explain the accumulated backlog. The completion of infrastructure projects by the government and the private sector in the second quarter of the year decreased by more than 40% over the previous year.

"This monument will not be just a silent memorial like the others, but a fully functional and useful tribute," says the Statue of Unity website, promising that it will stimulate all kinds of socio-economic development. This can be optimistic, since an entry ticket costs as much as an unqualified worker in Delhi earns in a day.

At least it's over. The Indian infrastructure could use a dose of the absolute resolution that allowed this project to be completed.

To contact the author of this story: Anjani Trivedi at atrivedi39@bloomberg.net

To contact the editor responsible for this story: Matthew Brooker at mbrooker1@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Anjani Trivedi is an editorialist of Bloomberg Opinion which covers industrial companies in Asia. She previously worked for the Wall Street Journal.

© 2018 Bloomberg L.P.

.

Post Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: