Presentation on
Strategies for Infrastructure
Development in
Karnataka
By: V. P. Baligar
Importance of Infrastructure

Basic requirement for economic growth

Growth rates could have been higher with better
infrastructure

Essential for improving quality of life

Positive impact on Human Development Indices.
Initiatives of Govt of Karnataka
Created a separate Department for Infrastructure in Sept
1996
 Formulated an Infrastructure Policy in 1997
 Incorporated ‘Infrastructure Development Corporation
(Karnataka) Ltd’ (iDeCK) in June 2000
 Incorporated ‘Rail Infrastructure Development Company
(Karnataka) Ltd (K-RIDE) in Nov 2000
 A Special Purpose Vehicle – Hassan Mangalore Rail
Development Company Ltd (HMRDC) set up in July 2003
 Other Departments have set up institutions such as
KRDCL, K-SHIP, KUIDFC, etc

Central Govt Initiatives

Set up a PPP Cell in Dept of Economic Affairs

Formulated a Scheme: ‘Viability Gap Funding’ (VGF) to
financially support PPPs

Established ‘India Infrastructure Finance Company Ltd’
(IIFCL) to provide long term finance to infrastructure
projects

Model Concession Agreements drafted for Road Sector
Aims to raise infrastructure investment
from 4.7% of GDP to 8%
Infrastructure: Challenges
A.
Policy Level
 Frequent changes in the policy
 Lack of information on the policy and
procedures
 Complicated concession agreements
B.
Demand Side
 One Billion people
 Rising aspirations
 Unpredictable demand
Challenges
C. Accountability issues
 Maintenance of transparency
 Accountable to the legislature
 Scrutiny by C&AG
D. Bureaucratic hurdles
 Clearances from a large number
of agencies
 Delay in processing
 Corruption and harassment
Challenges…..
 E.
Environmental issues
 F.
Legal problems
 G.
Land acquisition and
rehabilitation
 H.
Operation and maintenance
Infrastructure: Opportunities
A. Agriculture:
Agriculture and Horticulture markets
Floriculture parks
Agro-food processing
Cold storages
B. Energy:
Generation
Transmission
Oil and Gas pipe line
Opportunities….
C. Industrial Infrastructure:
Industrial parks
SEZ
Industrial townships
D. Irrigation:
Canals and dams
E. Tourism:
Hotels and resorts
Convention centers
Trade fairs
Amusement parks
Opportunities….
F. Transportation and Logistics
 Roads and Bridges
 Railways
 Airports and Airstrips
 Urban transport
 Minor ports
 Inland water ways
 Truck terminals
 Ware houses
Opportunities…...
G. Urban infrastructure
 Townships
 Water
 Solid
supply and sewerage
waste management
New Initiatives and Strategies
 New
Infrastructure Policy 2007 Drafted
Objective:
To provide a fair and transparent policy
framework to facilitate and encourage
Public Private Partnership (PPP) in
upgrading, expanding and developing
infrastructure in the State.
Benefits of New Policy
•
•
•
•
•
•
Savings in costs due to innovative designs, timely
project implementation and higher efficiencies in
operations
Enhanced quality of services to users due to better
managerial practices & efficiencies
Reduction in, and gradual elimination of, pricing
constraints
Enabling public funds to be earmarked for other
commercially non-viable but socially justifiable
projects
Financial innovation and development of costeffective solutions
Greater employment opportunities in the
infrastructure sector
Strategies…..
 Payment
for Services
- Inculcation of
“Provider charges” and “User pays”
Principles
- Subsidies in user charges for economically
weaker sections
Strategies…
Contractual Structure
 Existing Assets:
O & M Contracts, Lease of Assets,
Rehabilitate, Operate Maintain Transfer (ROMT)
Contract
 New Assets:
BT, BLT, BTO, BOT, BOOT, BOO, BOST, BOOST,
BOLT
B: Build, O: Own/Operate, L: Lease, S: Share,
T: Transfer
Strategies…
 Setting
up Special Purpose Vehicles(SPVs) where
appropriate
-
Selection of Private Sector Partner through a
transparent procurement process.
 Procurement
in all Projects to be on the basis of a
transparent bidding process
Strategies…
Regulatory Framework
 Suitable
mechanisms to be worked out to facilitate
expeditious land acquisition
 Set up independent regulatory authorities for some
sectors
Institutional Framework





Infrastructure Development Department(IDD) to be
the nodal agency to coordinate PPP projects
A PPP Cell to be set in IDD to assist in
identification, development, implementation review
of PPP projects
District Level Committee under DC to assist PPPs
Single Window Agency under the Chairmanship of
CS/ACS to approve projects up to Rs 50 cr and to
recommend projects over Rs 50 cr to HLC
High Level Committee under the Chairmanship of
Chief Minister to approve projects above Rs 50 cr.
THANK YOU