REGIONAL PLANNING IN INDIA SCENARIOS FOR AN UNCERTAIN FUTURE

INDIA 2050

FACULTY OF ENGINEERING CAIRO UNIVERSITY

ARCHITECTURE - URBAN PLANNING DEPARTMENT

PRESENTED TO PROF. DR. TAREK ABD EL LATIF PRESENTED BY ARCH. GHADA ATTIA

MAY 28th , 2013

P A R T I INTRODUCTION 3 WHY INDIA? 3 IMPORTANCE OF INDIA FOR EGYPT 4 INDIA 4 INDIA IN THE SECOND HALF OF THE 20th CENTURY 4 MAJOR LONG-RANGE TRENDS FOR 21st CENTURY 5 MENTAL MAP & FORCES MAY OBSTRUCT 6 P A R T II VISION AND ASPIRATIONS 7 THE TWELFTH FIVE YEAR PLAN: 7 “Faster, More Inclusive and Sustainable Growth” MACROECONOMIC FRAMEWORK 8 TWENTY FIVE COFRE INDICATOR 8 DETERMINANTS OF GROWTH 9 ALTERNATIVE SCENARIOS 10 SCENARIO I 10 SCENARIO II 10 SCENARIO III 11 P A R T III FINANCING INFRASTRUCTURE 12 THE SHIFT TO PPP (Public–Private Partnership) 12 INSTITUTIONAL FRAMEWORK for PPP 12 STANDERDISED DOCUMENTS and PROCESSES 14 APPLIED EXAMPLES 16 RECOMMENDATIONS 16 HOW CAN EGYPT BENEFIT FROM THE INDIAN CASE? 16

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P A R T I INTRODUCTION India have been following successive five years development plans that encountered rapid economic growth over the past ten years, which gave their citizens much higher expectations for their future. Inspite of the difficulties and challenges that faces India, it has put a very optimistic twelfth five year development plan. It is advisable for Egypt to study the Indian’s experience in development, since they share common problems. Therefore, this paper describes, by using an inductive approach, the Indian’s case; problems, challenges, their mental map for themselves, their vision towards their future. In the end of the paper recommendations are presented that will allow Egypt to benefit from the Indian’s experience. WHY INDIA? India’s Future is a central question that will impact all people across the world because of its large future population (1.5 billion by 2050); • The second largest population 1.25 billion people today. • The fourth largest economy in PPP terms (possibly 1/3rd largest economy

by 2040. • The largest concentration of poor people in history (270 million) and poor

population per capita(PPP 2,365 1995 INR in 2002). • Massive market size. • Severe resource constraints(Land, Water, Liquid fossil fuels & biomass) • Huge potential contribution to green house gas emissions and trans-

boundary pollution. • Weaponized nuclear power. All of this makes the future of Indian people, its markets and its politics will become an important strategic concern for most OECD nations and humankind.

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IMPORTANCE OF INDIA FOR EGYPT Similarities between India and Egypt makes India very important for Egypt to benefit from its development planning programme; • Both nations go back to the same old ancient era. • Both nations have the same past historical association with Great Britain

(India 18581947 – Egypt 18821952). • Bothe nations had common goals of their respective movements of

independence. • Bothe nations during the period of Nehru and Gamal Abd El Nasser were

founders of the Non-Aligned Movement. • Both nations were originally agriculture societies that are recently turning

towards industrialization. • Both nations have densely population big cities like Cairo ,Bombay and

Delhi. • Both nations followed development strategies after independence to the

same time to achieve freedom and social equality. • Both nations are considered 3rd world nations. • Both nations have restricted water and energy resources. • India is the 4th largest trade partner of Egypt after the USA, Italy and Saudi

Arabia. • Like Egypt India’s development focus on the short (1 to 5 years plan) &

medium (10 to 20) year time plan • Egypt and India both have imbalanced regional developments • Both countries have high percentage of poverty and illiteracy • Both countries suffer from the inherited the same bureaucracy

INDIA INDIA IN THE SECOND HALF OF THE 20th CENTURY • Declining but still large rate of population growth (1 billion people). • Successful improvement of food situation but there are limitations for further

growth. • Unbalanced and unequal economic growth since 1990s. • Rapid growth in energy and water demand which can partially be met.

Challenges to meet: • Cross border migration • Fossil fuel scarcity • Potential conflicts between current and future Great Powers to the transition

to renewables within India.

1 Population growth from 1 billion to 1.5 billion.

2 NPP (Net Primary Production) increase in food production and urban land area.

3 Water resource preemption and development for agricultural, industrial, energy and urban use.

4 Development of non-renewable (coal, oil, gas and nuclear) and renewable (biomass and wind) sources, technologies and infrastructure to meet increasing shortage in energy supply.

5 .Slow urbanization (due to growth of large informal settlement, poor infrastructure and declining living and working conditions.

6 Rural education transition to secondary and high education, collapse of artisanal education.

7 Expansion of the Indian ‘State’ with increasing democratic participation.

8 Growth of the black economy.

9 Increased life expectancy and slow growth of human development.

10 Development of new entrepreneurial institutions and classes in the private, co-operative and social/non-profit sector.

11 Slow decline in poverty (increase in some regions, more rapid increases in differential wealth, urban elites, wealth creation by new entrepreneurial class.

12 Growth of knowledge-based services and industries, globalization linked wealth creation.

13 Increasing penetration into the informal economy, inflow of international financial capital, growth of capital, commodity markets formal financial systems and financial regulation.

14 Development of strategic nuclear and missile capacity.

15 Increase in passenger and goods mobility and network coverage.

16 Growth of religious intolerance, fundamentalism and new spiritual and social movements.

17 Increasing migration out of arid regions and strife torn regions to cities

18 Women in Indian Society will have significant consequences over social and political dynamics

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MAJOR LONG-RANGE TRENDS FOR 21st CENTURY

Fig. (2): Shows the forces that may obstruct such growth in economic activity and/ or reduce the improvements in quality of life expected from it

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P A R T II VISION AND ASPIRATIONS “Ours is a diverse society and also an argumentative one. We are suspicious when decisions that affect us are not taken transparently and we resent too much centralization of decision-making. But we all believe in democracy, we respect the views of others and, although we may disagree, we admire and learn from those who work together to offer any vision of a better India. We need to do more to build a greater consensus around a common national goal”(1) THE TWELFTH FIVE YEAR PLAN 2012-2017 “Faster, More Inclusive and Sustainable Growth” Rapid Growth Is the GDP growth which produces a larger expansion in total income and production, while the real objective should be to achieve an improved quality of life of people across both economic and noneconomic dimension. If the growth process is sufficiently inclusive it will directly raise living standards of a large section of our people Focus should not be just on GDP growth itself but on achieving a growth process that is as inclusive as possible; • Rapid growth in agriculture and especially in rain fed-areas where most of

the poor live, will be much more inclusive than a GDP growth that is driven entirely by mining or extraction of mineral for exports

• Rapid growth which is based on faster growth for the manufacturing sector as a whole will generate much broader employment and income earning opportunities than a growth driver by extractive industries……..etc.

Inclusiveness Means the different things and each aspect of inclusiveness has its own challenges for policy; • Poverty reduction • Group equality; the poor are certainly one target group, but inclusiveness

must also embrace the concern of other groups such as the Scheduled Castes(SCs), Scheduled Tribes(STs), Other Backward Classes(OBCs), Minorities and other marginalized groups and women can be also viewed as a disadvantaged group.

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• Regional balance; it relates within all States, all Regions are seem to benefit from the growth process

• Inequality; meaning Income Inequality • Empowerment; it is also about empowerment and participation • Employment programs MACROECONOMIC FRAMEWORK TWENTY FIVE CORE INDICATORS Twenty-five core indicators that are listed below reflect the vision of rapid, sustainable and more inclusive growth: Economic Growth 1. Real GDP Growth Rate of 8 per cent. 2. Agriculture Growth Rate of 4.0 per cent. 3. Manufacturing Growth Rate of 10.0 per cent. 4. Every State must have an average growth rate in the Twelfth Plan

preferably higher than that achieved in the Eleventh Plan. Poverty and Employment 5. Head-count ratio of consumption poverty to be reduced by 10 percentage

points over the preceding estimates by the end of Twelfth Five Year Plan. 6. Generate 50 million new work opportunities in the non-farm sector and

provide skill certification to equivalent numbers during the Twelfth Five Year Plan.

Education 7. Mean Years of Schooling to increase to seven years by the end of Twelfth

Five Year Plan. 8. Enhance access to higher education by creating two million additional seats

for each age cohort aligned to the skill needs of the economy. 9. Eliminate gender and social gap in school enrolment (that is, between girls

and boys, and between SCs, STs, Muslims and the rest of the population) by the end of Twelfth Five Year Plan.

Health 10. Reduce IMR to 25 and MMR to 1 per 1,000 live births, and improve Child

Sex Ratio (0–6 years) to 950 by the end of the Twelfth Five Year Plan. 11. Reduce Total Fertility Rate to 2.1 by the end of Twelfth Five Year Plan. 12. Reduce under-nutrition among children aged 0–3 years to half of the

NFHS-3 levels by the end of Twelfth Five Year Plan.

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Infrastructure, Including Rural Infrastructure 13. Increase investment in infrastructure as a percentage of GDP to 9 per cent

by the end of Twelfth Five Year Plan. 14. Increase the Gross Irrigated Area from 90 million hectare to 103 million

hectare by the end of Twelfth Five Year Plan. 15. Provide electricity to all villages and reduce AT&C losses to 20 per cent by

the end of Twelfth Five Year Plan. 16. Connect all villages with all-weather roads by the end of Twelfth Five Year

Plan. 17. Upgrade national and state highways to the minimum two-lane standard by

the end of Twelfth Five Year Plan. 18. Complete Eastern and Western Dedicated Freight Corridors by the end of

Twelfth Five Year Plan. 19. Increase rural tele-density to 70 per cent by the end of Twelfth Five Year

Plan. 20. Ensure 50 per cent of rural population has access to 40 lpcd piped drinking

water supply, and 50 per cent gram panchayats achieve Nirmal Gram Status by the end of Twelfth Five Year Plan.

Environment and Sustainability 21. Increase green cover (as measured by satellite imagery) by 1 million

hectare every year during the Twelfth Five Year Plan. 22. Add 30,000 MW of renewable energy capacity in the Twelfth Plan. 23. Reduce emission intensity of GDP in line with the target of 20 per cent to

25 per cent reduction over 2005 levels by 2020. Service Delivery 24. Provide access to banking services to 90 per cent Indian households by the

end of Twelfth Five Year Plan. 25. Major subsidies and welfare related beneficiary payments to be shifted to a

direct cash transfer by the end of the Twelfth Plan, using the Aadhar platform with linked bank accounts.

DETERMINANTS OF GROWTH The determinants of growth depends upon the capacity of Economy to maintain high rates of Investment, depends upon; 1. Investor expectations 2. Existence of a dynamic entrepreneurial and marginal class capable of

taking the risks and dealing with competitive pressure

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3. Quality of Public Sector Managers 4. Availability of skilled labor to support rapid growth 5. External Environment also affects the growth potential since it determines

the scope for exports to grow and thus contribute to the expansion of domestic economic activity

6. The accumulation of Capital and Labor Stocks and how these stocks are used

7. Emerging markets have potential to accelerate growth

ALTERNATIVE SCENARIOS These scenarios are to project the trends of the economy, depending on how the principal sociopolitical forces take shape; SCENARIO I “ Strong Inclusive Growth” It describes the conditions of a “Well Designed Strategy” implemented. The Growth rate in this scenario starts from below 6% in the first year to reach 9% in the last two years; • Appropriate steps taken to deal with implementation and governance

problems, • wheels of government at all levels begin to move more smoothly, • Local governance institutions and small enterprises are nurtured and have

an opportunity to grow effectively, along with larger enterprises, • Livelihood opportunities, along with community based solutions and

enterprises for addressing environmental issues, are seen to be sprouting’ • Many virtuous circles begin to operate in this scenario, raising confidence

and trust. In this scenario, growth could average 8.0 per cent and inclusiveness would be assured. SCENARIO II “ Insufficient Action” It describes the consequences of “Half Hearted Action” in which policies are set but not sufficient action is taken. The growth rate in this scenario declines to 6-6.5% • Action is incomplete or implementation is poor, • Outcomes are weaker than anticipated, • Centralized government systems do not provide sufficient flexibility to cope

with demands of decentralization,

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• Small enterprises and new entrepreneurs need to be encouraged, • The outcome will fall short of expectations, • The policy conflict between subsidies and financial stability of the economy

remains unresolved. In this scenario, growth of 8.2 per cent is not feasible. Growth could decline to between 6 per cent and 6.5 per cent, and inclusiveness would suffer. SCENARIO III “ Policy Logjam” Where “Policy Inaction” persisting too long, the growth rate in this scenario can drift down to 5-5.5%. This scenario reflects a situation where very little can be done for whatever reason on many of the policy fronts identified in the Twelfth Plan. • Difficult to build growth momentum if critical supply constraints relating to

energy and transport are not overcome, • Investor confidence is likely to be severely eroded, • Lack of inclusiveness that results will lead to increased impatience and

political logjam, putting the economy under severe stress, • Vicious cycles begin to operate. In this scenario the growth rate can drift down to 5–5.5 per cent with serious loss on the inclusiveness front. In some ways, there is a danger of insufficient action scenario degenerating into a policy logjam scenario, if it persists too long. These scenarios are not presented as an alternative option. In fact there is only one scenario that will meet the aspiration of people which is scenario I. The other scenarios are only presented to illustrate the consequences of inaction. Scenarios are not predictions. They are projections of plausible outcomes of alternative courses of action. They point to strategies that have more likelihood of producing the desired results. Therefore, depending on the strategies chosen and implemented, result the different outcomes for the country’s progress. Part III, explains the government’s current initiatives in the area of PPPs in the infrastructure sector, which is designed to achieve their objectives.

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P A R T III FINANCING INFRASTRUCTURE THE SHIFT TO PPP (Public-Private-Partnership) Adequate investment in the development of infrastructure is vital for higher growth. The government has to create an enabling environment to promote investment in infrastructure. The strategy to do so is to rely upon the private sector participation directly as well as through various forms of PPPs. Private investment not only expand capacity but also improves the quality of service, besides minimizing cost and time overruns in implementation of infrastructure projects. The share of the private sector in infrastructure investment rises up to 48%, while the Central share in the overall infrastructure investment is to decline from 35.4% to 28.72% in the twelfth plan. Global Ranking in PPP “According to a World Bank Report on Private Participation in Infrastructure, private participation in the first semester of 2011 was highly concentrated in just one country, India. The Report further states that India has been the top recipient of PPI activity since 2006 and has implemented 43 new projects which attracted total investment of US$20.7 billion in 2011. India alone accounted for almost half of the investment in new PPI projects in developing countries implemented in the first semester of 2011. The Report maintained that India remained the largest market for PPI in the developing world. In the South Asian region, India attracted 98 per cent of regional investment and implemented 43 of the 44 new projects in the region.” (1) INSTITUTIONAL FRAMEWORK for PPP The following steps have been taken to promote private investment in infrastructure sector: 1. Setting up strong institutional structure for appraising and approving PPP

projects 2. Developing standardized documents such as model concession

agreements across infrastructure sectors 3. Increasing availability of finance by creating dedicated institutions and

providing viability gap funding

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Institutional Framework for PPP

CCI Cabinet Committee on

Infrastructure

PPPAC PPP Appraisal Committee

and Empowered Institution

Regulatory Framework

Advisory Services VGF Viability Gap Funding

IIFCL India Infrastructure Finance Company

Limited

Description for the Institutional Framework for PPP 1- CCI (Cabinet Committee on Infrastructure) The Cabinet Committee on Infrastructure under the Chairmanship of Prime Minister, it reviews and approves policies and projects across infrastructure sectors. It considers and decides on financial institutions and legal measures required to enhance investment in infrastructure sectors. 2- PPPAC (PPP Appraisal Committee and Empowered Institution) A Public-Private Partnership Appraisal Committee consisting of the Secretary Department of Economic Affairs, as Chairman and Secretaries of the Planning Commission, Department of Expenditure, Department of Legal Affairs.

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The Administrative Department concerned as members for speedy approval of PPP projects. 3- Regulatory Frame Work Independent Regulatory Authorities have been established to discharge numerous responsibilities which were earlier in the domain of the government. 4- Advisory Services Implementation of PPP projects, requires appropriate advisory services in terms of preparation of project agreements, structuring of projects and so on. 5- VGF(Viability Gap Funding) The VGF scheme, grants assistance of up to 20 per cent of capital costs provided by the Central Government to PPP projects undertaken by any Central Ministry, State Government, statutory entity or local body, thus allowing budgetary resources to access a larger pool of private capital. An additional grant of up to 20 per cent of project costs can be provided by the sponsoring Ministry, State Government or project authority. 6- IIFCL (India Infrastructure Finance Company Limited) IIFCL was incorporated by the Ministry of Finance in consultation with the Planning Commission in 2006 for providing long-term loans for financing infrastructure projects that typically involve long periods. IIFCL provides financial assistance up to 20 per cent of the project cost both through direct lending to project companies, and by refinancing banks and financial institutions. IIFCL raises funds from both domestic and overseas markets on the strength of government guarantees. STANDERDISED DOCUMENTS and PROCESSES The government has decided to adopt a standardised framework that ensures transparency in the allocation of risks, costs and obligations while minimising the potential for disputes and malfeasance.

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Model Concession Agreements for PPP • National Highways • State Highways • Operation and Maintenance of Highways • National Highways (six laning) • Operation of Container Trains • Re-development of Railway Stations • Procurement-cum-Maintenance Agreement for Locomotives • Non-metro Airports • Greenfield Airports • Port Terminals • Transmission of Electricity • Urban Metro Rail

Model Bidding Documents for PPP Projects • Model Request for Qualification (RFQ) Document for PPP projects • Model Request for Proposal (RFP) Document for PPP projects • Model RFP Document for Selection of Technical Consultants • Model RFP Document for Selection of Legal Advisers • Model RFP Document for Selection of Financial Consultants and Transaction Advisers • Model RFP Document for Selection of Transmission Consultants

Standardised Guidelines and Model Documents

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Guidelines and Manuals • Guidelines for Financial Support to PPPs in

Infrastructure (VGF Scheme) • Guidelines on Formulation, Appraisal and Approval

of PPP Projects (PPPAC) • Guidelines for Establishing Joint Ventures in

Infrastructure • Guidelines for Monitoring of PPP Projects • Scheme for Financing Infrastructure Projects through

the IIFCL • Manual of Specifications and Standards for Two-

laning of Highways • Manual of Specifications and Standards for Four

laning of Highways

APPLIED EXAMPLE PPP in Highways “The National Highway network of the country spans about 70,548 km. The National Highway Development Project (NHDP), covering a length of about 54,000 km of highways, is India’s largest road development programme in its history. The government has encouraged increased private sector participation in upgrading the arterial road network of the country to world class standards. More than 60 per cent of the estimated investment requirement is expected to be financed through PPP. With several key projects on the anvil spanning a length of about 45,000 km (including six-laning of four-laned roads, expressways and port connectivity projects) and a large number of projects in States, there are increasing opportunities for the domestic and foreign players in the sector. The government has decided to widen 20,000 km of less than two-lane National Highways to two-lane standard in the EPC mode.” (1) RECOMMENDATIONS HOW CAN EGYPT BENEFIT FROM THE INDIAN CASE? Egypt and India have the same problems; poverty, high population growth, limited resources, bureaucracy, development imbalance, inequality,…… Since India seems to have a clear vision for the future and have been following planned policies that seem to achieve their targets, it is advisable that Egypt to benefit from the Indian’s experience especially in the fields that India has come a long way in it.

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According to the World Bank India is the top recipient of PPP activity in the whole world and has a long experience in that field, and therefore it is ready to pass it’s experience to other countries. Building a Bridge 1) Egypt should form a strong network of companies, research institutes that

delivers the Indian experience to Egypt especially in the PPPs 2) Egypt should give special concern for the Indians experience in the PPP in

Highway; The Indian National Highway Development Project (NHDP) spans about 70,548 km. The National Highway Development Project (NHDP), covering a length of about 54,000 km of highways, is India’s largest road development programme in its history.

3) PPP in Urban Infrastructure; The Hyderbad Metro Rail Project is presently under construction. The project is spread over three high density traffic corridors of Hyderabad with total length of 71 km and is being developed on Design, Build, Finance, Operate and Transfer (DBFOT) mode. This will be the single largest private investment in a PPP project in India. It is also one of the largest metro rail projects built and operated by a private entity anywhere in the world.

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REFRENCES 1) Eleventh Five Year Plan (2007–2012), Inclusive Growth,

http://planningcommission.nic.in/plans/planrel/fiveyr/11th/11_v1/11th_vol1.pdf

2) Twelfth Five Year Plan (2012–2017), Faster, More Inclusive and Sustainable, http://planningcommission.gov.in/plans/planrel/12thplan/pdf/vol_1.pdf

3) MNP Report 550033002/2007, India 2050: scenarios for uncertain future, Netherlands Environmental Assessment Agency, http://www.rivm.nl/bibliotheek/rapporten/550033002.pdf

4) Regional Planning India – Scribd, http://www.scribd.com/doc/37332140/Regional-Planning-India

5) Regional imbalance – Scribd, http://www.scribd.com/doc/35541123/Regional-Imbalance

6) Regional Planning in India a Target Area and a Target Group – Scribd http://www.scribd.com/doc/17319118/Regional-Planning-in-India-a-Target-Area-and-Target-Group-Approach-by-Tulika-Sanadhya

7) Introduction to Regional Planning – Scribd http://www.scribd.com/doc/18935597/Introduction-to-Regional-Planning

8) Regional Planning Part II Types of Regions and Regionalization of India – Scribd, http://www.scribd.com/doc/15072424/Regional-Planning-Part-II-Types-of-Regions-Regionalization-of-India