Financial Daily from THE HINDU group of publications
Thursday, Jul 11, 2002
Industry & Economy - Economy
Transport sector reforms not enough: World Bank
NEW DELHI, July 10
THE World Bank has said that though there has been a paradigm shift in treating transport as a social service to an economic sector in India, the overall progress has fallen short of what is needed for transport to facilitate faster economic growth as well as poverty alleviation.
In a comprehensive monograph on India's transport sector, the Bank said that India has also been slow relative to the major changes around the world, changes such as transport deregulation, increased private sector participation and decentralised and commercial management of transport assets and operation.
It further noted that India's progress on institutional reform in transport varies by sub-sectors, with roads and ports moving ahead steadily, while the railways and urban transport have been falling far behind.
Stating that further reform would confront "some tough political and institutional constraints," the Bank said the progress of transport reform would depend critically on "a continued and steady increase in the political will for reform and the emergence of transport users and stakeholders as key agents and pressure groups for change."
It said the highway agencies need to maintain their strong reform momentum by involving road users in planning, prioritising and ensuring the proper use of sector funds through broadly representative advisory committees and eventually, overseeing boards empowered for decision-making. Making towards a clear separation of client and provider functions, and using output-oriented performance indicators and effective monitoring mechanisms. Third, building consensus for the removal or reduction of any non-physical barriers to the movement of freight across State borders, including highway check posts and fourth, monitoring closely recent innovations in road financing.
It said evaluating the effectiveness of these new approaches in leveraging public sector finance and transferring risk to the private sector (rather than merely creating off-balance sheet liabilities for the Central or State budgets) and addressing regulatory and information bottlenecks that might have slowed down private investment in the sector.
Pointing out that India has "high stakes" in rail reforms, the challenges confronting Indian Railways have much in common with situations driving rail reforms elsewhere. There are two top priorities at the very least, it said, adding that these include, improving customer-responsiveness of the core rail business services and focusing a much larger share of the capital budget on economic priority investments.
Despite the impressive progress made with reform in the ports sector, institutional issues remain to be dealt with. Further areas of reform clearly include corporatising ports, concessioning out operations and even developing landlord ports with competition for rights to provide functions. The success of concessions would depend partly on alleviating unnecessary constraints on the concessionaire (a process that is under way), and on settling labour issues. The regulatory power of the TAMP (Tariff Authority of Major Ports) should be extended to cover minor ports so that any distortions arising between major and minor ports could be effectively resolved, it said.
Finally, the Bank report stressed that multi-modal integration has become extremely crucial to ensure that existing port and transport facilities be used more effectively and that new ports be developed to be more economically sound and financially attractive. This would entail setting up inter-modal platforms at nodal points in the transport network. For instance, establishing dry ports outside main port cities would facilitate interfacing with railways and road transport and possibly waterways in the eastern part of India. The specific issue of railway interface in ports has to be addressed on a priority basis, particularly in places where the cargo transfer between IR and the local port railways involves inordinate delays, the Bank observed.
The Bank said a host of operational weaknesses in India's transport services not only reduce service quality but also exacerbate capacity shortages - especially in operations dominated by the public sector with little competition. Underlying these operational weaknesses are four problems that must be addressed through policy and institutional reforms such as unclear or overlapping responsibilities, inadequate resource mobilisation, poor asset/system management and inadequate accountability for service outcomes, the Bank noted.
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