The Hindu Business Line : Open those doors

IT HAS BY now become routine at every forum for prime ministers and finance ministers to make entreaties to foreign businessmen to invest in this country, especially in infrastructure. At times the invitations have been specific to certain sectors such as electricity generation, but most of the time, they have been open-ended. Yet, as in the case of the man who invited a dozen guests home for dinner when the wife was unwilling to host more than a couple, invariably the invitations have gone out before enough groundwork had been done to make those investments attractive or even possible. It was so with Mr Atal Bihari Vajpayee's government, his intuition pushing him to open the door wider to domestic private enterprise and foreign investors, even as the swadeshi elements in the coalition and in the Opposition strained to keep it closed. Now it is the turn of Dr Manmohan Singh and Mr P. Chidambaram to woo the foreign investor, never mind what their supporters in the Left front and in the unions say and what legislators at large are willing to concede. In the Prime Minister's assessment, the infrastructure sector could absorb foreign capital of up to $150 billion over the next ten years. Airports and railways would need $55 billion, the power sector about $75 billion and the telecom sector some $25 billion. Are these sectors ready for the flow? Sincere as Dr Manmohan Singh is about the invitation, does he have political consensus behind him?

The Railways, for one, has the door firmly shut on investments, not just from overseas but also from the domestic private sector. If foreign capital must flow into the Railways, it can come only as debt. The Prime Minister knows that if the economy is to grow at 7-8 per cent a year, industry has to rev up to a double-digit pace. That will call for logistics support from the Railways of a substantially higher order, both in quality as well as quantity. Is that feasible considering the monolithic ownership and command structure? If not, should the Government not contemplate a new railway dispensation that admits of private investment and partnership? A start was made with Container Corporation of India, which moves containers on the rails. Although an arm of the Railways, it does have public and foreign institutional investors holding a minority stake. Can we have a private entity competing with Concor to move containers? Considering the pile-up of cargo at the JNPT port, it is but a crying need.

After the spectacular failure of the fast-track power generation projects, especially Enron's, there are few investors waiting to rush in. The legislative and regulatory framework has not yet attained the shape that would infuse confidence. The monopolistic hold the State electricity boards have over distribution continues to be a deterrent to private investment. Political consensus on ceding control over airports to private operators has been slow to coalesce, with the result that few projects have got off the ground. The telecom sector has been the most gracious host among them all, but the investment cap set for foreign investors is a government-created choke. Foreign investment is welcome. But, pray, through which door?