All hopes are set on the new government that will drive the country's growth in the coming times. While a number of policies and bills were passed towards the end of the last government's term, there are still a number of pending bills that are important for the people, industry and the nation. Alok Rawat takes a look at a few pending bills in the 15th Parliament that are integral to the Indian Infrastructure and affect the growth of the sector in the country.
The fate of the bills hangs in the hands of the new government and it remains to be seen whether the next government will reintroduce legislation addressing these issues and to what extent the new legislations will incorporate the recommendations of Standing Committees.
India's economic slowdown has been accompanied by a deceleration in infrastructure investments over the last few years. The infrastructure sector currently faces some common challenges from issues such as land acquisition, environmental clearances and availability of finance. In addition, sub-sectors such as power, roads, mining etc face their own set of difficulties.
In its attempts to revive the infrastructure sector, the government sought to bring new laws. Yet, frequent disruptions and a decline in Parliament's productivity resulted in 128 Bills left pending at the end of the 15th Lok Sabha.
Here we discuss some key pending Bills related to power, mining, real estate, civil aviation, and public procurement which would have a direct impact on the infrastructure sector.
One of the key issues faced by the power sector has been poor supply and the rising price of coal. The coal industry is characterised by near-monopoly dominance of Coal India Ltd, leading to coal buyers' opposition to frequent price revisions and asymmetrical coal supply contracts. The Coal Controller's Organisation, empowered to ensure coal quality and adjudicate disputes, is hindered by lack of adequate manpower. Further, the process of allocation of captive coal blocks has attracted criticism from the Comptroller and Auditor General and the Parliamentary Standing Committee on Coal and Steel for lack of transparency and slow pace of development. The Planning Commission and the Expert Committee on Coal Sector Reforms have suggested creation of an independent regulator to address these concerns. The Coal Regulatory Authority of India Bill, 2013 seeks to establish a Coal Regulatory Authority (CRAI). CRAI's functions include specifying the methodology for determination of coal prices, ensuring adherence to mining plan and adjudicating disputes between buyers and sellers. It will also advise the government on various matters including allotment of coal mines and coal linkages.
It is debatable if regulation of prices is the best way to address the monopoly structure of the sector. Another challenge could be striking a balance between the interests of buyers with those of sellers.
Nuclear power has been envisaged as one of the pillars for India's energy security. The 2011 Fukushima incident in Japan has raised apprehensions regarding nuclear safety in India. Presently, the Department of Atomic Energy has the administrative control of the safety regulator, Atomic Energy Regulatory Board (AERB), as well as the nuclear power generators. The Nuclear Safety Regulatory Authority Bill, 2011 proposes to establish a Nuclear Safety Regulatory Authority (NSRA) as the civil nuclear safety regulator to replace AERB. A Council of Nuclear Safety will oversee and review the policies of NSRA.
A key issue is whether the proposed regulatory mechanism will have adequate independence. Additionally, the Bill does not specify the regulation mechanism for strategic nuclear facilities.
Mining is viewed as high risk industry by investors due to long gestation periods, uncertain geological conditions and volatility in prices. The National Mineral Policy, 2008 sought to address some of these issues.
The Mines and Minerals (Development and Regulation) Bill, 2011 proposes to overhaul the laws regulating mining industry. It specifies competitive bidding as the only method for grant of mineral concessions if the existence of minerals is known. The Bill introduces two categories of exploration licences that would ensure grant of mining leases upon fulfillment of certain conditions. The Bill seeks to create a District Mineral Fund to share the benefits from mining (26 per cent of net profit for coal and an amount equal to royalty paid for other minerals) with persons affected by mining activities.
The key issue for consideration is the impact that payments to the District Mineral Fund will have on investments in the sector.
At present, consumer protection in the real estate sector is provided through the consumer forums (for grievance redressal) and the Competition Commission of India (in cases of anti-competitive behaviour). The existing system has been described as being curative instead of preventive. Multiple real estate projects have witnessed delays due to alleged diversion of funds and post-construction disputes between developers and buyers.
The Real Estate (Regulation and Development) Bill, 2013 seeks to establish state level authorities for the regulation of the real estate sector and to ensure consumer protection. All residential real estate projects above a certain size need to be registered with the respective state authority before any booking, sale or offer for sale is made. A developer is required to maintain 70 per cent of the amount collected from buyers in a separate bank account; this money can only be used for construction of the particular project. The state government can reduce this amount below 70 per cent.
The civil aviation sector faces challenges like rising competition from foreign airlines, high fuel and airport charges and the airlines' obligation to fly uneconomic routes. The Civil Aviation Authority of India Bill, 2013 seeks to establish a Civil Aviation Authority (CAA) to replace DGCA as the civil aviation safety regulator and to protect consumer interests. CAA will have the power to select and appoint its personnel. All funds received by CAA including Central government grants, and fees and charges, shall be credited to a dedicated fund. Since CAA's powers and functions are very similar to DGCA, it remains to be seen if CAA can address the concerns raised in DGCA's reviews. Two of CAA's functions (checking anti-competitive air fares and consumer protection) may overlap with functions of the Competition Commission of India and consumer protection forums/courts.
The controversies regarding the procurement of helicopters for VVIPs and the 2010 Commonwealth Games have brought public procurement in focus in the recent years. The value of public procurement in India is estimated to constitute 15-20 per cent of the GDP. The Planning Commission estimates that losses due to inappropriate procurement procedures could be 20-30 per cent. At present, there is no law regulating procurement by the Central government.
The Public Procurement Bill, 2012 seeks to regulate procurement by the Central government and its entities, with certain exceptions. Its coverage includes all public sector and public-private partnership (PPP) infrastructure projects, whether awarded through turnkey contracts or separate packages. The Bill seeks to establish a code of integrity for procuring officials and bidders and mandates dissemination of all information on a central portal. It sets open competitive bidding as the preferred procurement method and penalises both offering and accepting a bribe. The Bill provided exceptions for small purchases, national security or strategic purposes, disaster management and implementation of the government's socio-economic policies.
Conclusion All these Bills, with the exception of the Real Estate (Regulation and Development) Bill, 2013, will lapse on dissolution of the 15th Lok Sabha.
It should be noted that Standing Committees of the Parliament have submitted their recommendations on some of these Bills. It remains to be seen whether the next government will reintroduce legislation addressing these issues and to what extent the new legislations will incorporate the recommendations of Standing Committees.
Infrastructure Today takes infrastructure industry captains' views on the major reforms the new government needs to take up.
Fast-track investments in the infrastructure domain. Pursue integrated approach to particularly rail networks connecting hinterland to ports and inland waterways.
Pursue the National Manufacturing Policy in right earnest so that we reach the targets.
Education levels, in terms of quality and capacity, should be more in with employability.
- Harsh Pati Singhania, Vice Chairman & MD, JK Paper and Director JK Organisation
Remove policy paralysis. Revive infrastructure sector. Make India an attractive business destination to pull-in FDI. Break the growth-inflation conflicts in play to enable monetary policy to stay supportive to growth.
Address (and remove) structural woes around twin deficit - fiscal and current account deficit. Need to ring-fence rupee exchange rate from the one-way hot money FII flows.- Moses Harding, Group CEO and Chief Economist, Srei Infrastructure Finance Ltd
Top reforms for the new government
Implement Goods and Service Tax (GST). Immediate identification and execution of top 50 infrastructure projects. Create a regulatory body for individual project categories. Create employment in manufacturing sector to ensure equitable growth. Reviving manufacturing sector is a key for an overall growth. - Vipin Sondhi, Managing Director & CEO, JCB India Ltd
Bring FDI in infrastructure, preferably PPP models. Avoid FDI in retail.Measures needed to control inflation, corruption, population and improve GDP. Improve growth in agriculture and industrialisation and thereby improve employment opportunities. - MSA Ambegaonkar, Director - Business Development (Global), Essar Projects (India)
Relook at the land reforms act which was passed recently. Focus on infrastructure and manufacturing sector. Implement Goods and Services Tax on a priority.- P Jagan Narayan, Director (Transport), CRISIL Infrastructure Advisory