The right ingredients were all there. Start with a dynamic chief minister manfully trying to revive the fortunes of his state. Toss in the dynamic CEO of India's largest cigarette maker who is now giving sleepless nights to India's FMCG brigade. Mix these with an articulate economist turned politician and the head of a highly globalised tea company and you get- if you pardon the cliché'- the perfect meal.
The ET CEO Cookout at Kolkata on Friday night, the third after Delhi and Bangalore, churned out an invigorating and stimulating potion of ideas on "Radical solutions to India's infrastructure deficit".  |
Left to Right: Y C Deveshwar, Buddhadeb Bhattacharjee, Jairam Ramesh and Commerce & Industry Secretary Sabyasachi Sen |
That wasn't surprising given the intellectual firepower at hand -- and the convenient fact that the ET Cookout only only provided an
excuse for Calcut-tans to engage in their favourite pastime, adda. This difficult to translate Bengali word, means far more than a stimulating discussion. The guest of honour, chief minister Buddhadeb Bhattacharjee and the three chefs, ITC chairman YC 'Yogi' Deveshwar, Union minister of state for commerce Jairam Ramesh and Tata Tea managing director Percy Siganporia did just that. They served up not merely a menu of ideas, but thought-provoking observations and questions in the course of a relaxed evening.
The ingredients lined up for the recipe/solutions ranged from the infra-structure gap between China and India, the role of the private and public sector, the promise and limitations of PPP (public-private partnership), the role of conservation, the time it takes to put together a model concession agreement for roads and many other issues.
Kolkata's business elite was out in full force. We spotted Harshvardhan Neotia, chairman Ambuja Realty, Sudhir Jalan, CMD Meenakshi Tea, Karan Paul, chairman Apeejay Surendra Group, Sabyasachi Sen, principal secretary, commerce & industry in the West Bangal government, Hemant Kanoria, VC and MD, Srei Infrastructure Finance, KK Bangur, chairman Graphite India, CS Nopany, VC, Sutlej textiles and industries, BVR Mo-han Reddy, CMD, Infotech Enterprises, Utsav Parekh, chairman, Smifs Capital Markets.
Tata Steel MD B Muthuraman was delayed by pressing business preoccupations but dropped in late in the evening. He had been called away to ac-quire coal assets in Mozambique to keep the home fires burning at Tata Steel and Corus, but clearly wanted to see what was cooking at the ITC-The Sonar too!
Unlike the previous cookouts, the panel discussion was the aperitif, not the main course. And Buddha Babu or the 'capitalist communist' as The Economist recently dubbed him, lived up to the moniker by putting his faith in the PPP model and foreign investment. With his characteristic humility, the CM confided that he did not have time to prepare for his speech, but the content -- peppered with statistics -- indicated his mastery of the subject. Indeed, his speech included a panoramic stock-taking of India's infrastructure situation, ranging from the golden quadrilateral to rural electrification to telecommunications.
China, the CM pointed out, invests 9% of its GDP in infrastructure, com-pared to India's 3.6% and the results were there for all to see. India plans to raise its spending on infrastructure as a share of GDP from 3.6 % to 6%. The CM also expounded on his plans to upgrade West Bengal's infrastructure, including a proposed deep sea port.
Jairam Ramesh, who turned out to be the life and soul of the party, began by insisting that he was not speaking on behalf of the union government. He also said by the time he finished, the audience would be confused as to who was the leftist. He certainly did not disappoint, expressing scepticism on whether PPP was really a catch-all solution.  |
Left to-Right: Jairam Ramesh, Percy Siganporia and Y C Deveshwar |
"The private sector will not build roads in Manipur," Mr Ramesh said. What India needed was not FDI but DI (domestic investment), the minister pointed out. In remote and poorer regions of the country, the public sector would have to invest. "No country has developed infrastructure using FDI," he asserted. The public sector would have to play the role of a venture capitalist, paving the way for the private sector. The public sector ought to build projects while the private sector could run projects, the minister said.
The two corporates on the panel, Mr Deveshwar and Mr Siganporia, concentrated more on micro solutions instead of the big picture aggregate view preferred by the two politicians. Mr Deveshwar praised the government's flagship Bharat Nirman programme but said the government should do more to support rural infrastructure. The private sector, he said could play its role in providing rural infrastructure, if given incentives. He also pleaded for incentives for corporates to utilitise wasteland for sustain-able wood products.
The government's job, he added was to mobilise, ideas and resources, in the same manner that a company's CEO mobilised ideas. He was paid, Mr Deveshwar, said not to implement his own ideas but to appoint people with the best ideas.
Mr Siganporia emphasised the need to develop soft infrastructure such as health education and communications. He also proposed closer monitoring of projects, involvement of NGOs and initiatives at the village level.
The speeches were followed by a short but lively question and answer session which saw a spirited discussion on the time the government takes to finalise model concession agreements. While Hemant Kanoria of Srei Infrastructure pointed out that it had taken five years to finalise concession agreements under which private sector could build roads. Mr Ramesh attributed this to complexity and low capacity on the part of users.  |
Left to Right: Patton Ltd MD Sanjay Budhia, Dhunseri Group Chairman C K Dhanuka & Ambuja Realty Development Ltd Chairman Harshavardhan Neotia |
Talking over, the union minister and two CEOs donned chefs aprons to become chef-executives as the more tangible part of the ET CEO Cookout, presented by Daawat, got underway.
Mr Deveshwar dished up a grilled fish in teriyaki sauce, while the minister stuck to his college-days' staple, masala omelette -- both with a little helping hand from ITC chefs.
But Mr Siganporia, a self confessed regular weekend chef, needed no such assistance for his seafood pasta medley.
Apart from the discussions, the evening provided ample opportunities for networking which continued late into the evening. The infrastructure deficit may remain with us for a while but enough ideas had been generated, most members of the audience felt, to find a way out.
MIXED GRILL
LAND, FINANCE & POLITICAL WILL ON MENU
IT WASN’T your formula Q&A at the ET CEO Cookout on a balmy Friday evening in Kolkata. Though somewhat tight set, it was super-charged. As our panelists focussed on the pressing need for quality infrastructure and its associated challenges, the city’s corporate power elite instantly related to the predinner discussion over wine and canapes.
Srei Infrastructure Finance vice chairman & managing director Hemant Kanoria set the ball rolling. “Government policies relating to infrastructure are too cumbersome. For instance, the model concession agreement (for road projects) took 16 years to prepare when it could have been done in a year” he said.
Jairam Ramesh fires from the hip literally in such situations. “The model concession agreement wasn’t so simple my friend. It took years to develop an equitable policy document. Also, the ability to pay varies since we know what happened when power distribution was privatised,” he said.
Up next was the US consul general in Kolkata Henry V Jardine, who wondered how the government proposed to address global concerns about the “ease of doing business in India” in terms of facilitating new infrastructure projects and implementing them soon. The US diplomat cited a 2006 World Bank survey in this context, that ranked India No. 135 in a list of 177 countries that were part of a global study on the issue.
ITC boss YC Deveshwar took it on. “We may be ranked 135, but India’s GDP is still growing at 9% in the last three years. So it underscores the entreperneural genius to be able to take on adversity and turn it into an opportunity.”
Time was short and the session had to break for the chefs’ show. However amidst all the camaraderie, questions continued to float around. CEOs seemed quite perturbed by the infrastructural bottlenecks that exist in the country and many threw up, what they felt, could be the genesis of the problem and the solutions that may help India to bridge this huge deficit.
The intensity with which they discussed the subject was best highlighted perhaps by the evening’s very last guest to walk in : Mr B Muthuraman, managing director of Tata Steel.
“Fundamentally, I think there are three important things that need to be done for creating infrastructure. First there are issues regarding land acquisition and the government needs to get them sorted out. Land forms the basis of infrastructure, be it roads, ports or power plants. Yet land acquisition is getting in creasingly difficult in our country. This could hinder infrastructure growth,” Mr Muthuraman pointed out.
“The second point I wish to make is on financing of infrastructure projects. By their very nature, money invested in infrastructure projects is locked in for longer periods of say 10-20 years. There is money in insurance and pension funds that are invested in inherently low yielding assets. We need to evolve a mechanism within financial mar kets, so that these funds can be invested in infrastructure projects, which may provide somewhat higher returns. For this to hap pen, we need maturity of financial mar kets,” he commented.
“Finally, to achieve both these, political consensus is needed. So, it is the third thing perhaps that is somewhat axiomatic towards achieving of the other two,” Mr Muthuraman added.
Indeed, everybody seemed to be worried about the infrastructure deficit angle Apeejay group’s Karan Paul, Yogi Devesh war and Utsav Parekh of SMIFS, kept on discussing the escalating realty prices in Mumbai and Delhi, including RIL’s Rs 1,100 crore deal in Bandra Kurla — even as they dug into their dinner.
Sudhir Jalan of Meenakshi Tea felt for example that an integral part of infra structure development is land and its valuation remained a critical issue. “I strong ly feel land should be valued at prevailing market price and not be based on 100 year old rates. Proper utilisation of land will increase the overall economic output ratio,” he said.
Reward infra initiatives
YC DEVESHWAR, CHAIRMAN, ITC
EVEN before he donned the role of executive chef to make fish in teriyaki sauce, ITC chairman YC Deveshwar gave the audience a taste of his radical ideas. Since only 20% of the total outlay envisioned in the Five Year Plan was for rural infrastructure, he felt the private sector could do far more if there were market rewards and incentives. “Only if these initiatives are incentivised will corporates come forward as venture capitalists in rural areas and act as angel investors! Some companies like ITC do it because it has a passion for such programmes,” he noted and proceeded to serve up his energy and water conservation initiatives.
Mr Deveshwar felt organisations would be compelled to save energy if — and only if — they can save the cost of energy as well as the cost of taxation on it. “This can be achieved by splitting excise duty into two parts. While one part can get linked to the number of units one consumes, the other can get linked to the value one generates. The total tax incidence on these two, however, should remain same initially,” he quickly added.
He was firm on the issue that farm forestry or use of wasteland to generate renewable sources of wood in India would go a long way to create a multiplier effect on employment as well as on conservation of energy that is otherwise required to produce cement and steel.
Complimenting the Centre’s Bharat Nirman programme, the IIT-D alumnus said the exercise involved private sector only as a contractor. “To accelerate the exercise, the government should involve private sector as a partner — it could be a partnership between state and central government, panchayats, NGOs and even the private sector,” he said. “If all these efforts are conceived as projects in infrastructure, even ITC could have managed to get deductions. We have been spending huge monies on these projects because we are passionate about it. But rewards for taking up these works could have prompted us to accelerate these programmes,” he added referring to his company’s ‘integrated watershed development’ efforts.
Overall, he propagated mobilisation of not only the financial resources of the private sector but also their managerial resources to be able to bridge the deficit!
But in conclusion he tempered his contentions with the caveat, “As a chairman, it is very hazardous to apply your ideas on your organisation. You are paid to mobilise ideas from others who are close to the market, who are close to the technology. My job, most of the time, is to mobilise people who I think can bring great ideas.”