Infrastructure

Here are edited excerpts:

WSJ: In a city like Mumbai and a country like India, where infrastructure projects are fraught with bureaucracy, long delays, and tricky issues of rehabilitation, what is the way forward?
JM: It has been predicted that in India alone about 500 million people will move to the cities in the next 10 to 15 years. The government needs to think about this in terms of policy and how to lay out the second and third-tier cities of India, so that mega cities don't get overcrowded. There is also a financial configuration that needs to be worked out - for example, if there is only government capital available for funding infrastructure, it's harder to make an investment and hence the need for private participation and partnership. It is also efficient to do one [well-coordinated], transparently conducted project instead of working on 500 acres of land at a time. So while some may argue that inefficiency is a worthy price for individual freedom and a place in society, on the flip side collective power is more efficient. The key is to aggregate lots of little transactions into one big transaction.

Dharavi, one of Asia's largest slums in Mumbai.

WSJ: How can private investment in infrastructure improve the situation in India's cities?
JM: The main way, in my opinion, that private investment in public infrastructure can improve the situation in India's cities (and elsewhere) is as a source of capital, a key constrained resource. According to a recent McKinsey study, "India's urban awakening: Building inclusive cities, sustaining economic growth," over $1.2 trillion is needed for appropriate infrastructure investment in India, without even addressing the housing gap. Some of that money can come from the federal government, some from increased taxation at the city level, some from governments monetizing the value of land...but a major part of it has to come from the private sector, potentially foreign investors.

The second way that private investment in infrastructure can help the situation is by bringing faster solutions. Like in our case study at the Harvard Business School titled, "Dharavi: Developing Asia's largest Slum," one of the appealing factors of the five-sector Dharavi scheme is that in seven years the entire project could be completed, to a high standard, with one master private sector vendor. This would bring world class resources to bear, mean that there are far fewer bureaucratic reviews, and lesser chances to get off track.

Source: blogs.wsj.com By Arlene Chang How to Improve Infrastructure and Slum Life