MSRDC and Mumbai-Pune Expressway: A Sustainable Model for Privatising Construction of

Physical Infrastructure?
Author(s): Hemalata C. Dandekar and Sulakshana Mahajan
Source: Economic and Political Weekly, Vol. 36, No. 7 (Feb. 17-23, 2001), pp. 549-559
Published by: Economic and Political Weekly
Stable URL: http://www.jstor.org/stable/4410291
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 opecial articles

MSRDC and Mumbai-Pune Expressway

A Sustainable Model for Privatising Construction

of Physical Infrastructure?
This case study of the Mumbai-Pune Expressway points out that delivery of infrastructure
like road and highways, especially mega projects, totally through the private sector is
currently difficult. In the absence of such private sector capacity to take on this
responsibility, the role has been creatively shouldered by the Maharashtra government by
forming and supporting a road development corporation - carved out of its public works
department in its primary mission, the building of essential projects in a timely fashion. The
experience of the Mumbai-Pune Expressway indicates that the public sector, freed of
political intervention and outdated organisational structure and given command and
authority to innovate is able to deliver needed products efficiently.

HEMALATA C DANDEKAR, SULAKSHANA MAHAJAN

Involving the private sector in develop- from the way privatisation has been imple-Corporation (MSRDC), the agency which
ment planning efforts in India has mented by the government of Maharashtrahas facilitated its construction, are being
in the soon to be completed Mumbai-Puneclosely observed by other states and the
emerged in the rhetoric and policies of
government. The central government's Expressway with a view to delineate: whatcentral government. The critical analysis
worked; the elements of success; the prog- presented here describes the MSRDC
privatisation policy of 1991 has been
adapted to varying degrees by different
nosis for replication; the caveats; and, whatapproach and conceptualises it in an effort
Indian states. The shift to liberalise the is implied for the role of the public sector,to inform those who wish to emulate the
the private sector and their partnership in approach, those who want to understand
economy has included attempts to incorpo-
rate the private sector in a variety of the efficient delivery of physical infra-how privatisation policy is being imple-
activities, ranging from formerly mono- structure. The intent is to critically exam- mented, and those who have stakes in the
ine the model for incorporating the privatedebate on development in India.
polised government sectors like television
and insurance to those such as banking, sector in physical infrastructure develop-
telecommunication, hotels, and, engineer-
ment that is emerging in the Mumbai-Pune Models of Privatisation
ing consultation services which operatedExpressway, and make an assessment of of Infrastructure
benefits as well as concerns. This is useful
in competition with the private sector.
as the expressway project is widely claimed
Significant in this has been the privatisation The new economic policy of liberal-
of physical infrastructure such as high- to be a success, not just by the government isation evolved through the economic crisis
ways and ports. The definition of what agencies involved, but also by the popularof 1991 when the government sought
media and, sections of the construction private sector participation, including that
constitutes privatisation, what elements of
a sector are executed by private corpora-industry, and will be emulated. It is a of multinational corporations, in various
tions and what is the role of the govern-significant project because it brings on- sectors including those hereto reserved as
of an essential and long-overdue piece a monopoly of the government.1 The
ment, is evolving. Even a quick review line
of physical infrastructure, the lack ofDisinvestment Commission2 appointed in
the literature reveals that there is a great
deal that remains to be clarified in the term
which has acted as a bottleneck to the 1996 by the central government to recom-
'privatisation' mend a strategy of privatisation of 43
efficient functioning of a crucial corridor
This paper does not attempt the formi- of industrial capacity and production public
in sector units (PSU) has suggested
Maharashtra. As such, the project and different
dable task of defining privatisation. It seeks the methods for different organis-
rather to understand what can be learned Maharashtra State Road Development
ations depending on the nature of the PSUs,

Economic and Political Weekly February 17, 2001 549

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the areas of their operations, and, their out of services and the construction of evidence of such shortcomings the
present status. Recommendations have turnkey projects - the BOT arrangements transportation sector was declared a prior-
encompassed a range of actions for might be most effective. ity sector for privatisation. This was seen
example as follows: In the last few years privatisation has as the best strategy for addressing defi-
(1) Sale of 100 per cent of government been significantly promoted in the area ofciencies and to:
holding as in the case of Modern Food (1) Fill gaps between the needs and de-
physical infrastructure. The transportation
Industries, Pawan Hans Helicopters, sector in particular was identified as mands for expansion -of physical infra-
Ranchi Ashok Bihar Hotel Corporation, crucial in the transmission of economic structure networks and the paucity of
and Utkal Ashok Hotel Corporation which development. Inadequate means of trans- available resources of various kinds -
are two hotels owned by India Tourism portation was perceived as responsible for investment capital, technological know-
Development Corporation. the concentration of economic activities in how and hardware, managerial and human
(2) Partial disinvestment varying from a few major cities with detrimental effect capital, and streamlined administration.
74 per cent in the case of Hindustan Pre- on the development of peripheral regions. (2) Circumvent the bottlenecks that were
fab, 40 per cent in the case of Shipping The fast growing non-traditional, agricul- created by bureaucratic delays by creating
Corporation of India and 25 per cent tural sector was also felt to be affected as new and unorthodox communication links
in the case of Indian Petro Chemical it was unable to tap the growing demand between government departments and to
Corporation. in the domestic urban and world markets explore imaginative ways to manage
(3) Infusion of Rs 1,000 crore as equity for its produce. Existing surface transpor- projects so that they attain the stated goals
in Air India, followed by a strategic sale tation such as railways and national andwithin the stipulated time.
by way of new share issue to reduce gov- state highways were overloaded beyond(3) Harness the ability of the private sector
ernment holding to 60 per cent, and, sub- their capacities.3 Some indication of this to look at new, advanced and alternative
sequent offer to sell 20 per cent of govern- is apparent in aggregate data on roads.technical solutions and to assimilate these
ment holdings to domestic investors. India has a road network of 33,00,000 km,into the delivery system, construction
(4) Discontinuation of operations imme- the third largest in the world. National andprocess and project planning.
diately and sale of assets of companies as state highways constitute a mere 1,80,000(4) Facilitate utilisation of large amount
in the case of Electronics Trade and Tech- km or 6 per cent of this total network andof funds available with banks as well as
nology Development Corporation. of these the national highways which private sector finance companies and inter-
In addition other measures have been
constitute only 2 per cent of the totalnational funding agencies like Asian
recommended by government which are network carry 40 per cent of total traffic. Development Bank and International
related to involving the private sector
Freight traffic on roads has increased fromFinance Corporation.
6 million tons in 1951 to 400 million tons
actively in infrastructure creation, main- The call for privatisation is now firmly
tenance and operations. In an overview in 2000 while vehicle traffic has increased embedded in the rhetoric of planning bu-
from 0.3 million vehicles to 27.5 million
paper on privatisation of municipal ser- reaucracies throughout India. The high-
vehicles but the road network has not
vices Mehta and Mehta (1992) outline four lights of the central government's mea-
distinct forms of privatisation - divesti-
expanded to keep pace with this. A 10-year
sures were announced in 1994. They inclu-
programme to widen the Indian National
ture, contracting, financing and deregula- ded declaring the road sector to be an
Highways was estimated to need funds
tion. Numerous ways to achieve these have industry (thus allowing it to raise bonds
of Rs 8,020 crore at 1996 prices.4 This
been practised by government and include to raise resources), amending the National
actions such as: National Highway Development Project, Highways Act to enable the levy of tolls
(1) Allowing the entry of private sector is therefore being implemented with fund- by the private sector, and allowing the
firms and thus competition into sectors ing from the World Bank5 which involves private sector to participate in infra-
which are presently the monopoly ofprivate contractors to build the roads, structure construction on a BOT basis. It
government, for instance as it has done inmanage them, and, transfer them back has to also allowed 100 per cent foreign
general insurance and telecommunications. the government on a BOT basis. In 1995, equity participation and given the rights
(2) Retaining ownership of a public sector in the state of Maharashtra, the estimatedto the private sector to develop services
but outsourcing work to a greater extent need for road development and maint- and rest areas along the roads. Companies
to various private contractors or privateenance was to the tune of Rs 14,000 crore involved in BOT projects can avail of a
sector companies in a variety of arrange-while only Rs 1,400 crore were allocated 100 per cent tax holiday for five years
ments such as build own operate transfer and a 30 per cent tax holiday for another
in the budget.6 The inadequacy of resources
(BOOT); build operate lease transfer; five years.
for the transportation sector is noted in the
(BOLT); build operate transfer (BOT). Ninth Five Year Plan (1997-2001).7 There-
These have been implemented in various fore a major imperative for a privatisation Private Sector Response to
port projects. policy in road construction was to raise
Government Policy
(3) Creating new forms of public sector needed capital for both developing and
companies with the collaboration and maintaining roads. Although the policy change adopted by
participation of the private sector for Compounding the problem of under the government was welcomed by the
example as in the Konkan Railway capacity in the physical infrastructureprivate
of sector its participation in actual
Corporation and MSRDC. transportation has been the perceived projects has not been enthusiastic. Inter-
Mehta and Mehta suggest that in the inability to finance, manage and create national infrastructure companies have not
initial stages of privatisation contracting bid on infrastructure projects like the
new infrastructure. In light of the growing

550 Economic and Political Weekly February 17, 2001

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Mumbai-Pune Expressway in spite of factors that deterred private companies. Since independence India relied heavily
various incentives declared by the Indian The expressway is not an isolated caseon ofthe public sector for economic develop-
government which have been publicised low response to opportunities in infra- ment funding its activities with budget
by foreign governments.8 In the port sector allocations through national and state
structure construction by private corpora-
too which has been more attractive to the tions. In another recent infrastructure planning. Public sector companies were
private sector, their presence is limited. development project in Mumbai, Tataowned by the state and national govern-
The domestic private sector has also not Electricals has won a BOT contract to ments. Thus the new policy to privatise
responded with bids for infrastructure construct a port at Pir Pao in Nfumbai represents
at a significant departure. It is a
projects like roads and highways. Aug- the cost of Rs 200 crore.10 The Mumbai model of privatisation in which the role
menting central government measures the Port Trust was able to sell eight docu- of government continues to be significant.
Maharashtra government devised various ments in the globally invited tender. It can be understood through the
incentives to boost privatisation. They However only Tata Electrics actually organisational structure of recent projects
included a guaranteed 20 per cent rate of submitted a bid and was awarded the of MSRDC. In the conventional approach
return on capital, a promise of rapid and contract, presumably because the bidwhere was the public, government sector was
single window approval, tax incentives within the range of the estimated cost of
dominant, the government raised the capi-
and reduced duties on imported equipment the project. These examples illustratetal needed for companies and their profits
that
for all investments in industry, and, at this juncture despite the desires of orthe
losses were transferred to, and accounted
allowing up to 40 per cent government for, in government budgets. The manage-
centre and state governments, it is diffi-
support to the project. Private sector ment
cult to attract foreign direct investment or of these companies was answerable
entrepreneurs are allowed to recover broad-based domestic participationonly in to the government. In contrast, the
their investments first, followed by the basic infrastructure projects. The Indian
private sector was composed of companies,
government. But as demonstrated in the incorporated by individuals or group of
private sector is only now slowly position-
lack of bids for the Mumbai-Pune Express- ing itself to handle the challenges of individuals,
such who raised needed finance
way the response from the private sector mega projects. through the share market and were inc-
has been low. It is apparent that capacity buildingorporated
in under the prevailing legal con-
The background for the Mumbai-Pune ditions. The new emerging sector which
infrastructure construction is developing
Expressway is as follows. In 1990 the in Maharashtra and this is occurring is being promoted by national or state
with
state government commissioned a feasi- a particular model of indigenous privat-government, is a public/private joint sector
bility study for the expressway.9 The reportisation put into place in projects such whichas has some or all of the following
submitted in 1994 recommended the con- the Konkan Railway Corporation and characteristics:
those
struction of a new 10-lane expressway as developed by MSRDC. The speedy con-- The companies in this sector are formed
a BOT to be financed and operated on astruction between 1991 to 1997 of some and promoted through the initiative of
toll basis. These recommendations were760 km of the Konkan railway,1l by the government.
accepted, tender documents for the - The seed capital is provided by the
Konkan Railway Corporation was financed
expressway were prepared and bids in- through public bonds and built by selectedgovernment and key management person-
vited by the Maharashtra public works private firms through competitive tenders.nel are selected from existing government
department (PWD). Six corporations pur- Another mega project, that has been organisations/ departments.
chased the tender documents but only one,successful in delivering tangible physical- Funds are raised through public bond
products, involves large investments issues,
the Reliance Corporation, submitted a bid. in as and when required for specific
Detailed information on exactly why Re- projects, which are traded on the stock
the construction of fifty-five flyovers and
liance was the only contractor to respondbridges at critical junctions in the city market.
of Investments are attracted from
Mumbai's overloaded and congested road
is not readily available. The Reliance bid private financial institutions as well as the
was for Rs 3,600 crore, a sum more than system. This has however not been with- general public. Governments provide the
out great controversy and challenges
twice the currently anticipated cost of the necessary guarantees for such bond is-
expressway and it was not accepted by theby civilians in the court system bringing sues. -The public corporation is entrusted
government. It is difficult to pin-point to a halt work on critical bridges. The with responsibility for overall manage-
why the Reliance bid was so high. Factorskey catalyst in this project and in the ment of the projects. Most of the functions
that could have driven up the bid price Mumbai-Pune Expressway has beenrelated to construction, operation and
MSRDC, an institutional creation of the
can be speculated. Potential costs for hold- maintenance are contracted out to large
ups to the project by the environmental Maharashtra state government. MSRDC and small companies, which could be from
lobbies could be one. The unexpected private or public or even cooperative
was formed with an equity capital of only
decline in real estate demand leading Rs to 5 crore. It was quickly able to raisesector.

reduction of real estate values throughout - These joint sector companies have some
Rs 2,121 crore for the two priority project
from financial institutions through
the Mumbai-Pune belt, the cost of raising popular support, from consumers as well
capital needed to acquire high end con- private placements and an additional as investors. Involvement of people in the
struction equipment, non-availabilityRs of600 crore were raised through tax-freepublic companies can generate relatively
infrastructure bonds.12 Capital for the
government subsidies, the overall size and. greater accountability towards consumers
cost of the project and uncertainty thatproject was expeditiously raised and as well as investors.

tolls would provide sufficient pay backMSRDC

in could proceed with organising - These joint sector companies have
actual construction.
the stipulated time frame, could be other relatively more independence, flexi-

Economic and Political Weekly February 17, 2001 551

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bility, and dynamism than the conven- rains. The resulting delays and trafficknown, which represented a lower initial
tional public sector. They are similar blockages turn a five-hour journey to construction
one cost and used available con-
to private sector companies in their that would involve anywhere between struction technology in the country. The
management approach and work in a 10 to 15 hours.15 second one was to construct a rigid pave-
networked relationship with other The expressway is being constructedment
as concrete road. This required the
participating companies. a six-lane, divided, access controlled introduction of new technology/equipment
concrete road (with a provision of two in the country and increased the project
MSRDC's Mumbai-Pune cost
extra lan6s for future addition) with a variety by 6 per cent (Rs 56 crore). This
Expressway: Some Background
of services and amenities. It is the first of second option was found economical in
its kind in India. The construction of an the longer run when calculations were made
MSRDC in its' execution of the Mumbai- based on a 30-year life cycle.17 MSRDC
emergency telephone service, fire fighting
Pune Expressway provides an example equipment, hospitals with emergency fa- in adopting the second option accepted the
of the workings and successes of a joint cilities, rest areas, petrol pumps and fre- short-term higher costs giving weight to
sector model. The example is analysed quent, closely spaced pedestrian and cart the long-term gains rather than the short-
here to glean insights into the strengths, track crossings are included in the design term economies.
potentials and vulnerabilities of future of the expressway. All tunnels are pro- The actual road construction work was
initiatives in infrastructure creation with divided into four sections and tenders were
vided with adequate artificial lighting and
this approach. ventilation along with backup emergency invited from the private sector Project
The Mumbai-Pune Expressway had been supply. The completed road is planned Management Companies (PMCs) for these
a priority project for the Maharashtra state with continuous fencing along its stretch sections and accepted by January 1998.
government for quite some time. In the last to deter pedestrians and cattle and facili-Responsibility of each segment was given
decade the Mumbai and Pune regions13 tate the movement of high-speed vehicles. to one PMC. Construction of each segment
have grown and evolved into large A pipeline of sufficient diameter is laid of road was entrusted to one construction
urbanised areas, which are increasingly along the road length for communication company. The private sector was thus
interrelated. In a 1994 article on industrial cables. involved through outsourcing of engineer-
policy in Maharashtra, the concentration The managing director of MSRDC has ing services.
of the state's industrial activity in Mumbai observed that mega project like this in- The choice of concrete technology and
and Pune was vividly highlighted by data volve the participation of different govern-the large size of the project as well as the
which showed that the two cities and the ment departments. To facilitate this therelatively short time in which the work was
corridor between them, the Mumbai-Thane-government of Maharashtra constituted ato be completed necessitated the use of
Pune urban belt as it is sometimes referred high powered steering committee for co- highly automated, sophisticated equipment
to, contained 72 per cent of factories,ordination among the involved depart- and high quality construction materials.
provided 77 per cent of industrial employ- inents. Environmental clearances from Modern machinery used in the project
ment, controlled 88 per cent of workingrelevant departments of the central govern- includes high capacity cone crushers, sand-
capital, and yielded 86 per cent of totalment and from the forestry department manufacturing machines, computer con-
state industrial output.14 More recentlywere essential. MSRDC as a government trolled automated batching plants18 and
this link between Pune and Mumbai has organisation procured the permissions. laser guided slipform pavers. The slipform
become crucial for the development of the Thus it managed that aspect of the work paver is a piece of equipment which has
computer and information sector that it is had a comparative advantage for - get- a number of attachments such as: an
perceived to be a key element in facilitat- ting all government departments to take automatic dowel bar and tie bar inserter
ing globalisation and international busi- speedy action on permissions and land which allows steel bars which reinforce
ness linkages. The route continues to be acquisition. MSRDC acquired land 90 m concrete to be placed at pre-designed
a corridor for substantial investments by wide for the carriage-way and for support intervals; high-capacity vibrators which
both the private sector and the Statefacilities including requirements of con- are essential to achieve the needed high
Government. The traffic on the Mumbai- struction like stone quarries, water sources, compaction of concrete; and, elimination
Pune section of National Highway 4 is project offices, storage of materials and of voids to achieve specified concrete
expected to increase from 60,755 passen- equipment. In total MSRDC acquired 646 strength; auxiliating float which allows the
ger car units per day in 1990 to a projectionha of land for the right of way, 455 ha of forming of a uniform curvature and level
of 100,000 passenger car units per day byland for quarry and dumping areas and of the road surface; and, a texturing machine
the year 2004. The distance between the1,338 ha for real estate development, which which gives a texture to the smooth surface
two cities is some 180 km and it takes is expected to generate surplus revenue.16 of concrete to increase friction with tyres.
about four and a half to five hours to coverAn additional sub committee to take
With the use of the slipform pavers it was
policy decisions was constituted under possible
it under good traffic conditions. However the to construct one kilometre of
increasingly, and particularly during chairmanship
the single lane pavement in a day. This level
of the state chief minister.
monsoon, the traffic on the Mumbai-Pune of quality and speed would be impossible
The most important decision that of using
road gets frequently and unpredictably
rigid concrete pavement for the road, without
was automation. Equipment costing
paralysed by accidents which block the
taken by MSRDC during the conceptual Rs 300 crore was purchased for achieving
phase of the project. Two options were
narrow and winding curves of the two lane this fast track construction.
considered;
highway. Landslides in the ghats are a the first was to use flexible
Project planning and management of
frequent occurrence due to the monsoon large modem infrastructure projects such
pavement, asphalt road as it is commonly

552 Economic and Political Weekly February 17, 2001

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as the expressway is a complex task invol- petrol pumps, restaurants and hospitals
in the project such as the PMCs, contractor's
ving coordination of multiple activities, site and main offices and MSRDC offices will also benefit commuters. The recre-
organising the division of labor and co- were connected with a networked comput-ational facilities and theme parks that are
ordinating inter-related work. Achieving erised system. In such networks, any proposed will offer facilities for the
an efficient management strategy has affluent commuters able to afford them.
decision by any unit is immediately made
become a significant factor in successful available to all other parties. Actions The expressway also makes it possible
execution of such projects. Various to segregate fast moving light motor
related to, or dependant on, such decisions
organisation theories have evolved and are also immediately obvious to all agen- vehicles from slower goods carriers. Large
prevailed in different periods. Morabito, cies involved as well as to MSRDC and and heavy container trailers carrying goods
Sack, Bhate (1999, p 18) describe these any adverse effects on overall goalsfrom can the southern part of India to the new
theories in terms of three 'schools of be identified and discussed immediately. Jawaharlal Nehru port in Uran as well as
thought' as follows: Inter-related processes such as material to the Mumbai port are presently prohib-
Classical theory, which typically repre-inventory, ordering, store control, man- ited on the existing Mumbai-Pune road.
sents the culture of the Industrial Age.power
Its and machinery requirements, mea- They are diverted through the Kasara ghat,
tenets are normally associated withsurement the and certification of completed which is a much longer route, and adver-
view of the owner and the underlying work, accounting, billing and cash flow sely affect traffic on the Mumbai-Agra
premise is that the organisation should management
be are linked in this network. road, and the Nasik-Pune road. The new
operated as a machine. In contrast to Any this information regarding delays, short- expressway will help ease the traffic load
neo-classical theory advances the position ages of mateflal, manpower or resources on these roads. Transport service com-
of the employee. This is the so-called can be tracked continuously and corrective panies are going to benefit despite the toll
'humanistic school', which emphasises measures can be taken immediately. This they will pay as the new highway reduces
motivation and employee involvement. model helps to optimise use of available commuting time and distance. About 40
Whereas classical and neo-classical resources including time and spaceper andcent of the traffic on the existing
theories are framed in terms of division eliminate redundancies. Well defined and Mumbai-Pune National Highway 4 is anti-
of labour, the advent of new technologyclearly communicated evaluation criterion cipated to divert to the new Expressway.
of information has ushered in new infor- The option of the toll-free existing nati-
for selection of contractors, regular billing
mation theory which encompasses a and payment cycles and other procedures onal highway will still be available for the
variety of models that depict organisation followed in this project have increased lower end traveller who is willing to forgo
and decision-making in terms of infor- transparency and helped to build the con- the amenities of the expressway. Traffic
mation flows. fidence of contractors.20 on the old road should also be lower and
The organisational structure and probably less dangerous as truck traffic
management strategy of MSRDC appears Benefits from Mumbai-Pune will by and large shift to the expressway.
to be like modem autonomous business Thus by and large the general perception
Expressway
corporations, which can be understood by is that the public stands to gain with
new information theories. A dynamic(1) Essential Infrastructure is created
this project.
which
approach to collection, transmission and has popular support Although the private corporate sector
free flow of information within the did not invest in the expressway its' com-
organisation are key aspects of such
The expressway is extremely important
pletion is going to benefit the industries
management practices and noted as inno-for the long-term viability of Mumbai to
situated in this important corridor. Large
vations in MSRDC. In this model many remain an industrial and economic power and small industrial enterprises around
in the country. State government actions
activities of a project are started simulta- Pune, Mumbai and Thane are interdepen-
neously. In the case oi the Mumbai-Punehave been resolute not just in buildingdent the in many ways in that finance, manu-
expressway but in budget allocations and
Expressway, the land survey was entrusted facturing, computer and information in-
to a separate private agency, to ensureland
its reservations for establishing a chain dustry, technical services, entertainment
of industrial development parks whichand
completion before the start of the monsoon aretransportation services are shared by
rains while that of selecting PMCs to wasbe strung along its length. The overall them. The new expressway will help bring
concurrently undertaken. Thus, as soon benefit
as to accrue to the Mumbai-Pune these cities closer in time and space. On
the PMCs were appointed, the surveyregion
data is clear. the whole the fact that this project has
was ready and could be provided to them. The commuter public on this route popular support is evident in quite positive
generally stands to benefit from a reduc-
Similarly, each PMC and contractor could press coverage.
tion in delays, increased speed of journey,
plan the construction of various sections
(2) Indigenous capacity has been built in
of the expressway independently, inand co-greater safety achieved through better
construction sector
ordination with other agencies, as welldesign.
as A higher level of security ensured
keeping with the overall framework.by The an intensive system of policing and A large number of small and medium
electronic surveillance has been announced
adoption of parallel information proces- scale companies in the construction indus-
sing, networking and decentralised deci-
for the highway. The design of this express- try have benefited from their involvement
way with clear sightlines and more intense in the Expressway project, not just in terms
sion-making strategies coupled with trans-
parency characterises the constructionsecurity
of systems promises to benefit com- of profit but more importantly in terms of
muters.
this project and exemplifies the intent of The amenities that are planned experience and enhanced productivity.
along the expressway such as rest rooms, PMCs are new and important entrants in
the state government.19 All units involved

Economic and Political Weekly February 17, 2001 553

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this project. PMCs have been made re- was an essential factor in the decision.24
Construction contractors have used differ-
sponsible for all aspects of planning, design, Large-scale manufacture of fine aggregate
ent crushing systems and helped in assess-
estimation, tendering, selection of con- was successfully instituted in this project
ing their comparative performance. Con-
tractors and, actual management of project to provide replacement or partial replace-
crete batching plants and ready mix con-
construction. They have taken up the role ment for river sand. Experts assert thatcrete was not used by the Indian construc-
formerly played by the Public Works crushed fine aggregate (sand) with correct
tion industry until the last decade.26 In the
Department. These companies are engaged physical characteristics, contributes to a
Mumbai-Pune Expressway project their
by MSRDC, with contractual obligation to lower voids content, surface area and water
use has became the accepted standard. The
achieve time bound completion of the demand in cement, resulting in higher
availability of large quantities of quality
project. Some of these companies have strengths and improved workability due concrete
to was essential for high speed
collaborations with experienced intera- lower internal resistance.25 The intro-
construction.
tional organisations.21 As a result new duction of various construction innova-
(5) Improved quality control and speed of
technology and management practices used tions in the building of the Mumbai-Pune
construction
internationally have been introduced in the Expressway offered a rare opportunity for
the domestic construction industry toThe speed and quality of work achieved
project. The expert advice and inputs from
these PMC companies has facilitated in-
closely study, under actual field condi- in the expressway would have been im-
novative technical decisions taken by
tions, the performance of different tech-possible without advanced technology and
MSRDC. sophisticated equipment. This along with
nical solutions particularly in the area of
systems to produce standardised quality
production of aggregates and crushed sand.
(3) Sophisticated construction equipment
and technology has been utilised
MSRDC has helped contractors to pro-
SAMEEKSHA TRUST BOOKS
cure needed machinery by giving them tax
exemption and advances and it has borne
the additional cost of currency fluctuations.
Selections of articles from Economic and Political Weekly
As observed in the India-2000 Infrastruc-
ture seminar,22 95 per cent of construction
contractors are small scale and face re-
Ideals, Images and Real Lives
source constraints which render them
unable to invest in expensive construction
Women in Literature and History
equipment. Since a higher level of invest- Edited by Alice Thorner and Maithreyi Krishnaraj
ment in machinery can help to increase
quality and/or lower construction costs,
'Birds in a Cage': Changes in Bengali Social Life as Recorded in Autobiographies
small contractors are often not competitive
to participate in large construction projects.by Women Sarabashi Ghosh : In Search of the 'Pure Heathen': Missionary Women
To assist them MSRDC has provided in Nineteenth Century India Geraldine H Forbes .* Sarojini Naidu: Romanticism
advances to the tune of 90 per cent of the
and Resistance Meena Alexander *. Women, Emancipation and Equality: Pandita
cost of new machinery. To assist in the
Ramabai's Contribution to Women's Cause Meera Kosambi *: Outside the Norms:
purchase of very expensive machinery such
as slip form pavers, batching plants andWomen Ascetics in Hindu Society Catherine Clementin-Ojha :. Nationalist Iconography:
stone crushing plants. MSRDC has alsoImage of Women in 19th Century Bengali Literature Tanika Sarkar -: Positivism
made provisions to reimburse contractorsand Nationalism: Womanhood and Crisis in Nationalist Fictioi'- Bankimchandra's
up to a limit of $ 0.7 million to pay for
customs duties and foreign exchange fluc-Anandmath Jasodhara Bagchi *: Govardhanram's Women SonalShukla * How Equal?
tuations. The concept of an equipmentWomen in Premchand's Writings GeetanjaliPandey *: Representing Devadasis: 'Dasigal
bank that makes needed machinery avail-Mosavalai' as a Radical Text S Anandhi *: The Virangana in North Indian History:
able to contractors was an innovation that
Myth and Popular Culture Kathryn Hansen *. Construction and Reconstruction of
was instituted in this project illustrating
the creative approach of private sector in Woman in Gandhi Sujata Patel :. Feminine Identity and National Ethos in Indian
developing solutions to comrnon prob- Calendar Art Patricia Uberoi.
lems.23
pp xiv + 354 Rs 350
(4) Improvements in domestic delivery of
quality concrete construction
Available from
Although most of the sophisticated
machinery was imported all other con- ORIENT LONGMAN LIMITED
struction materials including chemical Calcutta Chennai Mumbai New Delhi Bangalore Bhubaneshwar
products and cement were procured from Emakulam Guwahati Hyderabad Jaipur Lucknow Patna
local manufacturers. The current avail-
ability of domestic cement in the country

554 Economic and Political Weekly February 17, 2001

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materials allowed better planning of the rupt practices. The institution in this pro- was overcome as capacity to elicit and
ject of time bound billing procedures, ac- promote savings and investments was built
project by reducing the uncertainties asso-
ciated with traditional methods which countability in the process of settling up in the financial sector. Large amounts
claims, and, in certifying and making of funds were available in the form of
require the deployment of a large labour
payments have won the trust of the savings in banks and financial institutions,
force. Advanced technology also requires
involved contractors.
skilled operators to achieve productivity which could be readily deployed in financ-
gains. In construction of the Konkan ing projects such as the Mumbai-Pune
(6) Upgradation of construction skills and
Railway productivity was increased Expressway. In addition this new model
capacity
through the use of advanced tunnel boring of a public private joint sector has been
machinery. This machinery and the skill The many small innovations that take successful in eliciting support from the
of operating it was readily available place
and in the implementation and construc- investing public at large. This support was
used in the Mumbai-Pune Expressway tion of projects like the expressway are initially evident in the success of the bonds
often not reported. People involved in such
project. Similarly, the use of other techno- floated for the Konkan Railway. Similarly
logies new to India are expected to raiseprojects at unskilled, skilled or managerial MSRDC was able to raise Rs 600 crore
levels move into a development mode
the standards of future road construction from its tax-free bonds. One might con-
in the country.27 hardly realising the changes they are strue this as wide-scale public support either
Another major innovation was an im-interalising. Voluntarily and involuntarily for the projects or for the financial instru-
the human resource is upgraded at all levels,
provement in the quality of construction ments which are considered 'safe' as they
through the institution of quality assurancewhich is difficult to measure in economic are guaranteed by the state government,
and quality control procedures.28 Qualityterms benefits individuals, the construc- or for both.
checks were introduced throughout thetion industry and the project. It is notewor- That is not to say that there is no public
process from the testing of materials, tothy that the large-scale shortages reported dissent and opposition. Public sector
sampling, preparation, reporting, and docu-in this project were not of materials or employees, labour unions and environ-
mentation by way of day-to-day qualityequipment but of the right kind of trained mental activists have all expressed various
control of operations and sequence of manpower at all levels. It is a paradox thatconcerns. Consumers have challenged the
testing procedures. Continuous qualitydespite having a large pool of technically policy of toll collection on roads in the
checks assured that timely corrective trained people in India, it is here that courts but the policy has been upheld.
action could be undertaken. An insistence shortages are likely to affect infrastructure Consumers are now realising that the days
on quality construction is an importantconstruction in the future, a concern re- of providing free public infrastructure to
factor in avoiding wastage during con- iterated recently at the National Road consumers are over and that user fees such
struction and in reducing maintenance Congress in New Delhi in November 2000. as tolls are viewed as a necessary measure
costs. The type of maintenance that might PMC companies that specialise in con-to enable provision of benefits in the
be required for the pavement is dependent struction management and constructionlong term.
on a variety of factors and therefore peri-technology as well as engineering design The expressway has been opposed by
odic surveys for timely action will beare rather new in the Indian construction environmental groups such as the Bombay
necessary and are proposed to be carriedindustry. To train needed people in constru-Environmental Action Group (BEAG)
out by the PMCs till such a time as stipu-ction management the National Institute who have objected to the fact that reserve
lated in the contract. However, it is not yetof Construction Management and Research forest lands through which the road is
clear from the available resources how the (NICMAR), a private institute, was startedbeing built are being adversely impacted.
road is going to be maintained in the longin the last decade in Pune and Mumbai byThey have pointed out instances of vio-
term and by whom. an association of construction industrylations such as rubble being dumped in
The speed with which the expresswaycompanies. The decision to appoint'fourforestlands and colonies of construction
project was constructed is widely appre-different PMC companies for the four labour being set up in forestlands with
ciated. A bonus and fine clause to assure segments of the expressway was related tonegative consequences for the forest pre-
timely delivery was built into the constru- the available capacities of such privateserve. They have also questioned whether
ction contracts. This practice is quite com- companies.29 To a large extent the conven-a new road was really the best answer
mon in private sector projects. Introducing tional construction machine manufactur- to the admitted need for improving the
the clause into this joint sector project ing industry too was readily able to con-effectiveness of the road. They lobbied
served to put the burden of accountability tribute to the expressway project. Manyinstead for continued up gradation and
for making timely decisions on the PMCs traditionally skilled and semi-skilledwidening of the existing National High-
as well as MSRDC as the promoters of the labour and trained technicians were em- way 4 claiming that this solution would
project. Delays in decisions can result in ployed thereby increasing their confidencebe less destructive to the environment
contractors claiming additional payments to deliver at this scale. and cheaper to build. Their efforts to stop
for idle labour or equipment. Thus all the project and elicit broad public sup-
(7) Public support and opposition
parties to the contract are made respon- port have not met with great success
sible for timely action. For contractorsIn the 1950s when the Indian govern- although in one case the expressway was
involved in traditional government pro- ment embarked on the task of developing rerouted to avoid a confrontation with
jects, delays in decisions, billing approvalsthe public sector there was a dearth of an environmental group that claimed that
and payments on the part of the govern- indigenous private finance for develop- the habitat of a particular squirrel was
ment are a constant concern and fuel cor- ment projects. By the 1990s this constraint
endangered.

Economic and Political Weekly February 17, 2001 555

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 MSRDC Structure and real estate in the windfall benefit sone of sector approach that is represented by
Characteristics the transport project. (b) Imposing tax on MSRDC and compare it to previous efforts
petrol and diesel fuel for raising needed by government to create innovative
The Maharashtra state government's
capital. (c) Raising a cess on the wage bill corporate structures within itself. Many
decision to carve out MSRDC from the of corporations in the beneficiary sone, public sector corporations, periodically
PWD when the private sector failed toand (d) Developing real estate along the created since independence, have shared
respond with acceptable bids for construc- transport corridor. In addition to these similar success stories in their early stages.
tion of the expressway has proved to be methods which have been tried elsewhere Public sector enterprises promoted by the
an essential and bold step. MSRDC hasin India, MSRDC has also made a strategic central government such as Air India, Hotel
made rapid progress in constructing 55 move to lay telecommunications ducts Corporation of India, Modern Food Indus-
flyovers and the Mumbai-Pune Express- along'various roads and bridges including tries (India), Indian Tourism Development
way. Some of this success can be attributedthe expressway. These can be leased to Corporation and those promoted by the
to the structure and culture of operation private telecommunications agencies. It is state governments, such as Maharashtra
which has been adopted by the depart- anticipated that the rent from these will be State Electricity Board (MSEB),
ment. For one MSRDC administration quite substantial. Maharashtra State Transport Corporation
moved to make its' projects successful One might argue in Hirshman's terms30 initially achieved delegated targets in a
by streamlining government regulations that there is a vindication of the privatisation timely way. This success was achieved
and delegating certain powers to the pri- model that one is observing evolve in using new, contemporary technology and
vate sector so as to decentralise decision Maharashtra state. The rapid completion independent management which was simi-
making. Nitin Gadkari, ex-minister for of the Konkan Railway Project that was lar to that of forward thinking private sector
PWD estimates that the government financed by a very successful effort to float corporations of that time. These public
eliminated some 70 or more regulations, state backed bonds resulted in the Konkan sector corporations expanded rapidly in
that were obsolete or represented undue Railway Corporation acquiring and using scale, taking on additional responsibilities
red tape. high-end tunnel boring machinery. The and obtaining funds and incentives from
MSRDC also moved to improve the experience with the machinery has made the government. The employment in pub-
interface between itself and the private the company highly competitive in tunnel lic corporations grew rapidly in this pe-
sector construction companies who would construction. The capacity to apply this riod. In the process they became powerful
actually construct the expressway by technology is now available for other organisations and attracted the attention of
appointing four PMCs with a proven track projects and has proven to be most suc- the political ruling class. However subse-
record in managing engineering design cessful in the construction of the five tunnels quent political interventions in such cor-
and construction projects. This was an that are part of the Mumbai-Pune Express- porations as well as the vested interests of
important decision. The relationship of way. This seems to be a healthy, develop- bureaucracy emerged over time reducing
MSRDC to the PMCs can be described as ment oriented gain. In addition it has created their efficiency and enterprise. The dead
that of a consumer with service providers.a climate in which the government is weight of these public sector corporations
MSRDC as the consumer and owner of the embracing the application of advanced
started surfacing as a drag on government
product, the Mumbai-Pune Expressway construction technology in the concrete budgets. As Sane aptly observes this is a
was able to demand efficient services and work of the expressway. The result is process in which "the loss incurring bu-
quality products from the PMCs. As owner quality construction of a roadway that reaucracy replaces the profiteering
of the product it retains and exercises the promises to last longer than the one or two- capitalist class in the name of socialist
right to choose private sector construction year life of the improvements the PWD planning".32
companies at an acceptable but differential traditionally made on the old national A current example of public sector
price for each company, depending upon highway. Expansion plans of east-west decline in the state is that of MSEB which
the organisational structure and the type road connecting Silchar in Assam to at one time was considered one of the best
of services they provide. At the same time Podichari in Gujrath and north-south roads organisation of its kind in India engaged
MSRDC itself is answerable to a larger connecting Shrinagar in Jammu and Kash- in efficient generation, transmission and
public which has provided funds for the mir to Kanyakumari in Tamil Nadu of distribution of electricity. In fact it might
project. It is responsible for delivering an some 7,300 kms and an ambitious rural be said that MSEB's efficiency enabled
acceptable and efficient road. road development project have been de- Maharashtra state to achieve significant
MSRDC has encouraged private partici- signed to build on the experiences of the industrial growth and economic expan-
pation in the execution of the various mega Mumbai-Pune Expressway.31 sion. Maharashtra rarely faced the severe
projects that are listed as its' 10 priority power shortage which were experienced
projects. However it has concluded that
Sustainability of Joint Sector by other states in India. Today MSEB is
transport infrastructure projects are not Model facing its worst crisis and is one of the most
financially viable based exclusively on toll/ maligned and politicised organisation in
fare receipts. It has explored other inno- Maharashtra. In 1999-2000 it suffered
The success of MSRDC in building badly
vative sources of financing to raise re- needed infrastructure deserves, and has losses to thefts of 34 per cent of its pro-
sources. Some of the financial incentives received, widespread acclaim. However duction
it whereas as recently as 1997-98
used to encourage private sector partici- is wise to temper the euphoria about this
it had made a profit of Rs 342 crore. In
pation or to raise finance for these projects and reflect on the sustainability and
1997-98 the list of ailing state public sector
include: (a) Tapping the value-added to replicability of the public/private joint
units in Maharashtra included Maharashtra

556 Economic and Political Weekly February 17, 2001

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Construction Highlights - Mumbai-Pune State Road Transport Corporation (Rs 309
Expressway crore), Maharashtra State Textile Corpo-
ration (Rs 140 crore), Maharashtra State
Handloom Corporation (Rs 31 crore),
Maharashtra State Farming Corporation
/
(Rs 20 crore), Maharashtra Electronics
avoid the problem of redundant govern-
ment employment internal to itself by
outsourcing services. However, there is
nothing in the structure of MSRDC that
addresses the issue of redundancies
created in PWD as a result of activities that

/
Corporation (Rs 21 crore). In that year, out
of 60 state government corporations only
27 recorded a gross profit of Rs 501 crore
while the top four loss-making undertak-
ings incurred total losses of Rs 613 crore.
i Air India, the flagships air carrier of
are now assumed by MSRDC. On the one
hand governments are trying to privatis
activities which are currently the respon
sibilities of existing public sector
organisations and attempting to diminish
the role of the public sector in the economy.

I I
India, which initially was recognised for
the quality of its service and its competi-
tive management has incurred losses for
the last six consecutive years. It is now on
the top of the list of units that the central
government wishes to privatise. The ratio
of 750 employees per aircraft of Air India
compares poorly with the average of air
carriers around the world which range
between 150 to 300 employees per air-
craft.33 There is a similar example of decline
in the banking sector. After banks were
nationalised in 1969 public sector banks
successfully expanded their operations so
as to serve a large number of villages and
Il'' towns which had never been served be-
the organisation.36 Although these con-
fore. Many individuals and small entrepre-
neurs were able to avail of banking ser-
cerns are not confined to only public/private
,
On the other hand new corporations like
MSRDC are being created without any
guarantees of their continued profitability
and success and without commensurate
cuts in other arms of the government, such
as in the PWD.
An overarching objective, central in
learning organisations, is to sustain the
flexible and independent management of
units such as MSRDC which is key to their
success. The need for entrepreneurial
innovation is essential in enabling the
organisation to absorb new technology,
adopt more responsive management struc-
tures and practices and facilitate enterprise
and innovation of creative individuals in

vices. The expansion rescued a large joint sector organisations such as MSRDC
but endemic concerns for organisations
number of poor people from the clutches
of private moneylenders. However,
broadly, the bureaucratic weight of govern-
ment and the historical assumption of
bureaucratisation has taken hold. Although
d~~~~~~~~~ud0
the performance of these banks is not entitlements that is a legacy of the post-
uniform, the employees enjoy uniform independence period calls for particular
salary benefits, which are not related vigilance.
to
a~~i -i
............- - - - - -
their productivity or efficiency. Attempts
at reforming this important sector and to Summary and Conclusion
I! i introduce merit and performance criterion
are challenged by the powerful employeeThis case study of the Mumbai-Pune
U B~~" Expressway points out that delivery of
organisations and privatisation is now being
considered as a remedy. The urgent need infrastructure like roads and highways
,
I-~~~~~~~~.~~
j to make changes in" this sector is well totally through the private sector is pre-
understood by economic planners.34 sently difficult. Foreign construction com-
Oil J-~~I Reflecting on such examples serves panies
cast a shadow of concern despite the current
to have not shown a direct interest and
involvement by responding to potential
Q.~~~~I --------U Z
successes of MSRDC. Examining some contract of opportunities with competitive
the underpinnings of MSRDC's success bids. Domestic private sector companies
/~~~~~~~~~~6
raises questions about the potential for too appear unable or unwilling to submit
IH
long-term sustainability. Even though bids that have comfortable but acceptable
MSRDC has successfully raised capital profit margins that indicate a genuine
through private placement from financial interest in these projects as good business
institutions, the funds have been made ventures. Mega projects of the scale of the
available with the help of counter Mumbai-Pune Expressway (Rs 1,600crore)
guarantees from the state government.35 currently appear to be beyond the capacity
There appears to be no mechanism built of the Indian private sector to assume as
into the organisational structure to protect. one integral project.37 In the absence of
it from government or political interven- such private sector capacity to take on the
tion. Currently MSRDC has been able to responsibility of delivering needed physi-

Economic and Political Weekly February 17, 2001 557

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cal infrastructure the role has been cre- build patronage networks and obtain period for transport sector was Rs 39,461
kickbacks. And since this made them crore (Annexture III)
atively shouldered by the Maharashtra
unpopular, they favoured ever-rising
8 Trade Development, International Trade
government by forming and supporting
Administration, US Department of
subsidies to mollify irate voters. This made
MSRDC in its primary mission - build them doubly anxious to accelerate publicCommerce, Basic Industries has given India's
essential projects in a timely fashion. The spending, which was financed increasinglytransportation overview at its web site. http:/
experience of Mumbai-Pune Expressway by borrowing. Since the borrowings were /www.ita.doc.gov/td/transport/id-oview.html
clearly indicates that the public sector freed 9 RITES in association with Scott Wilson
poorly used, the rising debt burden eventually
of political intervention and outdated led to a fiscal crisis, which spilled over into
Krikpatrick of UK were appointed to complete
a balance of payments crisis". For details seethe feasibility studies for the new expressway
organisational structure and given com-
http://www.sas.upenn.edu/casi/reports/to be operated on a toll basis. RITES estimated
mand and authority to innovate, is able to
Aiyerpaper042299.doc that the division of traffic to the new
deliver needed products efficiently by2 The five-member disinvestment commission expressway would be of the order of 40-45
outsourcing to the private sector not only was appointed by central government on of the total corridor traffic. They
construction but also coordination and August 23, 1996 and has submitted 8 reports recommended that the subsidy that was
oversight functions. Not only has needed to the government of India, the last in August needed might come from income through
infrastructure been created, but according1998. The detailed reports and summary are property development on the land in the
available at the web site: http:// vicinity of the expressway. Based on the
to statements made by some of the partici- www.crisil .com/DCIndia/
recommendation the government of
-pating private sector companies, they disinvestment_dcindia_ .html Maharashtra decided to construct the
have obtained incentives to upgrade their
3 Ninth Five-Year Plan Report, Volume 2 on expressway as a toll road with a part of the
productivity and skills. transportation notes that the aggregate finance coming from property development
A cooperative and synergetic relation- length of roads, which was 0.4 million kms on land to be acquired and leased by the
ship between public and private sectorsin 1950-51, has increased eight-fold to 3.32 government.
million kms in 1995-96 but the number of 10 Private participation in Indian ports is listed
has found receptive ground to flourish.
passenger buses has gone up 13-fold from at Indian ports site at http://
The general public has supported these
0.34 lakh to 4.5 lakh and goods vehicle fleet www.indiaport.com/ipa/
ventures as is reflected in its enthusiastic 22-fold from 0.82 lakh to 17.85 lakh in the privB.htm#consideration%20.
vesting the bond issues offered by MSRDC corresponding period. Out of the total road 11 Triumph over terrain web site o
as well as by the Konkan Railway Corpo- length constructed during the Eighth Plan, railway http://www.konkanrailw
66 per cent were constructed under Jawahar ehtm/eindex.htm.
ration. The new form of public/private
joint sector effort which has evolved Rozgar Yojana. These roads are of limited 12 For details see P L Bongirwar
value from the point of view of movement Momin's article in 'From Conc
appears to -be dynamic, flexible and open
of heavy traffic. Further, only 20 per cent Commissioning', Indian Concrete
in its approach. MSRDC appears to have of the surfaced roads are estimated to be in (ICJ). Private placement involve
developed a lean, efficient, contemporary good condition, which compares un- bonds to commercial banks or
organisational structure, acquired the favourably with other countries. The national financial institutions like ICICI,
necessary technical skills and developed highway network, which carries about 40 per permission from the Stock Ex
the necessary enterprising spirit, capable cent of the road traffic, and over 20 per cent Regulatory Authority as the guaran
of the national highway network is single the governments is considered suff
of and supporting decentralised decision lane. 13 The Mumbai region comprises of
making. MSRDC has also demonstrated 4 The government of India had constituted an
Navi Mumbai, Thane, Kalyan; Am
an ability and readiness to cooperate and expert group under the chairmanship of municipal corporations while Pu
coordinate with the contemporary private Rakesh Mohan, Director General, National prises of Pune, Pimpri Chinchw
sector constructively and in a way that is Council of Applied Economic Research to poration and surrounding villages w
responsive to its concerns. The public- give suggestions on Commercialisation of recently been incorporated in Pune m

private joint sector model of liaisons is Infrastructure Projects (including road area.

proving to be effective and appears to be
able to successfully deliver the necessary
infrastructure. The reservations and cave-
ats about this approach centre around the 5 The World Bank Report on south Asia dated
question of whether this organisational
structure is able to withstand the forces of
bureaucratisation, maintain financial
viability, and is replicable and sustainable
financially and institutionally over the
long term. [1
Notes
I Swaminathan S Anklesaria Aiyar in his paper
'India's Economic Prospects: The Promise
of Services' CASI paper no 9, April 1999
University of Pennsylvania, observes "For
four decades, politicians used the holy name
of socialism to cater to their private agenda.
They used ever-rising public investment to
projects). The group submitted its report in 14 S B Sakhalkar, then executive director of
June 1996 and listed the deficiencies in road Maharashtra Economic Development
network and estimated the funds needed for Council, Mumbai, states in the article titled
national highways. 'New Industrial Policy of Maharashtra - A
Critical Appraisal', Southern Economist, Vol,
June 9, 2000 notes that funds amounting to 32, No 19, February 1, 1994, pp 23-28 that
$516 million are provided with variable the then new industrial policy while making
spread and rate single-currency loan with a needed changes in rules, procedures, and
grace period of five years and 20 years to accelerating the state's competitive edge does
maturity. The document available at http:/ little in its location policy to achieve the
/wbln 1018.worldbank.org/sar/sa.nsf/ effect balancing industrial activity in the
6062ad876fb8c066852567d7005d648a/ state and decentralising it. The priority given
827d4f201192c35b852568f900617499? to the construction of the Mumbai-Pune
OpenDocument Expressway seems to confirm this
6 As reported by V Shankar Aiyar, India Todayobservation.
June 9, 1999. 15 For a typical description of such traffic
7 Government of India, Ninth Five-Year Planlogjams see http://www.timesofindia.com/
Report, Volume 2 indicates that total need 171199/17mboml3.html.
of finance for highways in the plan years 16
wasP L Bongirwar and S S Momin in their
Rs 40,000 crore, while that of the transport article in ICJ titled 'From concept to
sector overall was estimated to be Rs 2,00,000 commissioning'.
crore. However budget provisions in the 17 A A Erande and Shrikant Limaye of SOWEL
plan

558 Economic and Political Weekly February 17, 2001

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 consultants, in theirarticle in ICJ: 'Optimising of the PMC observes in article in ICJ, Overview' by Montek S Ahluwalia dated
mix design for concrete pavement' in 'Considering the magnitude of work, a very August 27, 1999.
section D. short time limit and the present level of http://planningcommission.nic.in/rif.htm
18 A batching plant is a concrete making plant 35 Banks and financial Institutes consider the
availability of contractor's and consultants
where ingredients of concrete like cement, capabilities, MSRDC decided to split up. the government guarantees as safe securities,
sand and stone aggregate (khadi) of required work into four sections both for appointing and purchase bond issues of PSUs. However
size, in required proportion and of required consultants and construction agencies. The as a source in ICICI has pointed out many
quality are tested and then mixed dry in estimated cost of each sections ranged times prudential norms are violated. Funds
controlled conditions. Correct quantity of between 130 crores to 200 crores'. are advanced without confirming the viability
tested and approved water is then added 30 In Development Projects Observed, The of the projects.
before the mixture is transported to site. This Brookings Institution: 1967, Albert36OJ A Schumpeter (1934) in his book Theory
allows for the close control of the quality of Hirschman argues for that the capacity of Economic Development has listed several
concrete. ways in which innovation can occur:
building effects of messy large-scale projects
19 For additional details of Maharashtra state that involve innovation and indigenous Introduction of a new good, a new method
government policy regarding infrastructure problem solving may in fact be major of production, conquest of new source of
see http://www.maharashtra.gov.in/english/ contribution that large projects make to the supply of raw material or manufactured good,
invest/invest.html. development enterprise of a country. The carrying out of'a new organisation of any
20 P V Kamat, director of Frischmann Prabhu problem solving capacity that is generated industry like creation or breaking up of a
(India). Has reported many such procedures translates to an enhanced ability by the country monopoly position.
followed in this project in his article, tender to undertake new and more ambitious 37 In case of port privatisation, most projects
documents and fixing of agencies for main projects. range between Rs 200 to Rs 300 crore. There
civil work, in ICJ special issue. 31 A rural road development corporation was are 10 such projects at various stages of
21 Examples of such collaborations are Stuplaunched by Atal Behari Vajpai in December privatisation. In case of Mumbai-Pune
Consultants with Hyder, Inter Continental 2000. As reported at http://www. Expressway cost of each section is less than
Consultant and Technocrats (India), maharashtratimes.com/20001227/arth.htm Rs 200 crore.
Frischman Prabhu (India) and Sir Owen the cost of project is 6,000 crores and is
Williams Innovestment. headed by Nitin Gadkari. References
22 The seminar was organised by Gremach
32 Rajeev Sane in his Marathi book Yugantar
Commerce in October 1999 at Mumbai. The Mehta, Meera and Dinesh Mehta (1992):
has argued that individual responsibility for
proceedings are reported in January 2000 ones own actions is neglected in the present 'Privatisation of Municipal Services', Urban
issue of Construction Material Purchase at system of governance leading to great India, Vol XII (2), July-December, National
web site http://indianpurchase.com/ inefficiencies and costs of such inefficiencies Institute of Urban Affairs, New Delhi.
construction/200001/article2.html. are much higher than the profits made by Morabito, Joseph, Sack Ira, Bhate Arunkumar
23 For details see report by Construction Online the efficient private sector. The consumer is (1999): Organisation Modeling, Innovative
at http://indianpurchase.com/construction/ therefore the victim. Architecture for the 21st Century, Prentice
2000/article2.html. 33 News item in India information dated Hall PTR, Upper Saddle River, NJ 07458.
24 Cement manufacturing has increasedsteadily Sane, Rajeev (2000): 'From Social Capitalism to
November 14, 2000, http://news.indiainfo.
in India in the last 15 years. See for example com/business/2000/1 1/14/selloff.html. Individual Laboralism', Yugantar (Marathi),
data available at http://www.the-hindu.com/34 'Reforming India's Financial Sector: An Rajhans Prakashan, Pune 2000.
1999/08/23/stories/06230002.htm.
25 See article by Ajit Pradhan and Sandeep
Bhattacharjee in ICJ 'Aggregate Crushing
Systems: Salient Features of Operation and REVIEW OF LABOUR
Performance'.
26 In 1999 only 2 percent cement was consumed May 27, 2000
by ready mix concrete plants which is
expected to grow to 5 per cent in the year
2000 as reported by L and T at its web site
Business-Labour-State Relations in New Chilean
http://www.lntecc.com/concrete/
confaqgeneral.asp#one. Democracy -Patrick S Barrett
27 The Indian Concrete Journal, June 2000 is
Miracle Worker or Womanmachine? Tr
a special issue highlighting the Mumbai-
Realities in Bangladeshi Factories -Dina M Siddiqi
Pune Expressway. In it the editorial notes
that "the construction industry in India will Increasing Inequality in United States: Trends, Problems,
certainly benefit from the spin-offs of the and Prospects -Leslie McCall
frontline-line technologies adopted on the
Mumbai-Pune Expressway" and suggests Personal Responsibility amomg Puert
that the MSRDC model will prove to be of in New York City -Coridad Souza
great value in guiding actions of other states.
28 A description and details of these procedures
as instituted in the Expressway project see
Shirish Pandit's article in ICJ in which he For copies write to:
defines the terms quality assurance and quality Circulation Manager
control and makes the case that since the
Economic and Political We
construction process is an output of plants,
Hitkari House, 284, Shahid Bhagatsi
equipment, materials and manpower, all the
Mumbai 400 001
inputs involved must meet the standards of
a quality system.
29 P V Kamat director Frischman Prabhu, one

Economic and Political Weekly February 17, 2001 559

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