Tapping the Fortune at the Bottom of the Pyramid
Sirjjan Preet
BUILDING FROM THE BOTTOM: INFRASTRUCTURE AND POVERTY ALLEVIATION by Sameer Kochhar Academic Foundation and SKOCH Development Foundation, 2011, 318 pp., 955
June 2011, volume 35, No 6

I have released many books but this is different said Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission at the book launch of Building from the Bottom: Infrastructure and Poverty Alleviation. Ahluwalia said that the book corrects the perception that infrastructure is for (urban) India and not for (rural) Bharat. While it is important to look at failures as well as big successes the micro-successes are generally not taken cognizance of. This work takes care of this gap he said. The book is an inspiring compilation of essays by leading entrepreneurs and distinguished scholars providing insights into policy and infra-structure issues governance and service delivery and poverty alleviation. It also includes 11 case studies reflecting community participation innovation and commitment on different aspects of infrastructural develop-ment. As an advocate of inclusive growth Sameer Kochhar underscores two main challenges facing India in its pursuit of the growth story namely improving service delivery especially to the poor and spreading the benefits of rapid growth across the country. He tries to find answers to two key questions: How can we ensure infrastructure access and affordability? What are the implications for development planning and decision-making process?

The book begins with the issue of improvement in service delivery followed by a discussion on inclusive and sustainable urban development PURA (providing urban amenities for rural areas) and disinvestment and privatization. Nandan Nilekani writes on the power of identity the Unique Identification Number (UID) or Aadhaar as a tool of empowerment access opportunity and inclusion but he misses out on policy dimension. However Nilekani draws an important corollary of UID in terms of increased accountability and transparency of government spending resulting in efficiency in public services and financial inclusion. M. Ramachandran envisages the roadmap for the countrys intelligent urbanization. In the wake of liberalization and globalization cities are fast becoming centres of both domestic and international investment and exhibit incredible potential as engines of economic growth and prosperity. Intelligent urbanization stipulates institution of innovative urban governance model and infrastructure renewal financing models on priority. P.V. Indiresan provides critical insights on PURA and urbanization of India and suggests ways of achieving inclusive development. Vijay Kelkars paper on strategies for disinvestment and privatization provides an important perspective on the topic. Kelkar has been an integral part of Indias reform story and a strong proponent of disinvestment programme. He raises two key questions: What should the portfolio composition of the government be? What assets should be held by the State?The answers lie in a bold and innovative disinvestment/privatization strategy involving careful re-engineering of the portfolio of public capital assets.

Engagement of private sector in infrastructure development projects through Public Private Partnerships (PPPs) works well only if such projects are backed by dedicated legal and institutional framework individual training and technical support and are subject to strict monitoring mechanism. Hari Sankaran evaluates the PPP model discusses the factors governing its success lists the challenges involved and analyses the alternatives available in infrastructure development. On the other hand S.S. Tarapore argues that PPP model works only for projects with short gestation period so excessive reliance on private investment can have negative implications for infrastructure financing. Sound macroeconomic policy by way of reasonable interest rate and moderate inflation can facilitate long-term infrastructure investment. Tarapore is appalled by the common mans perception that inflation rate at the grassroots level is much higher than what is reflected in the official indices. As a supporter of inflation targeting he believes that inflation control is a sound policy and a necessary (but not sufficient) condition for infrastructure financing. The essay by Chetan Vaidya and Hitesh Vaidya provides a detailed examination of various market-based financing models of urban infrastructure. Market-based financing in the shape of municipal bonds can strengthen urban decentralization in line with the 74th Constitutional Amendment. Weak institutional capacity of urban local bodies (ULBs) to perform the tasks entrusted to them causes municipal fiscal stress which is prevalent not only in our country but also in countries of South Asia Africa and Latin America. K.K. Pandeys paper on fiscal decentralization and urban infrastructure reveals the sad state of fiscal stress at the municipal level. The amount of fiscal stress among the ULBs can be seen from the fact that the combined expenditure of ULBs declined from 1.74 per cent of GDP in 1998-99 to 1.54 per cent in 2002-03.

A discussion on the issue of governance and service delivery is incomplete without mention of successful Municipal Corporation of Greater Mumbai (MCGM) e-Governance project and Gujarats e-Gram project. The key success factor in both the projects has been the active involvement of the private sector in project implementation inbuilt sustainability and rollout planning backed by strong political will. Dealing with the issue of poverty alleviation N.C. Saxena sets out the list of options and programmes for the poor. He draws attention to the under-reporting of the actual number of urban poor and suggests an alternative methodology whereby consumption expenditure and access to amenities are given equal weight in estimating poverty. As a veteran of rural development and poverty alleviation programmes he comes out with ingenious alternatives and solutions to vital issues concerning the urban poor.
India has a demographic profile that is changing in a manner which is conducive to economic growth. Nitin Desai elaborates on dynamics of demographic change and the impact on demographic dividend over a relatively long period of time. He stresses that realization of this dividend requires increase in employment change in education and training urban development and reform of public sector management in a favourable political environment. Bibek Debroy in his essay on urban India argues that rural to urban transition is often resisted and never smooth. He presents urbanization trends and challenges with the help of relevant data and national and international reports and makes out a case for a critical and urgent reform agenda. Finally the essay by Naveen Surya discusses the much-discussed topic of financial inclusion encompassing every aspect of the financial inclusion problem.

The 11 best practice case studies in the book exemplify the benefits of innovation commitment community involvement and private sector participation through PPP. These micro-successes have addressed the issue at the grassroots level to achieve the goal of sustainable development. Such successes if replicated can change the face of urban India. If we give sincere thought to what Mahatma Gandhi and Jawaharlal Nehru believed to be necessary for the country to flourish we have to start at the bottom of the pyramid and empower the panchayati raj institutions and third tier of our country towards greater self-sufficiency and equity of opportunity.

The book is a stimulating compilation of essays which share a common agenda of inclusive urbanization and infrastructure access and affordability for the poor and deprived. However the main shortcoming of this volume is that it lacks adequate emphasis on ramifications of policy decisions to political economy. A succinct introduction linking papers to the key issues under consideration would have also added value to the work. Nevertheless the book can be of great assistance to project implementers and policy makers in developing sustainable and inclusive urban infrastructure services. Since the fortune is at the bottom of the pyramid it is wise to start building from the bottom.

Sirjjan Preet is a Research Associate at Indian Council for Research on International Economic Relations (ICRIER) New Delhi.