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Land disputes hit Indian infrastructure schemes

Discussion in 'National Politics' started by Naren1987, Dec 5, 2010.

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  1. Naren1987

    Naren1987 Captain SENIOR MEMBER

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    Protests against a proposed Indian nuclear power plant this weekend highlight a growing problem facing developers, experts say, as the country tries to upgrade or build much-needed infrastructure.

    Thousands of fishermen, farmers and their families in Jaitapur in western Maharashtra state turned out in force Saturday to denounce the loss of homes and agricultural land, as well as voice fears about radiation and pollution.

    The long-running protest has already seen a government compensation package rejected as "derisory" compared with the estimated 22 billion dollars that the plant will cost.

    Environmentalists also oppose building the French-backed facility because of its location in the ecologically-sensitive Western Ghats mountain range and a high-risk earthquake zone, plus India's lack of an independent nuclear regulator.

    "The authorities are trying to spin this as people wanting more money," Lauri Myllyvirta, an energy campaigner at Greenpeace, told AFP.

    "But the people just want to have their land and have the security of that lifestyle and income. They're very concerned about the radiation risk and whether there will be a waste-reprocessing facility on the site."

    Years of wrangling over land, compensation and environmental impact have become a regular feature of many projects aimed at developing modern India.

    High-profile disputes include plans for a second airport on protected wetlands to service India's financial hub of Mumbai and a plan by Tata Motors to build a new manufacturing plant for the world's cheapest car, the Nano.

    India's environment ministry approved the much-delayed airport project last month but Tata Motors aborted its move to West Bengal state in 2008 after weeks of violent protests by farmers angered by the forced purchase of their land.

    ArcelorMittal, South Korea's POSCO and Vedanta Resources have all recently been forced to look elsewhere for large-scale steel plant and mining projects after opposition in the eastern state of Orissa.

    Special economic zones -- a government initiative aimed at turning India into a manufacturing powerhouse by offering tax breaks and other incentives -- have also been hit by claims of illegal land grabbing and corrupt practices.

    The editor of India Infrastructure magazine, Shubhra Puri, said such disputes were now a major problem, as ordinary Indians, with the help of campaigners, become more savvy.

    "Whatever settlement was given to them earlier, they used to think this was a boon and it helped them alleviate their economic status, but today they are wiser," she said.

    "They talk to other people in other areas to see if they're getting a lucrative deal... If they get together these projects will not happen. They're negotiating very, very smartly."

    India desperately needs infrastructure development to keep pace with an expanding economy, exploding population and urbanisation.

    A McKinsey Global Institute study in April said 1.2 trillion dollars of capital investment was required by 2030 to meet demand in Indian cities, and warned that sustained economic growth was at risk without managed policies.

    Environment minister Jairam Ramesh has said that demand for electricity is now about 10 times greater than output, and the 9,900 megawatt Jaitapur plant could help cut the deficit.

    He has pledged to review the compensation package for locals, but there are few signs that the issue will be resolved anytime soon.

    Rahul Gandhi, touted as a future prime minister, has called for fairer land acquisition laws, amid signs that powerful business lobbies and vested interests tend to win out over most grassroots opposition.

    Proposed changes to the opaque and out-of-date laws, though, are stuck in India's parliament, which is currently in a state of gridlock over corruption claims in the awarding of 2G mobile phone licences.

    Jai Mavani, an infrastructure specialist at the PricewaterhouseCoopers consultancy, said strong political will was needed to push through projects.

    Yet he and Puri said delays were inevitable.

    "We're a democracy and the due process requires that every citizen, no matter how insignificant they may be in the scheme of things, needs to be heard," said Mavani.

    "We can't just get the road and railway lines," added Puri. "We can't ignore grassroots sentiment. These problems are bound to arise."
     
  2. RoYaN

    RoYaN Lt. Colonel ELITE MEMBER

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    Dam these NGO's..........
     
  3. Naren1987

    Naren1987 Captain SENIOR MEMBER

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    I'll second that, I'll bet my life's savings that all these environmentalists are elitist snobs who have a bigger footprint than my family combined.
     
  4. Naren1987

    Naren1987 Captain SENIOR MEMBER

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    Boom and bust in infrastructure

    It is widely expected that investment will become the key driver of India’s gross domestic product (GDP) growth in future years. Investment as a component of GDP is likely to increase from around 34% in fiscal 2010 to around 38% by fiscal 2015. During the 12th Plan (2012-17), infrastructure is expected to absorb about $1 trillion of investment. This will be used for roads, seaports, airports, power, telecom, railways, water, and irrigation projects.

    At first glance, this presents a huge opportunity for all types of players: project promoters, equipment suppliers, service providers and users of infrastructure. But what is the reality on the ground?

    In recent weeks, there has been a spate of reports about delays or reversals in approvals for various projects. Changes in rules (regarding forest use, environment protection, land acquisition, tribal habitat and so on), or the way these are interpreted, can further stall projects. Several high profile infrastructure projects have come under a cloud—airports, expressways, rail links, highways, thermal power, coal mining, and hydro-electric generation. For project promoters, such situations, if they drag on, can turn an attractive opportunity into a nightmare.

    At the same time, there have been many success stories. The Mahindra special economic zone (Chennai), Adani and Pipavav ports, ultra-mega power projects, Dhamra port, and Delhi and Mumbai airports are examples that would inspire any promoter or investor.

    For promoters of major projects, the market demand is evident. But implementation issues, especially relating to land, environment and forests, are a major risk that can make the returns elusive. As new legislation for mining and land acquisition gets enacted, uncertainty and delays will hopefully reduce.

    Equipment suppliers are anticipating huge requirements for a wide spectrum of equipment, covering earth moving, power, construction, telecom, mining, material handling and so on. As demand from projects accelerates, large-scale imports, especially from China, are being reported. Backed by an undervalued yuan, Chinese imports have made serious inroads into power generation and telecom. Recently, a large Indian group announced an $8 billion order for power equipment from China. At least 30Gw of power capacity has already been contracted to Chinese suppliers.

    Indian companies need to gain insights into how customer needs are evolving, upgrade their offerings and evaluate the market for their range of products. They must also enhance their ability to compete, especially with Chinese suppliers and their attractive price points and faster delivery times.

    Services for the infrastructure sector cover project management, engineering, procurement, construction as well as financial, legal and other business services. Already, there are reports of specialized construction packages being awarded to Chinese and other foreign players. Also, the tendering process and definition of work packages may evolve to reflect global practices. This will bring more global competition into India, especially as contract sizes keep growing. All players need to study these trends, continuously upgrade/refine their offerings, define the verticals, customer segments and packages that form their addressable market, and identify where they are best positioned to compete.

    Firms that are users of infrastructure have been waiting for enhanced availability so that their operating and transaction costs improve, and there is a reduction in delays and inefficiency owing to various infrastructure-related bottlenecks and shortages. Unfortunately, barring telecom services, there has been little net improvement in other infrastructure services. Even with GDP growth pegged to cross 8% in fiscal 2011, the backlog in infrastructure persists. Industrial units are facing delays in obtaining land for greenfield expansion since most existing industrial zones are full. For chemical units, the problem is amplified since pollution and environmental clearances for new chemical zones/industrial parks are often delayed.

    For such firms, the immediate option available is to pursue brownfield expansion at their existing locations. Also, all efforts should be made to enhance throughput from current facilities. This may provide the breathing time to pursue greenfield sites. Even here, firms may need to consider alternative locations along with fallback plans to safeguard future growth.

    Clearly, India is poised for an investment boom driven by a surge in infrastructure building. This has the potential to create huge opportunities for all types of stakeholders. While the pipeline is very large, projects getting the final green light are still a trickle relative to the backlog. This poses serious risks and uncertainties for promoters. Also, for projects that do reach the implementation stage, new competition, especially from China, is redefining prices and delivery times, creating new challenges for suppliers of equipment and services. Users of infrastructure face ongoing bottlenecks and will have to get more out of their existing facilities while greenfield locations take time to materialize. In such an uncertain environment, each firm has to evaluate opportunities and find ways to compete and win.

    Firms that make a hard-headed assessment of these factors and craft their moves will gain from this emerging opportunity. Others will be left chasing a mirage.
     
  5. Naren1987

    Naren1987 Captain SENIOR MEMBER

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    Land disputes hitting Indian infrastructure schemes

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