Reflections of Rajaram Bojji

Look at DMRC Airport link expt with Reliance. Unless private party gets 30%pre tax profits no one interested to put money. And if capital has to come from private funds, the capital cost of project increases by 20 to 30% automatically. To assure the requisite revenue flows to service debt and ensure profits, recovering capital is an impossible task because our econony does not allow such fare structures to be born by users. FDI initially looks attractive because interest rate could be lower.  But after factoring in FE risk, unlikely to be any cheaper. I find only sovereign funds from China or similar arrangement with Japan can afford to invest with own national interest agenda. There is no free lunch in the world. India has collective genius to dump own intellectual capital and revels in copy cat brhaviour. Probably China or Japan will take over Mumbai Ahmedabad Bullet train. More likely China. Interesting time! Elite in Mumbai will start learning Chinese! http:...

Former RBI Governor : "PPP in the infrastructure area is private profit at the cost of public expenses" [News Reports] Date: Sat, 18 Dec 2010 In a one to one discussion almost 6 years ago when he was in Reserve bank, I argued the same thing and he agreed with me. Same thing about derivatives, and when Government allowed PSUs to also to indulge in interest rate swaps, I was unhappy and he too cautioned me. But dynamism in finance officers to realise the initial cash flow benefits to present a better balance sheet was difficult to rein in. With all precautions, after 4 years of such swaps, we found the going tough, but on longterm it all evened out and I sighed with relief. Reddy is one single person in the Government, who can be credited to have kept our finance system from a bankruptcy, even when he was goaded to become more relaxed and allow the unbridled derivative market to flourish. The current PPP projects actually are means to inflate capital costs and benefit...

PPP projects Indian Railways> - Those who do not know can be taught if willing to learn. Those who know but unwilling to do, you cannot teach them. Our case is the later. Extreme intelligence, perhaps best in the country, and full awareness represent our railway engineers. Our finance officers too lead and head other BOT organisations successfully in the country. Our Traffic officers successfully played in the market to leverage market forces to get what their organisations which they were heading to get what they want. Our mechanical engineers too played the game of export markets. It is not a matter of knowledge. It is a matter of system. A predominantly operations & maintenance organisation designed to maintain status quo to keep the wheels running day in and day out, where even the Cabinet Minister is under tension, of getting a mid night phone call and truly scared of it, ( as confided to me by a Railway Minister, who told me it is so easy to manage other ministries but in...

Montek Singh our man, is recently honoured in LSE and the lecture he gave was excellent. India will concentrate more on domestic demand growth rather than depend on export promotion. If all outside countries are poor, and cannot afford, then what is the point in expecting export oriented growth? PPP models will have to be reviewed too for the excessive capital costs wantonly built in, expecting lots of aid money and also financed by the government through increased fiscal deficit. The real capital cost is getting boosted by two to three times to take care of interests of political, bureaucratic and business players serving the development of infrastructure in the nation. The simplest example is to compare the figures cost of Delhi Metro itself--our show piece. In Goa, at a total cost of Rs 34 cr per r. km( double line) elevated metro for Standard and broad gauge , with very deep pile foundations, all pre-stressed structure, was constructed which included station, air conditioning , rol...

Risk management and mitigation is the key. India has quite well advanced in designing sound PPP models. One need not re-invent. The actual hurdle is mental attitude. For some reason our finance and audit wings as well as many executives suffer from a complex; private party should not be allowed to get benefit from working for railway. Excessive fear that we may give away some undue benefit to the private party is at the back of our minds holding us back. It was more than 3 decades ago some dynamic officers in Board tried hard to create a professional costing expertise within railways to make a proper planning and execution of works and manufacturing of rolling stock. But it died after a two year effort. Any new project of railway construction is not a rocket science -- it is like any other civil engineering project. SO long as we do not have to do under traffic block conditions, the risks can be estimated and mitigated during construction phase. But even here, our planning and execu...