Comparing China and India is a fascinating experiment. The dragon and the tiger, the manufacturing hub of the world and the outsourcing capital of the world, communism and democracy, the comparisons go on. While China has been growing at a breakneck double digit pace for nearly two decades, India is only now accelerating into that growth league. If viewed in its proper historical perspective, the Chinese growth story is frightening. In the economies of scales of production, manufacturing and construction, India is decades behind China. Let me give some examples.
While India generates 1,29,000 MW of power of a total demand of over 2,00,00 MW, China has a generation capacity of 622,000 MW. China added a fifth of this capacity, or almost equal to India's total generation, last year alone. India's total capacity addition in the full Tenth Five Year Plan period was less than 20,000 MW. Depsite all the hype surrounding the Goldern Quadrilateral Project, India added less than 2000 km of National Highways, whereas China laid 25000 km of National Highways in 2006.
A recent World Bank report titled, "Highway and Railway Development in India and China from 1992 to 2002," points out that in the early 1990s India's railway infrastructure was actually ahead of China's in terms of total route kilometre and route kilometre per head of population. Over the next 10 years, however, China's rail network outstripped India's on virtually every parameter. In the period 1992-2002 while India's overall rail network grew by only 1%, length of double track by 10%, and electrified lines by 48%, the corresponding figures for China were 24 %, 69 %, and 50 %. Investment in the railways in China during this period was estimated at $85 billion, compared to $17.3 billion in India. China is set to build 19,800 km of new railway lines by 2010 in addition to upgrading 15,000 km of existing lines. In 2006 alone, $19.7 billion was invested in railway construction allowing 912 km of new lines to be completed and 1,016 km of lines to be double-tracked, besides starting work on 1,609 km of new lines.
While India is struggling to establish 150 kmph rail corridors, China already has 5,370 km of tracks that can take speeds of up to 200 kmph, in addition to another 14,000 km where trains can run at speeds of 160 kmph. Over the next five years, China aims to raise further the speed of passenger trains to 200 kmph on an additional 13,000 km of existing rail tracks.
The annual cement production of China is nearly 1000 mt, whereas the Indian production was only 160 mt in 2006-07. India's steel production of 40 mt, pales in comparison to China's production of 400 mt in 2006.
In contrast to the breakneck, almost suicidal pace at which China is growing, we have a serious problem getting to overcome our snail's pace. We struggle to build even 2000 km of world class six and eight lane highways a year, or 5000 MW of power, or 2000 km of railway lines. In fact, except for telecommunications, the growth of our infrastructure sector has been as abysmally poor as China's has been spectacular.
This can be extrapolated to closer home, in Vijayawada Municipal Corporation (VMC). Among the different agencies in Vijayawada, including the private sector, the VMC is the largest provider of construction contracts. In the past three years, the VMC has done capital works worth Rs 22 Cr in 2003-04, Rs 28 Cr in 2004-05, and Rs 37 Cr in 2005-06. Then in March 2006, Vijayawada became one of the cities selected for the JNNURM Project. In 2006-07, the VMC was sanctioned Projects worth Rs 750 Cr, to be completed over the next 2 years. Given the existing capacity, both internal and external, and even with the most optimistic projections, it is difficult to imagine more than Rs 200-300 Cr being spent under the Project over the next two years. Even this would be some achievement, being 3 to 5 times the present expenditure.
On the demand side, achieving these targets would require extensive outsourcing of many engineering services, besides personnel augmentation. Innovative solutions like Project Monitoring Software can help the existing system monitor and execute much larger quantities of works. It would be necessary to carry out radical streamlining and liberalisation of the existing tendering and contracting procedures, so as to expedite awarding of large amounts of works. I had touched upon some of them in a previous post.
But going beyond the aforementioned demand side problems, we have more difficult supply side challenges. Do we have the resources in terms of contractors, skilled manpower, construction materials and logistics available to execute these works? This question has to be answered in the context of a massive boom in construction activity in real estate and infrastructure, including urban infrastructure.
Let me illustrate this with a few examples picked up from our experience in VMC. As I had mentioned in a previous post, there are no Readymix Concrete (RMC) Plants in the entire District, and only two for 4 districts. Even the smallest capacity RMC plants can produce 30 cubic meters per hour, as against 15-20 cubic meters produced the whole day with site production. There is a lone contractor in Vijayawada who owns centering material (required for storm water drains), and he has only material for 1500 m. Under the JNNURM, we have about 50 km of storm water drains sanctioned. Given this severe scarcity, the material is being rationed out between the ongoing works, thereby severely retarding the progress of works.
The example of Under Ground Drainage (UGD) sector is typical of the capacity problems faced by the system. With massive spurt in real estate construction activity, there is a severe shortage of stoneware pipes which form the major share of a UGD network. Faced with this demand pressure the prices for stoneware pipes have skyrocketed. There are only a handful of manufacturers with the required size dies for casting RCC pipes of 600 mm and above diameters. A single manufacturer monopolises the market for Ductile Iron (DI) pipe (required for water and UGD pumping lines) across the country. There are only two manufacturers in India of centrifugal and submersible pumps used in sewerage systems. In addition, the number of sewerage contractors with the capapbility of taking up major UGD works is also very small. The picture with water sector is only slightly better.
Severe demand strain is being put on the existing quarries for supply of 40-20 mm stone chips. Cement manufacturers are also not able to respond quickly to supply deficits, thereby driving up cement prices. Same is the story with steel and other construction material requirements. Over and above all this is the shortage in the number of experienced and qualified contractors for executing these works. After all, the same pool of contractors now have many times more works on their hands. Our pool of qualified and experienced structural engineers, environmental engnieers, and other professional experts is very limited. Even the best construction and consultancy firms are rationing the one or two qualified personnel they have, among the many Projects which they bid for. This severely affects the professionalism of these firms and the quality of their work output.
All these aforementioned indicate that the Indian economy is stretched out to its seams, and raises serious questions about our ability to move up to the next level of economic growth or even sustain the current growth momentum. It is therefore necessary for us to swiftly and steeply ratchet up our capacities in every sector, if we are to move up to a higher growth trajectory. It is only then that we can start dreaming about catching up with the Chinese economic miracle.
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