Interview | ‘PPPs in railways should start, Delhi station likely on the list’: V Vualnam

Expenditure secretary V Vualnam says fiscal prudence was a clear priority for govt and within the constraints of the Budget, it has rolled out support for critical sectors. Excerpts:

Can you help us understand the overall strategy behind the spending plan? How much flexibility on raising capex does govt have given the committed spending towards salaries, pension and interest payments?■ The key point is that the focus on capex is clear. In midst of all uncertainties, capex and building up infrastructure is well recognised everywhere. It has a multiplier effect, the way it helps all parts of economy. It is a recognition of that and the commitment to ensure that that continues and therefore increase is also based on that line of thinking.

What about committed spending?
■ That constraint or tightness remains. It's a reality. But within that we have managed fairly well. The fiscal prudence side was a clear priority for the finance minister and for everyone in govt. We have been able to focus and support sectors and interventions which are a priority, like the rare earth corridor.

Do you think this has peaked given the fact that in the last two years you were near the target but not fully achieved it?
■ I would not say yes or no because infrastructure should be created and the Budget provides for capex. Within that financing structures are also changing, and new modalities are coming up. Highways are quite advanced now into various types of PPP. So, the Rs 2 lakh crore we give, something more is added or annuity is stretched out and therefore they are able to do this.

How do you see the absorptive capacity in Railways, metro rail networks or there’s need to shift focus?
■ Absorptive capacity is there, especially the railways. Our country requires it. Dedicated freight corridor, whatever is getting ready, is promising. The almost doubling of average speed which freight trains are able to achieve inside the dedicated freight corridor is something which is really transformative.
The financing structure is something we no longer would like to go in the old style of everything being EPC (engineering, procurement and construction) contracts. In highway sector we found that, not only financing, quality of construction also improves. There's a stake in maintaining it for 15 years or the period that is mentioned in the contract. These are the benefits of this kind of collaboration.

So will there be more PPPs in Railways?■ In Railways it should start. Once it starts it will move well. You know it's an engineering, qualified team. A team which is handling ops at a high volume. The bandwidth is there. It is just that the mechanism has to come into place. They have prepared a cabinet note on PPP.

What kind of projects would these be? Will it include tracks?

■ It can be practically anything. Station development is one of the immediate possibilities. The potential is huge. The kind of business that they do: passenger traffic, cargo, there is enough. On station development, Bhopal is a beginning, and a lot of learnings will come from that. They've identified New Delhi. They are trying again now.