Sprawling Metropolis seeks Infrastructure

The State of Karnataka, home to India’s tech hub Bangalore, is considering a policy initiative that could transform the unforgiving metropolis and surrounding areas into a livable urban setting, reports the Times of India. Provided the plan is executed in a manner consistent with its guiding principles, it could prove to be a useful development model for India’s otherwise anemically funded state governments that face swelling urban populations.  Bangalore recently implemented this model with notable success to renovate two of its main arteries, Bannerghatta Road and Airport Road.

By providing incentives to private developers, such as long-term advertising rights or concessional rates on property, officials hope that corporate stakeholders in the city can shoulder the infrastructure burden.  The plan also provides for a “third-party body” to oversee the work’s progress. While this approach is certainly tried and tested in its ability to carry a large project through to completion, whether it will make Bangalore a better planned city is another question. Because money will flow to areas on a project-by-project basis and will be predicated on the bottom-line of major corporations, there is little hope for a unified web of infrastructure that ties the city together. Instead, the piecemeal approach may entail high long-term maintenance costs when, for e.g. the population relying on the newly constructed roads and bridges outpaces the rate of development. The sustained success of these projects, and consequently growth in economy, will depend in large part on how the government provides for infrastructure maintenance and coordination.

Livemint.com reported that India came in second to China in the amount of private equity investments made in the first half of 2007. However, the average deal size in India was larger than China’s, $15.2 million as compared to $14.5 million. At least in the foreseeable future, this trend will continue to grow in favor of India if the public-private model ultimately benefits the businesses that took the plunge.