Wednesday, June 11, 2014

Ports and shipping to benefit from Modi’s mantra on decision-making
The shipping ministry could utilize the newly granted powers to resolve issues so that India’s maritime sector can develop to its true potential
The shipping ministry had felt stifled under a set-up where there was a disconnect between what the Planning Commission advocated and what was happening on the ground. Photo: Bloomberg.
June 6, 2014: As Prime Minister Narendra Modi slowly unravels his style of functioning by dismantling the decision-making systems put in place by the previous United Progressive Alliance government (UPA) led by Manmohan Singh, it becomes clear that ministries will have greater flexibility to decide on issues pending in their respective domain, including ports and shipping, rather than be at the mercy of somebody else.

In the previous regime, the Planning Commission decided on all matters related to infrastructure. A committee on infrastructure functioning within the Plan body had the final say on a range of subjects, including the framing of model concession pacts for port contracts and guidelines on setting rates by port operators, to cite a few examples.

The shipping ministry had felt stifled under a set-up where there was a disconnect between what the Commission advocated and what was happening on the ground. For instance, the model concession pact finalized by the plan body in 2008 for port contracts has been a matter of intense debate among private investors. In order to remove the discretionary powers vested with project implementing authorities, the Commission made the pact so watertight and inflexible that it failed to respond to market dynamics. This meant private firms were forced to invest the entire money and create the full capacity upfront even if there were no cargo volumes to justify that in the beginning rather than scale up capacity in tandem with the expansion in volumes.

Also, rates for the service provided by the cargo handlers were fixed at the beginning of the contract period for the entire 30-year duration without any scope for revisions, except for the annual linkage to inflation. The Commission, in its wisdom, ignored many probabilities that could arise over the 30-year contract tenure, including advancement in technology that would have a significant bearing on the contract terms. This was a major reason for the tardy flow of investments into the ports sector and a slew of contract litigations during the previous regime.

On 31 May, just a week into its five-year tenure, the new Modi government declared its intentions to hasten decision-making in the government. “In a major move to empower the ministries and departments, the Prime Minister today decided to abolish all the existing nine Empowered Group of Ministers (EGoMs) and twenty-one Groups of Ministers (GoMs). This would expedite the process of decision making and usher in greater accountability in the system. The Ministries and Departments will now process the issues pending before the EGoMs and GoMs and take appropriate decisions at the level of Ministries and Departments itself,” a statement from the Prime Minister’s Office (PMO) said on 31 May.

True, shipping and ports did not have issues that were referred to the decision-making apparatus, but there are many key issues that are waiting for a decision such as allowing old cargo handlers to migrate to a new rate regime finalized last year for new projects. If Modi implements his intentions in letter and spirit, then bureaucrats in the ministries will be emboldened to take decisions concerning their sectors without referring the matter to inter-ministerial groups or committee of secretaries, something which was common in the previous regime.

“Wherever the ministries face any difficulties, the Cabinet Secretariat and the Prime Minister’s Office will facilitate the decision making process,” the PMO statement added.

This could be Modi’s way of telling bureaucrats in the ministry not to worry about the consequences of their actions, especially the fear of being questioned by the government auditor, the Comptroller and Auditor General of India (CAG) or law enforcement agencies such as the Central Bureau of Investigation (CBI).
Decision-making became a casualty halfway through the second five-year term of the previous government as the oversight agencies started stringent scrutiny of auctioning India’s natural resources, triggering a slew of graft cases. The bureaucrats in the shipping ministry could utilize the newly granted powers to resolve a host of issues so that India’s maritime sector can develop to its true potential.

Courtesy: Live Mint
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