Presentation on Strategies for Infrastructure Development in Karnataka By: V. P. Baligar

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Presentation on Strategies for Infrastructure Development in Karnataka

  • By: V. P. Baligar

Importance of Infrastructure

  • Basic requirement for economic growth

  • Growth rates could have been higher with better infrastructure

  • Essential for improving quality of life

  • Positive impact on Human Development Indices.

Initiatives of Govt of Karnataka

  • Created a separate Department for Infrastructure in Sept 1996

  • Formulated an Infrastructure Policy in 1997

  • Incorporated ‘Infrastructure Development Corporation (Karnataka) Ltd’ (iDeCK) in June 2000

  • Incorporated ‘Rail Infrastructure Development Company (Karnataka) Ltd (K-RIDE) in Nov 2000

  • A Special Purpose Vehicle – Hassan Mangalore Rail Development Company Ltd (HMRDC) set up in July 2003

  • Other Departments have set up institutions such as KRDCL, K-SHIP, KUIDFC, etc

Central Govt Initiatives

  • Set up a PPP Cell in Dept of Economic Affairs

  • Formulated a Scheme: ‘Viability Gap Funding’ (VGF) to financially support PPPs

  • Established ‘India Infrastructure Finance Company Ltd’ (IIFCL) to provide long term finance to infrastructure projects

  • Model Concession Agreements drafted for Road Sector

  • Aims to raise infrastructure investment from 4.7% of GDP to 8%

Infrastructure: Challenges

  •  A.    Policy Level

    • Frequent changes in the policy
    • Lack of information on the policy and procedures
    • Complicated concession agreements

  • B.    Demand Side

    • One Billion people
    • Rising aspirations
    • Unpredictable demand


  • C. Accountability issues

    • Maintenance of transparency
    • Accountable to the legislature
    • Scrutiny by C&AG
  • D. Bureaucratic hurdles


Infrastructure: Opportunities

  • A. Agriculture:

      • Agriculture and Horticulture markets
      • Floriculture parks
      • Agro-food processing
      • Cold storages
  •   B. Energy:


  • C.  Industrial Infrastructure:

      • Industrial parks
      • SEZ
      • Industrial townships 
  • D.   Irrigation: 

      • Canals and dams
  • E.  Tourism:

      • Hotels and resorts
      • Convention centers
      • Trade fairs
      • Amusement parks



  • G.    Urban infrastructure

New Initiatives and Strategies

    • New Infrastructure Policy 2007 Drafted
      • Objective:
      • To provide a fair and transparent policy framework to facilitate and encourage Public Private Partnership (PPP) in upgrading, expanding and developing infrastructure in the State.

Benefits of New Policy



  • Payment for Services

    • - Inculcation of
    • “Provider charges” and “User pays” Principles
    • - Subsidies in user charges for economically weaker sections


  • Contractual Structure

    • Existing Assets:
      • O & M Contracts, Lease of Assets,
      • Rehabilitate, Operate Maintain Transfer (ROMT) Contract
    • New Assets:
      • B: Build, O: Own/Operate, L: Lease, S: Share,
      • T: Transfer


  • Setting up Special Purpose Vehicles(SPVs) where appropriate

      • Selection of Private Sector Partner through a transparent procurement process.
  • Procurement in all Projects to be on the basis of a transparent bidding process


  • Regulatory Framework

  • Suitable mechanisms to be worked out to facilitate expeditious land acquisition

  • Set up independent regulatory authorities for some sectors

Institutional Framework

  • Infrastructure Development Department(IDD) to be the nodal agency to coordinate PPP projects

  • A PPP Cell to be set in IDD to assist in identification, development, implementation review of PPP projects

  • District Level Committee under DC to assist PPPs

  • Single Window Agency under the Chairmanship of CS/ACS to approve projects up to Rs 50 cr and to recommend projects over Rs 50 cr to HLC

  • High Level Committee under the Chairmanship of Chief Minister to approve projects above Rs 50 cr.


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