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Indian Infrastructure: Time to Refocus on The Basics

Now is the time to further push forward with policies that can help further facilitate the flow of capital into Indian infrastructure. It is also essential to realise that such changes are gradual, small iterations in the right direction can have significant positive lasting effects

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With 2019 underway, it would serve us well to look at some of the most pressing needs of Indian infrastructure. Trends in global capital markets and the needs of Indian infrastructure have broadly remained the same, but so have the challenges.

Recent news that the euro 399 billion Dutch pension fund ABP has lowered the expected investment returns over the next 10-15 years at five per cent a year on average from the earlier six per cent (Investment & Pensions Europe) shows the pressure the global pension fund community is under to deliver investment returns.

Additionally, a quick look at the Q4 2018 report of another Dutch pension fund, PFZW, shows a reduction in the current funding ratio from 103.4 per cent to 97.5 per cent. In layman’s terms, the value of current and future outflows from PFZW is higher than the value of the assets.

The data yet again drives home the point that in the face of constrained investment returns, the demand for annuity-type structures is even higher amongst the global capital providers.

While India has been aware of these trends and has made a concerted effort towards facilitating the flow of capital, now is the time to further provide impetus to the idea of “utilising global capital towards building Indian infrastructure”. The agenda for 2019 must be to build on and deal with issues that have slowed infrastructure creation in India. The core issues that need attention remain the same – local market funding to facilitate foreign capital inflows, a more efficient land acquisition strategy, better linkages in policies across infrastructure segments and, to the extent possible, allowing market prices to prevail.

Indian Infrastructure.

India needs to find a better solution towards providing local market credit to infrastructure projects to facilitate foreign capital inflows. For a capital provider, it is vital that local players partake in the risk-taking regarding infrastructure projects.

While Indian banks have cut back from infrastructure lending, a complete pullback is not feasible given the size of the balance sheets that banks wield and given the infrastructure funding requirements. The key for banks is prudent risk management and effective project selection. Additionally, other local funding sources such as the National Investment and Infrastructure Fund (NIIF) and revamped Development Finance Institution type structures will be crucial.

The fundamental reason why local funding in infrastructure projects gives foreign investors greater confidence is that knowing local capital has “skin in the game” implies more protection for their money.

Land acquisition remains a significant challenge for infrastructure creation. Recent issues that specific solar projects faced with getting access to land further elucidates this fact. The critical step here is to gradually tie-up land allocation and project allocation through the sector-specific agencies at work.

Mumbai Metro One announced on Monday that it has achieved the 400 million passenger mark on its 1,423rd day, which is almost within four years of its operations.
Mumbai metro station (Representational image). Wikimedia Commons

Bundling project and land allocation implies that for instance, when solar tenders are allocated, the planning on the associated land required is done concurrently with the tender and not after the tender process. While the issue around land acquisition is complex, land is the most crucial component of infrastructure creation in possibly every segment. Therefore, urgent attention is due.

Co-operation within infrastructure segments, especially through policies that consider sectoral interlinkages is crucial for the infrastructure ecosystem to deliver value. Power generation adds value when transmission and distribution assets can assist in giving the power to end users. Biofuels can add value when the water required to generate the raw material for them does not impede other more critical water needs in an economy.

Continually asking questions and ensuring that policy consistency is maintained across interlinked infrastructure sectors is the only way for infrastructure to indeed create value for all.

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While infrastructure assets vary significantly on the level of regulatory purview, it is essential that regulations are prudently used and do not stifle risk-taking and value creation. Asset returns need to be adequate to compensate for the risks involved to get both global and local capital to fund Indian infrastructure. Therefore, it is essential that greater focus is paid to tariff pricing, especially to the drivers of tariff rates. One size fits all solutions will lead to inefficient outcomes in the long-run.

Now is the time to further push forward with policies that can help further facilitate the flow of capital into Indian infrastructure. It is also essential to realise that such changes are gradual, small iterations in the right direction can have significant positive lasting effects. (IANS)

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The Errant Son: Mir Murtaza And Al-Zulfiqar

Would the Bhutto charm, have worked on India? And had it been so, would the map of the Indian sub-continent today, have resembled the idea of a free market zone in South Asia, with porous borders?

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Mir Murtaza Bhutto with Shahnawaz Bhutto
Mir Murtaza Bhutto with Shahnawaz Bhutto
Tania Bhattacharya
Tania Bhattacharya

By: Tania Bhattacharya

India-Pakistan relations have hit a record low following the dastardly Pulwama Attack on a CRPF convoy in Indian administered Kashmir, on the 14th of February this year. Curiously, the Pakistan PM Imran Khan, made a statement a few days ago, endorsing the Indian PM Modi, and suggesting, that in case there was a re-election of the latter, the Kashmir issue may be finally resolved. This scenario is significant, given that both Imran and Modi, are perceived hardliners in their respective nations. As some South Asian policy watchers have noted, it is hawks like the two aforementioned heads of state, and not peaceniks, who are more likely to take large risks over bilateral issues involving the two neighbours, since if any of them is required to acquiesce, they cannot be labelled as anti-nationals. Peaceniks, their good intentions aside, are looked upon with suspicion in their countries, which accuse them of selling out.

 

These are the heady days of jingoist patriotism in South Asia, where Right Wing organizations seem to be faring much better than the other political alternatives; but there was a time not very long ago, when Southern Asia was in a sweet spot between Dictatorship and Democracy, where conducive factors facilitated the spectre of Left-Wing radicalism, in both India and Pakistan. Between the imprisonment of Pakistan’s democratically elected PM Zulfiqar Ali Bhutto and the mysterious plane crash that killed President Zia ul Haq in 1988, a shadowy entity by the name of Al-Zulfiqar had emerged out of the pale, and rocked the Zia dictatorship, with its nuisance value. What were the origins of Al Zulfiqar, and who, was its chief executive officer?

The PIA Hijack drama
The PIA Hijack drama

We must retrace our steps to the early 1970s, when Zulfiqar Ali Bhutto was the Pakistan president. His eldest son, and second-born, Mir Murtaza, would build a lavish tent on the sprawling lawns of 70 Clifton, the Bhutto residence at Karachi. Inside the private sanctuary he had made for himself, the young lad would read the influential works of prominent Marxist revolutionaries like Lenin, Mao, and Che Guevara. The walls of his tent would be adorned with posters of world-famous figures, who had adopted Marxist techniques and applied them to their personal agendas. Murtaza had become deeply involved with the guerrilla warfare ethos of Socialist insurgents and quickly became a role model for his younger male sibling, Shahnawaz, junior to him by four years.

 

Sensing that the wayward, and obstinate nature of the older Bhutto was getting him into trouble with his high school officials and law enforcement, Zulfiqar had insisted, that Murtaza abandon his tent, and his Leftist reactionary literature, to concentrate on his school syllabus, so that the straight and the narrow could produce results for the latter. As soon as it became possible, and after consulting his wife Nusrat Bhutto, the President had packed off his enfant terrible to study in the United States, and then to England, where he hoped, that a new environment would change him. It was here, that Murtaza shone. A thorough academic, he researched upon and produced a dissertation, concerning the consequences of India’s nuclear program, on Pakistan. He developed the reputation of being a cad, and somewhat of a lady’s man as well, during his student years in London, where he was a regular sighting at nightclubs, with one or the other pretty girl, on his arm.

 

His father, had made the issue of the ‘Muslim Bomb’ an international one, arguing, that since the Christian, Hindu, Jewish, and Marxist political spheres had their own, ultimate weapon of mass destruction, it was only fair that the Islamic world follow suit. Israel though not openly belligerent with the bomb, was suspected of being in possession of the technology to construct one, in 1966 itself. Moreover, it had refused to sign the NPT (Non-Proliferation Treaty). Pakistan, under his leadership, he had sworn, would ‘gift’ the Muslim world with its first nuclear weapon. The president’s (and later, Prime Minister’s) son, would broach the topic on an academic level, and make its knowledge, widespread.

Zulfiqar Ali Bhutto with his third wife Husna Sheikh
Zulfiqar Ali Bhutto with his third wife Husna Sheikh.

Murtaza was yet abroad, when his father, by the time, the democratically elected Prime Minister of his country, was toppled in mid-1977, in a military coup, headed by General Zia ul Haq, who until the event, had been Zulfiqar’s handpicked Chief of the Pakistan Armed Forces; and a man, that the confident, and arrogant premier, termed his ‘monkey general’. In a letter, handwritten to her brother, Benazir had advised him to travel to the United States, to meet with American leadership, that were friendly with the Pakistan Peoples Party, to plead for assistance in toppling the dictatorship of Zia. Interestingly, she had told him to steer clear of a top Bhutto aide, Ghulam Mustafa Khar. This is testified by Lt. General Khalid Mahmud Arif in his book Working With Zia. Khar, an uncle of PPP ex-Foreign Minister Hina Rabbani Khar (2008 – 2013), had been a confidante of Prime Minister Bhutto, who he faithfully plied to the home of Bhutto’s first, secret mistress, and then, legally married third wife, Husna Sheikh, on a daily basis.

 

From the United States, Mir Murtaza had decided that it was not judicious to return to a strife-ridden homeland, which was experiencing its umpteenth military rule. Instead, he had flown to Syria and then Libya, to garner support from Bashar al-Assad and Muammar Gaddafi respectively. The Assads and Gaddafi were supportive of the Bhuttos. Zia to them, was an American puppet that had been installed as a means to an end, that too, through an undemocratic and unpopular regime change. It was in Syria occupied Lebanon, that Murtaza had begun building up a guerrilla outfit, which he named, the PLA (Pakistan Liberation Army). Members from the PPP back in Pakistan, were herded off to the Middle East, for rigorous guerrilla training, that was imparted by the Leftist PFLP (Popular Front For The Liberation Of Palestine). When Mir Murtaza deemed that the time was ripe for ambushing Zia’s men in positions of power; the trained militia of PLA flew to Afghanistan, where they continued further arms training, awaiting an opportune moment, to cross into their homeland, using the mountainous, and lawless tribal routes of northern Pakistan, which flanked the Durand Line.

 

While in Kabul, Murtaza Bhutto decided to rename his outfit Al-Zulfiqar Organization, or AZO. Shahnawaz, the younger son of the jailed premier, joined his older brother and was imparted training in guerrilla warfare, and violent Marxist insurrection. When not wielding guns in army fatigues, the young volunteers and the Bhutto brothers, would watch Bollywood flicks to kill time.

 

Initially, all Shahnawaz wished to do, was to open a tourist agency in Pakistan, and live quietly with the Afghan object of his affections. But the restless circumstances that engulfed the young man, forced him to join Al-Zulfiqar, all the more so, as it had his older brother at its helm; a man he had much admired from the days of his youth.

 

One of the first acts of the AZO, was to try to blow up Zia-ul-Haq’s plane with a missile, from an Islamabad rooftop. It did not produce the desired result. Next, was the hijack of a PIA (Pakistan International Airlines) flight. It was flown to Kabul, where the hijackers stated that the plane and its passengers would only be released if ninety-one political prisoners from the PPP, were set free from incarceration in Pakistan. Zia’s response initially, was a “No”. But once it became eminent, that there were no international mediators to take on the case on behalf of Pakistan; especially once Assad and Gaddafi explained the dilemma to General Zia, the latter was forced to rethink his stand. By then, AZO had reduced the demand from ninety-one prisoners, to some fifty-four of them. The Pakistan general was forced to comply with Murtaza’s bargain, as it released the PPP detainees from various gaols in the country, who were then swapped for the PIA plane and its passengers.

Zulfiqar Ali Bhutto with Indira Gandhi and Benazir
Zulfiqar Ali Bhutto with Indira Gandhi and Benazir.

The mastermind of the hijack, was a seamlessly trained Salamullah Tipu, who was seen waving his gun in the air triumphantly from the door of the airplane, after throwing down the bloodied and dead corpse, of one Major Tariq Rahim on the tarmac. Rahim was a close aide of the Zia administration. While Tipu took the blame upon himself, and the PPP back in Karachi, led by Benazir and her mother Nusrat, denied any knowledge or existence of the AZO, Mir Murtaza Bhutto continued to avoid Pakistani authorities, was never caught on camera during the hijack episode, and was declared a wanted criminal by the Pak judiciary, in absentia.

 

In his biography of the older Bhutto scion, The Terrorist Prince: Life And Death Of Murtaza Bhutto, author, student activist, and political henchman Raja Anwar, notes, that a paranoid Murtaza had ordered for the assassination of anyone who he feared would challenge his methods as head of AZO. A sizeable number of its members were apprehended from their homes, murdered, and dumped in shallow ditches. The same author states, how he himself, Shahnawaz, Mir Murtaza, and some other workers of Al-Zulfiqar, had received lodging, food, money, and military training, in New Delhi. The government of Indira Gandhi, a Centre-Left political organization in India that is recognized as the Indian National Congress, had housed and funded the Bhutto revolutionaries and their fighters, with an eye on ending the rule of the hated Zia. In the late 1980s, when Murtaza had made a stopover at Delhi, during one of his journeys abroad, he had personally met Rajiv, son of Indira, and her successor as the next premier of India, with a large, and impressive bouquet of flowers.

The AZO leaders and members resided in the outskirts of India’s capital, and led well-oiled, luxurious lives, while simultaneously receiving training to destabilize the regime of Zia ul Haq. In this duration, the Bhutto brothers had come close to the Nehru-Gandhi clan of India, and according to a number of verified reports, may have worked as R&AW (Research & Analysis Wing, India’s topmost espionage and intelligence agency) informants for a period of time. A common agenda; that of toppling the American-installed, Islamist, and regressive regime of Zia, being the binding force.

Benazir Bhutto with Rajiv Gandhi
Benazir Bhutto with Rajiv Gandhi

Zia was killed in a plane crash in 1988. The ensuing elections found the PPP, Zulfiqar Ali Bhutto’s political outfit, sweep the polls in Pakistan. Benazir went on to become the Islamic world’s very first woman head of state. Eventually she and Murtaza would have a falling out, with the latter going on to form his own faction of the PPP; the PPP(SB), where SB stood for ‘Shaheed Bhutto’. Unlike his sister’s rule, which can be described as opportunistic and inept, Mir Murtaza Bhutto remained a ‘Peoples Man’. He shunned unnecessary displays of wealth, and was always accessible to the blue-collar cadre base of the PPP(SB). The tussle between him and his sister may have continued on its logical course with a positive outcome for whoever was Destiny’s Chosen One; but for the tragedy that shook the Bhutto dynasty on the evening of the 20th of September 1996. The founder of Al-Zulfiqar was returning home from a political meeting, with his bodyguards and workers, when police opened fire on his cavalcade, right outside his home in Karachi. In the ensuing encounter, a number of his men were killed, while he himself was seriously wounded. A few hours later, the oldest of ZAB’s offspring, the man who was slated to succeed him, died from blood loss and a deliberate attempt to deny him medical attention.

 

Fatima Bhutto, an author, a poet, and an activist in her own right, is the daughter of Mir Murtaza. In her book Songs Of Blood And Sword, she puts the blame of her father’s death, squarely on her uncle, Asif Ali Zardari, the husband of Benazir Bhutto. Whereas in her interviews, Benazir had maintained, that Murtaza was murdered by anti-Bhutto elements within the Pakistan military. She herself would be silenced a decade later, by shady forces lurking within her country’s power corridors. The Bhutto saga brings to mind Salman Rushdie’s novel, Shame, which is a Roman e clef on Pakistan’s most powerful political family.

Nusrat Bhutto, Fatima Bhutto, and her father Mir Murtaza
Nusrat Bhutto, Fatima Bhutto, and her father Mir Murtaza.

Well-wishers of the PPP and people in India who would want Indo-Pak relations to improve, cannot help but wonder, what a future with Mir Murtaza in it, would have beckoned for bilateral ties between the two fraught neighbours.

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Would the Bhutto charm, have worked on India? And had it been so, would the map of the Indian sub-continent today, have resembled the idea of a free market zone in South Asia, with porous borders? After all, Benazir had alluded to it in an interview on the Pak TV show ‘Jawaab Deyh’.

 

Mir Murtaza Bhutto’s brutal life and demise, brings to mind the oft-quoted adage: Those Who Live By The Sword, Must Also Die By It.

Tania is a freelance writer with a masters in defence and strategic studi