'Funding projects is not a problem'

Interview with Karnataka Chief Minister S.M. Krishna.

For Karnataka Chief Minister S.M. Krishna, the first two years in office have been "mentally satisfying", in his own words. His government's thrust has been on housing, education, women's empowerment, rural development, administrative reforms, social justice and infrastructure development. Excerpts from an exhaustive interview he gave Ravi Sharma in Bangalore:

You are seen as a suave, technology-oriented Chief Minister. Has this image contributed to a feeling that you are not pro-farmer?

A politician, a Chief Minister can have a number of images. It is pro-IT (information technology) it does not mean he is not pro-farmer. This government has taken more decisions in favour of farmers than any other in Karnataka's history. But if somebody still wants to describe me as pro-high-tech I take it as an added compliment.

Critics say that the November 19 farmers' rally that the Congress(I) convened at Channapatna was more a show of strength and had nothing to do with farmers' problems.

The rally was primarily meant to pay homage to Indira Gandhi. Instead of holding it in Bangalore it was decided to hold it on a large scale at Channapatna. Accusations that I am anti-farmer are just false propaganda.

Karnataka will have to invest around Rs.4,000 crores in order to utilise fully the water that it can now store in Upper Krishna for irrigation purposes. How do you plan to raise the money?

Money is not a problem for the Upper Krishna irrigation project. The problem is getting the work done and within the time-frame. This year we are spending Rs.3,200 crores on Upper Krishna. This shows the government's seriousness in meeting the irrigation needs of northern Karnataka.

Over 2,000 km of field canals have to be constructed...

It is a gigantic task. But six lakh acres of land will be irrigated. This is a tremendous achievement.

Crucial irrigation projects such as the Malaprabha, the Ghataprabha, the Hemavathy and the Kabini are behind schedule. Has the government set a time-frame for their completion?

We have an irrigation projects calendar and all these fit in. We hope to complete them in a phased manner.

Are there any plans to introduce a cess on command area farmers who will benefit from these irrigation projects?

Yes, there will be an irrigation cess. The Deputy Commissioners will collect it. Otherwise development could become lopsided. The beneficiaries should be able to pay back to society. Only then can the amount be reinvested in new areas.

A cess could prove politically unpopular.

We are clear on this. We do not want to give any concession.

But your government has not been able to increase power tariffs in the rural areas. Industry's complaint is that it is forced to pay higher power tariffs in order to cross subsidise rural and agricultural users.

Last year we had to postpone the upward revision of tariff. This year we have to implement that. Rural users will necessarily have to pay. Industry has a genuine grievance. We are trying to keep power tariffs on a par with the neighbouring States.

How do you plan to mobilise the Rs.2,000 crores for rural power generation?

Power generation can be funded by financial institutions and commercial banks. So that should not deter us from taking up new projects.

Karnataka currently faces a shortfall of 1,000 MW. How do you plan to bridge this gap?

We will buy power from the neighbouring States and the National Thermal Power Corporation. Buying power is not a big problem. Finding the resources to purchase power is a problem.

A decade ago it was thought that independent power producers (IPPs) were the answer to Karnataka's power problems. Is that the case even now?

IPPs are a non-starter. The Enron experience shows that high-cost power is not the answer to the needs of a particular State. If Karnataka goes for high-cost power it will end up like the Maharashtra State Electricity Board. There is a lesson to learn from that experience. Our focus is on low-cost power.

Some IPPs are of course willing to generate power at low cost. IPPs on a smaller scale are being encouraged and they are trying to set up their generating plants.

Is there no alternative to IPPs?

The Karnataka Power Corporation (KPC) is the answer to the failure of the IPPs. The KPC has been in the forefront of power generation. Right now it is working on the 220 MW Unit 7 of the Raichur Thermal Power Station, the 500 MW Vijayanagar Power Project and the 297 MW Alamatti hydel project.

On the infrastructure front, Karnataka is borrowing Rs.2,000 crores for the construction and repair of roads. But there are already complaints about sub-standard work.

Road work has not really begun. Tenders have been floated. The agencies that are identified will sign a three-year contract so that they are responsible for the roads they lay. This should set at rest all speculation about sub-standard work.

Your government revised the criteria for floating tenders for public works. Earlier for all works above Rs.1,00,000 tenders had to be called, now the limit has been raised to Rs.5,00,000.

The tendering process will take longer and in most of the villages where work is being taken up, we had difficulty in coping with tendering. So we thought it better to revise it upward.

Given that post-September 11 many airlines have cut back on their schedules, do you think the international airport project in Bangalore will come through?

Yes. We are confident that the Bangalore 'greenfield' airport will come into being. It is necessary and steps are on to build it.

The Centre seems to be dragging its feet on the airport project.

The Centre has a nominal role to play in the matter. It is the State government and the private agency that has made a bid for it, that will have a decisive role.

Has the response from entrepreneurs been good?

There has been an unbelievably good response.

Is the consortium (Hochtief) that was outbid still in the reckoning?

Only two firms made a valid bid. One consortium (Siemens-L&T-Zurich Airport) has been preferred by virtue of its competitiveness. Negotiations with them have reached the final stages.

There is a line of thinking that the HAL Airport could be upgraded to international status. Is that an option?

No, that is not our intention. Our intention is to have a state-of-the-art airport at Devanahalli.

The proposed Bangalore-Mysore Infrastructure Corridor (BMIC) expressway has drawn wide protests.

Any development work will have its opponents. When farmers' lands are acquired it is a natural reaction from land owners and other interested parties. The law will take its own course.

At Rs.2,000 crores the project is expensive.

We have nothing to do with costs. It is a private sector effort. NICE (Nandi Infrastructure Corridor Enterprises Limited) would have looked into the economics of putting up such a road project. The government has just gone along with it.

NICE has sought 21,000 acres of land, of which 13,000 acres will be used to construct five townships. The farmers are sore. Can the government step in and build the expressway?

Do you mean to say that the government can build the expressway without acquiring land?

Yes, but not to the extent that NICE wants.

I would like to differ. Whether the government or the private sector builds the expressway, the quantum of acquisition will be more or less the same.

But the government will not have to acquire land for constructing the townships?

NICE may come to some understanding with the farmers on the township issue.

What is the intention behind the move to privatise the Bangalore Water Supply and Sewerage Board (BWSSB)?

To improve the efficiency of water management.

Will privatisation not mean an upward revision in tariff ?

Naturally. The BWSSB is unable to sustain itself on the present rates. So there has to be a tariff hike. Privatisation is an experiment, we would like to pursue it in Bangalore. It is similar to the privatisation of power distribution.

But the privatisation of power distribution is yet to take off.

It is going to take time. Unbundling distribution is not so easy. It cannot be done within a time-frame.

Are there plans to privatise the government's premier heart hospital, the Jayadeva Institute of Cardiology?

The health sector can also be privatised. But there are no plans to privatise the Jayadeva Institute.

What is the present status of the Rs.3,000-crore Elevated Light Rail Transit System (ELRTS) planned for Bangalore ?

It is a non-starter. As far as I am concerned it is off.

Is a metro or circular rail the answer?

These are some of the feasible alternatives that are being contemplated.

What about the Rs.400-crore Bangalore Mass Rapid Transport cess that the State government has been collecting.

The cess amount is safe and will be utilised for the metro/circular rail and various other projects. While there has to be a metro rail, we have fixed no time-frame to build it. We have not even crystallised our thoughts.

You had said that you are promoting Bangalore to be another Singapore.

Don't put words into my mouth. I had said Singapore remains a benchmark for Bangalore's development.

Bangalore has seen some haphazard growth during the last two decades. How do you plan to set this right?

Bangalore's future lies in the improvement of its infrastructure.

Why did the government then delay the release of grants for the Bangalore City Corporation's budget?

Every corporation in the State gets grants. Bangalore's demand was higher (than that of Mysore, Mangalore and Hubli-Dharwad) so we could not oblige. It gets as much as it is provided for in the budget.

Bangalore's industrial power requirements seldom seem to be met fully. How does the government plan to meet this shortfall? Will there be a dedicated power plant for Bangalore?

The previous government had thought of setting up a (gas-based) power plant at Bidadi. We are pursuing it.

Has the Karnataka Power Transmission Corporation Limited's power plant at Yelahanka, near Bangalore, been sold?

It has not been sold. But I don't mind selling it.

On the agricultural front, the past few years have been tough for Karnataka's farmers with climatic conditions not being favourable. Prices have fluctuated. The practice is to announce sops each time there is a crisis. Would it not be better if the government announced a fixed remuneration for farmers' produce?

Fluctuation in rates are some of the abnormalities in the agricultural economy. The WTO (World Trade Organisation) regime/dispensation will bring about some of these distortions. I think the government will have to be ready to face these abnormalities.

Karnataka has over 120 engineering colleges and for the first time seats in the computer branch of the Engineering course have gone abegging.

Yes. Now for the first time the government cannot be accused of favouritism. That's what I'm concerned with. We have sanctioned an engineering college to anyone who has shown us the necessary infrastructure.

But does it point to a situation where too many colleges have been sanctioned? Will students be able to secure jobs once they pass out?

It is the same case with graduates in arts and science. Are we able to provide jobs for all of them? The same analogy holds true in the case of engineering graduates. They have to take their chances.

Industrial trade bodies accuse you of giving sops to the IT industry and neglecting the old economy.

We may have given some sops to the IT industry because we find that it can provide jobs and the revenue. But at the same time we have taken a reasonably fair view of the old economy. We'd like to be even-handed.