Moving India: The Political Economy of Transport Sector Reform

The transport network is in many ways the circulatory system of an economy. Yet India’s transportation system remains clogged and underdeveloped after more than a decade of expressed commitments to improve transportation infrastructure by India’s political leaders. India’s transport infrastructure detracts from the country’s competitiveness as a destination for investment and tourism and hampers domestic firms’ competitiveness. Despite expressed good intentions, actual changes in the transport infrastructure have been uneven. This paper approaches transport sector policy as an important example of a larger political economy problem that India faces in accelerating infrastructure development. Like many nations around the world, India has chosen to move from a model of state provision of infrastructure to one in which both private and public sectors contribute financial and human resources to constructing and managing infrastructure and services. The transition requires the state to both build up new capacities as well as retire from some existing activities. We elaborate on the distinction between “getting out of the way” and “building capacity” and discusses some of the implications of this framework for the dynamics of infrastructure development. We then argue that most of the visible changes in India’s transport infrastructure are the result of the state simply “getting out of the way” in making the transition from public to public-private provision of infrastructure. Reforms that require more extensive changes in public sector operation have been slower. Finally, we highlight some of the key remaining challenges for transport sector reform and discuss the prospects for progress on some of these reform priorities.