As India's economy soars, its airports and roads can't keep up

Back in 1991, when India's government came so close to bankruptcy that it was forced to liberalize its old state-run economy, the government of Prime Minister Narasimha Rao - and particularly the economic team led by the man who would later be prime minister, Manmohan Singh - did away with all sorts of licenses and rules that simply slowed things down.

Much has changed, and yet, much has not.

Business leaders say the Indian government still tends to get in the way of development, rather than creating the conditions where growth can occur.

Terry Hill, chairman of the Arup Group Ltd., recently complained at a news conference in New Delhi that the Indian bureaucracy needed streamlining, saying, "Infrastructure is a high-risk game and we have seen projects getting delayed and going grossly over budget."

The answer, he said, was to continue going for private-public partnerships, where the private sector can provide the management expertise to get projects finished.

In a recent interview with the Asian Age newspaper in New Delhi, the chairman of the Airports Authority of India cast blame on the booming new private carriers for the overcrowding at airports, rather than on the airports' inability to meet demand.

"All airlines want to have their base in either Delhi or Mumbai," said K. Ramalingam. "Why can't they move to other smaller towns to park their aircrafts?"

The airlines, for their part, argue that they should go where the customers are.

Indian Airlines' recent buying spree is, in fact, a belated response to increasing competition by a number of both high-end and low-cost competitors. Today, private carriers - from the business-oriented Jet Airways and Sahara Airlines down to the new cut-fare rivals Air Deccan and SpiceJet, control 65 percent of all domestic air travel.

That trend is only likely to continue. SpiceJet, for instance, has bought more aircraft as part of its rapid entry into the low-cost air travel market - a niche modeled after America's Southwest Airlines that has already attracted two other new carriers, Air Deccan and Kingfisher.

Foreign airlines have also been boosting their routes to India, which is evidence that not only are Indians flying more, but more outsiders are flying to India. Tourist travel in the month of August this year is up 15.6 percent over the same period last year, with 2.37 million travelers coming to India. To meet that demand, British Airways announced that it would add 26 new flights per week between India and Britain.

While this is great news for hotel and tour operators, the big question now is whether India's airports can be made ready for all these travelers and planes.

"The situation will improve in a year or two," says Praful Patel, India's minister for civil aviation. The government is already recruiting new air traffic controllers, and when Indian privatizes both the Delhi and Bombay airports, work will begin to build new runways to help increase capacity.

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