Developing India’s Andaman and Nicobar Islands: A Test of Governance

By Amy Chang

This July, Indian Prime Minister Modi’s government approved the use of the Swiss Challenge Model (SCM) as part of an effort to increase private sector investment for the renovation of 400 railways across the country. SCM is a form of public procurement in which the government publicizes unsolicited bids for projects and invites third party actors to match or exceed them.  Later in October, the SCM was also adopted to develop the Andaman and Nicobar Islands—a cluster of islands due east of India in the Bay of Bengal.

The decision to adopt the SCM comes against the backdrop of a sharp plunge in private sector investment for infrastructure projects in India, and the government hopes it will help cut red tape and increase efficiency by allowing local companies and investors to craft proposals in line with their capabilities and needs. There are, however, serious concerns regarding the level of accountability that the SCM process requires, particularly when dealing with projects where public authorities have limited knowledge and experience.

The Andaman and Nicobar Islands remain largely ecologically and socially untouched by the outside world.

The Andaman and Nicobar Islands remain largely untouched by the outside world.

The World Bank estimates that India needs $1.7 trillion to fund its infrastructure gap by 2020, but current levels of funding are insufficient to cover that cost: Private investment in infrastructure fell from $23.8 billion in 2012 to $3.6 billion last year. Under the SCM, companies present an unsolicited proposal to the government, and then the project is opened to other third-party bidders. The original proposer then has the right to counter-match any final offer. The SCM invites private investors to formulate their own projects, while still encouraging competition through an open bidding process. Continue reading

A Window of Opportunity: Development Finance in Afghansitan

By Michael Jacobs

Last month’s signing of the long-delayed U.S.-Afghan Bilateral Security Agreement (BSA) allows American troops to remain in Afghanistan beyond 2014, providing a measure of security and stability for the country. The BSA is significant, but eventually American troops will head home. While U.S. military advisers and intelligence capabilities will likely remain in place for years, sometime soon Afghans will be substantively responsible for their own security and stability.

The BSA provides an opportunity for the U.S. to secure the progress we’ve established in Afghanistan over the past thirteen years.  So far the cost has been high in both dollars and lives, and as we’ve seen in Iraq, those gains can be erased very quickly. At a minimum, Afghanistan’s long-term stability will hinge on a capable military and an inclusive government, but also on broad economic development: countries with an additional 2 percentage points of economic growth sustained over 10 years have been shown to have their risk of civil war reduced by 28% when compared to the risk of civil war in a typical low-income country.

U.S. Ambassador James B. Cunningham signs the (BSA) with Afghan National Security Adviser Hanif Atmar

U.S. Ambassador James B. Cunningham signs the BSA with Afghan National Security Adviser Hanif Atmar (September 30,2014)

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