Chennai: It can be called a 'surprise' memorandum of understanding (MoU) that has been signed between the Tamil Nadu government, known to practice populism instead of economic pragmatism, and the Infrastructure Development Finance Company (IDFC), a financial institution that is embracing private capital by entering infrastructure projects.
 As per the MoU, IDFC will advice the Tamil Nadu government on policy frameworks and strategies to attract and accelerate investments in infrastructure projects in the state. The agreement is to help the state government to expedite orderly development of power, ports, roads, water, agriculture, tourism, health, education, industrial parks and telecommunications sectors.
The state government expects IDFC's financial participation in projects to be taken up through public and private partnerships. Some of the projects identified include the second IT park and Dr MGR Knowledge City in Chennai, and projects in roads, transport, tourism and agriculture sectors.
The funding by IDFC will be project-specific while the Tamil Nadu Industrial Development Corporation will be the nodal agency for implementing the MoU. Initially IDFC will be advising the state government on its own, and based on the progress it will form a 51:49 joint venture (JV) company with the state.
 IDFC has a similar JV with the Karnataka government called iDeCK. The company is also advising the Kerala government. Plans are afoot to float a separate JV for a better focus plan, as Kerala is now on a progressive mood to attract investments.
Says IDFC managing director and CEO Nasser Munjee: "In Tamil Nadu we will review the existing policy and regulatory framework to attract private participation. We will also analyse the reasons for some private projects coming to an halt and take measures to complete them."
Munjee says Tamil Nadu Chief Minister J Jayalalithaa is interested in solving the drinking water problem faced by Chennai. "She talked about setting up small desalination plants along the coastline to solve the water problem. The issue of special economic zones (SEZs) in Tamil Nadu was also discussed in a meeting with her."
 "One has to have two strategies for that - one for SEZ and another for the city in which the zone is located. Both the strategies should sync," says Munjee. Surprisingly, the prospect for a SEZ in Chennai, where the civic infrastructure is extended beyond its limits, is also under consideration.
The other Chennai-specific proposal is building a sky-bus project (costing Rs 40 crore per kilometre) or introducing high-capacity buses (Rs 6 crore) for urban transport. "IDFC is looking at a sky-bus pilot project in Mumbai, too," he says.
On the agriculture front, IDFC will help the state in building post-harvest infrastructure like cold storage, markets and wasteland development.
The MoU is expected to increase the state government's interaction with the only financial institution based in Chennai. Earlier IDFC was given a cold shoulder by the state government as the company's top brass operated out of its corporate office in Mumbai.
This was despite the fact that Mumbai is India's financial capital and it makes economical and financial sense for any CEO of a financial institution to be based there. But it's well known that populism and economic pragmatism do not sync.
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