Investing in
infrastructure Development
Infrastructure
development needs sustained investments of a long-term
nature. Not only is a rigorous monitoring of sector-wise
targets critical for the success of the entire investment programme, it is also
necessary for the policy environment to be dynamic in
nature
Equitable development is dependent on sustained
growth of an economy which is critically reliant on the sustainable development
of infrastructure. Infrastructure is, therefore, a driver for inclusive growth.
However, investments in infrastructure are not easily available due to
requirements of lumpy capital investment with very low returns. Such investments
are justified normally on grounds of social benefits rather than on financial
viability.
India is poised to become the third
largest economy in terms of GDP in the next two decades. At present, along with
China, it is one of the fastest growing economies in the world. The growth
momentum needs to be sustained to ensure that the fast pace of growth does not
peter down. Absence of world class infrastructure facilities in India is often
considered as one of the major impediments to growth. With the sprawling
urbanization, demand for infrastructure continues to
rise faster than the capacity in the economy to satisfy such demands.
Infrastructure
sectors
Glancing across the major infrastructure
sectors, it is found that apart from telecom where teledensity is extremely
high (79.28 in May 2012 as compared to 0.31 in 1981) and tariffs one of the
lowest in the world, other sectors are yet to achieve levels of stable growth coupled
with quality services.
India has a road network of
33 lakh kilometres which is the second largest in the world. These roads carry
65 percent of the freight traffic and 80 percent of the passenger traffic of
the country. National Highways carry 40 percent of the traffic, yet constitute
only 1.7 percent (71,772 kms) of the total road network in the country and rural
roads cover a length of about 26.5 lakh kms. Only 20 percent of this National
Highways network is four-lane, 50 percent two-lane and 30 percent single-lane.
The State Highways have also suffered from prolonged neglect.
As regards Indian Railways,
the largest rail network in Asia comprising about 64,000 route kilometres,
there has not been much growth in the network since independence. At the time
of independence, the route kilometres stood at 53, 596 kms. Hence, just about
10,000 route kilometres have been added in the last 65 years resulting in
saturation of routes and restricted capacity. Naturally,
the share of goods and
passengers carried has come down drastically since independence.
India has a total installed
capacity of 2.03 lakh MW of power as against 1,362 MW in 1947. Thermal power
forms 66.32 percent of this capacity and about hydel power 19.2 percent. The
per capita consumption has increased 49 times since independence and stood at
813.3 kwh for the year 2010-11. This was, however, less than one-third of the
world average per capita consumption of power. The power sector suffers from a
peaking deficit of 9.8 percent and an energy shortage of 8.5 percent due to
underinvestment and poor maintenance. The distribution segment of the sector suffers
from average Aggregate Technical &Commercial losses of 27 percent and as
per the 13th Finance Commission’s projections, in absolute terms, these losses
are projected to increase to Rs. 1.16 lakh crore by the year 2014-15.
At the end of the 11th Five Year Plan, India was the 9th largest civil aviation
market in the world with a passenger handling capacity of over 220 million and
cargo handling capacity of 3.3 MT. However, air travel penetration continues to
be low at 0.04 air trips per capita per annum. The Indian civil aviation sector
was able to attract private investment of about Rs. 30,000 crore in four
airports at Delhi, Mumbai, Hyderabad and Bengaluru. Airports Authority of India
had a plan to develop 35 non-metro airports in the country. Of these, 26 have
been developed and the balance would be completed in the current financial
year.
The Indian maritime sector handles
95 percent of India’s foreign trade by volume. There are 13 major ports and 187
minor/ intermediate ports in the country. In the year 2011-12, the major ports handled
560.1 million tonnes of traffic and the total cargo handled by all the ports
together was 915 million tonnes. The average turnaround time at major ports has
increased from 3.93 days to 4.67 days between 2006-07 and 2010-11. There has
also been a deterioration of 3 percent in the pre-berthing detention time.
Infrastructure
development through the Five Year Plans
In the initial Five Year
Plans, it was widely believed that agriculture needed the necessary push to
sustain the economy and the basic needs of food for the masses needed to be met.
There was also considerable importance attached to setting up heavy industries.
Infrastructure requirements were proposed to the extent of meeting the
aforesaid objectives and were never the stated objective of the Plan exercise
as such. However, there was heavy allocation of resources towards irrigation
and power since the two were necessary for the development of the agrarian
economy and industries. At a later stage in the 60s and the 70s, development of
roads also picked up momentum.
In the mid-80s onwards, the
thrust of the development process was towards obtaining state of the art
technology for the country. This resulted in impressive development of
communications technology. It was only from the Ninth Plan onwards that there
was a definite thrust towards infrastructure development in the Five Year Plans.
In each of the previous two Plan periods, the investment in infrastructure has
almost doubled. This is evident from Figure 1.
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