India Infrastructure Projects

In the last decade or so, development of India Infrastructure Projects have been propelled specially in transport sector with adequate intervention of Central and State Governments aided by a host of private investments from within and outside the country.

Since independence, India Infrastructure Projects bear testimony of the inability of policymakers to transform ambitious plans into action. The issues responsible for this were:

• Counter guarantees
• State level issues
• Delay in financial closure
• Ability and willingness of the end customers to pay
• Need to develop independent regulators who can monitor and guide development of the sector

There has been substantial improvement in the road sector. Let us analyze India Infrastructure Projects in the light of the fairly successful road development, port development, and contrast it with the formidable challenges faced by the other infrastructure sectors.

The road sector as is common with other parts of India's infrastructure has been in a dilapidated state. In 1997, 98% of the national highways ( a stretch of 54,000 km ) comprised 64 % single lane and 34 % two lane roads. In 1998, the government articulated the National Highway Development Plan (NHDP) and created the National Highways Authority of India to implement the plan.

Essentially the National Highway Development Plan was to be implemented in two phases:

1. In Phase-1, the Golden Quadrilateral, will convert the national highway connecting the four major metros to four lanes, a stretch of 5,846 km. The target date for completion was set at June 2004.


2. In Phase-2 the North-South and East West corridor plans to link Srinagar to Kanyakumari and Silchar to Porbander, a stretch of 7,300 km. The target date for completion was set at 2009.
   The total estimated cost of above projects was pegged at INR 540 billion (Rs. 54,000 billion).


3. The Port Sector has also witnessed significant progress in recent years.In 1990-91 the average ship turnaround time was 8.1 days which worsened to 8.5 days by 1995-96.As of March 2002,it has
   declined to 3.7 days still falling short of international standards where the turnaround time is in hours.In some ports such as Jawaharlal Nehru Port Trust , the turnaround time is 1.04 days.
   
   In 1996, against an installed capacity of 177 million tonnes, Indian ports handled 215.3 million tonnes. Apart from the inefficiencies from outdated equipment and low labor productivity, the congestion at ports led to pre-berthing delays and longer ship turnaround time.
   
   Given that the bulk of India's trade (95% by some estimates ) is carried by sea routes, inefficiency adds to transaction costs. In 1996-97, the government opened up the sector for private sector participation.
   
   A tariff authority was constituted by amending the Major Ports Act of 1963, increasing authority for financial and administrative decisions in major port trusts and a policy for corporatization. More importantly no guarantees were given for financial return or for the traffic.
   
   Approximately 161 million tonnes per annum of capacity enhancement is expected with an investment of INR 108 million mainly by the private sector.


4. The Power Sector has been struggling to reform without success for several years. In the initial stages the focus was only on power generation, totally neglecting the transmission and distribution loss.
   
   India's transmission and distribution loss is as high as 30.9 % due to theft, inadequate load distribution and indiscriminate grid extension. In 1990-91 the revenue recovery per unit was 82.2% of cost and by 2001-02 it dropped to 68.6 %
   
   The core issue of augmenting State Electricity Board finances is now being addressed and hopefully can spur investment in the sector.


5. In the Telecom Sector the mobile phones have led to rapid increase in density of telecommunication and it is increasingly done by the private sector.
   
   In short, Infrastructure Development in India has a bi-directional causality with economic growth. The recent success with the road sector, port sector must be extrapolated to other infrastructure sectors in order to materialize its objective of attaining self-sustained growth.

Last updated On: 7^th May 2011

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