The critical aspect in Indian infrastructure is the policy development, with specific steps being laid out for specific policies such as bidding and procurement process, policy planning methodology and the linkages between policy development and economic growth. The bidding and procurement process basically goes through the various steps, needed to get Private Sector Participation (PSP) in various sectors of the infrastructure.Infrastructure , India

Deepak Kumar

English

Research Papers in Economics

MBA Review June 2005 18
T
he American Heritage
Dictionary, defines the term
“infrastructure” as “The basic
facilities, services, and installations
needed for the functioning of a
community or society, such as
transportation and communications
systems, water and power lines, and
public institutions including schools,
post offices, and prisons.” However,
the areas of infrastructure have
broadened over the years and cover
Agriculture, Food, Water, Public
Health, Emergency Services,
Government, Defense Industrial Base,
Information and Telecommunications,
Energy, Transportation, Banking and
Finance, Chemical Industry, Postal
and Shipping and many other sectors.
Infrastructure has been a subject that
has traditionally been in the hands of
the government.
Right from the year 1947, till around
1994, there have been some debates
about which part of the infrastructure
sector needed to be in the private
sector, and which part in the public
sector. Compared to countries of the
Far East such as Malaysia, Thailand
and China, India has struggled in
getting these regulations together.
Privatization of infrastructure is not
simple as there is a social aspect to it.
Roads, bridges, railways and dams are
public thoroughfares and there are
sensitivities involved, particularly when
taking into account the realties and
socio-demographic characteristics of
the country.  But over the last nine
years, different infrastructure sectors
have also moved at different speeds.
The telecom sector, after initial
hiccups has moved very fast indeed.
On the other hand, the power sector
has hardly moved at all. Moreover, the
present UPA government has taken
many initiatives in this field, which will
help to boost the economy.
Infrastructure sector is divided into
hard and soft infrastructure. The hard
Infrastructure in India
infrastructure includes roads and
bridges, ports, airlines, railway, power,
telecom while the soft infrastructure
includes education, health, tourism,
etc.
Hard Infrastructure
In transport sector, BOT (Build-
Operate-Transfer) projects have had
some success. One of the most
prestigious projects is the “Golden
quadrilateral project” launched by
NDA government which aims to
connect the four metros. This is a
forward step to upgrade the standard
of transportation and to enhance the
quality of life and economic
development of the country. The cost
would be generated in part through
grant and in part through the extra
cess on petrol. The first phase of
golden quadrilateral is targeted to be
completed by December 2005.
NHDP II and III phases are in the
pipeline and much groundwork has
been done to complete the project in
targeted time.
Another important aspect is how to
provide better transport facility to
urban people. Different state
governments have taken the initiatives
to improve the suburban network.
Delhi, Hyderabad, Bangalore, Chennai
and Mumbai are having the existing
rail network but they need to be
improved to handle the urban mobility
and therefore, state governments are
working on this aspect.  Bangalore city
is planning to implement the light rail
network. Delhi, Hyderabad and
Chennai are extending their rail
network. The credible work done by
Mumbai Railway Vikas Corporation
(MRVC) to improve the Mumbai
suburban railway system since its
inception has taken care not only to
extend the suburban rail network but
also resettlement and rehabilitation of
slum dwellers along the railway tracks
in both the Central and Western
sections. Moreover, railway sector
needs to be part of multimodal
transport system and the railway
network would be enhanced by having
railways’ golden quadrilateral plan
same as golden quadrilateral projects
for the roads.
The Government of India’s targeted is
$150 bn and a global share of 1.5%
by 2010.  This has created the urgency
to have the standard cargo handling
equipments, modernization of the port
systems and transforming the port
sector from labor-intensive to
autonomous system. However, such
modernization has been done in the
past by restructuring the major and
minor ports in India viz., Nhava Sheva
International Container Terminal
(NSICT) Tuticorin port and Mundra
Port. Recently, Vallarpadam container
terminal project was inaugurated by
PM Dr. Manmohan Singh on February
16 this year.  The Shipping Ministry of
India has also formulated the National
Maritime Policy in 2005, wherein the
private sector participation is
encouraged.
In the civil aviation sector, Airports
Authority of India (AAI) has also
made a list of bidders and there is an
attempt to lease the airports. The
privatization of Bangalore international
airport is a forward step, which is
supposed to be completed by the end
of 2005. The international airport
project at Hyderabad is being built on
private-public partnership model. Even
the AAI Amendment Bill 2003 has
formulated a framework to invest in
new and existing airports. The increase
in FDI in airports from 49% to 74%
also aims to increase the involvement
of private parties.
Power has traditionally been one of
the areas, which has caused the
maximum trouble in terms of effective
utilization, and management of
resources. Two of the core issues
revolving around the regulation are:
SPECIAL ANNIVERSARY ISSUE
TOPICAL  ESSAY19 June 2005  MBA Review
Proper management of the power
sector, and the rationalization of
tariffs. The former has been addressed
somewhat by the authorities in the
Electricity Act, 2003. The latter is yet
to be properly addressed due to socio-
politico nexus. The government is
looking to exploit the hydel power to
generate electricity as it is cheaper and
abundant, particularly in the north
and east.
There is a lot of conceptual
development in the area of rural
infrastructure where rural telecom is
being used to increase the tele-density,
connection of the rural roads by
pradhan mantri gram sadak yojana
and development of rural power
through the Accelerated Power
Development Program. It is pertinent
to note that as per government data
only 78,205 villages out of 5.8 lakh
villages are left to electrify.
Soft Infrastructure
The government aims to provide the
free primary education and therefore
a cess of 2% on direct tax has been
imposed. The satellite technology
aims to provide education in the
remotest areas. EDUSAT is one of
such efforts of the government.
However, the direct interaction with
teachers can’t be ignored and the
government provides mid-day meals
for school-goers to encourage their
participation whereby the literacy of
the country should be increased.
National Literacy Mission has been
launched in April 2005 by Government
of India for the same.  Higher
education has undergone a profound
change and requires continuous
updating to stay competitive. An
educational body has to be a source
of creation of information and not just
a purveyor of somebody else’s
information.
Rural Health Mission was launched in
April 2005, it aims to provide effective
healthcare for rural population
especially women and children. The
health plan for each villager will be
through village health committee of
the panchayat. It will cover 18 states
and aims to have 24 hours functional
hospital in each block. There will be
special community health insurance
for the poor.  Another issue in health
sector is telemedicine, which has
attracted a lot of interest in this
country. Telemedicine enables the
doctor to be where he is, and yet treat
a geographically dispersed set of
patients, thereby increasing the
coverage and lowering the cost. The
health sector, as of now, needs the
better delivery network of distribution
of medicines, availability of doctors at
right time, functional hospitals and
modern equipments.
Investment in infrastructure is a
long-term concern and the investors
expect assured return on investment.
Now 100% FDI or substantial FDI with
automatic approval is permitted.
Transport, power and end use of urban
infrastructure, permits 100% investment
and telecom, airports and civil aviation
have recently shown an increase from
49% to 74%.
Great strides have been made in
telecom, roads and ports. Power
continues to be the area with the
maximum bottlenecks.
It is observed that after the opening up
of the economy in 1991, foreign
companies have shown a lot of interest
but it had died down. In the meantime,
companies from Asia had continued to
do excellent business in this sector,
particularly in the last five years.
Having gained the experience, know-
how and contacts, these companies are
poised to take full advantage of the
same in the coming years.
The critical aspect in Indian
infrastructure is the policy development,
with specific steps being laid out for
specific policies such as bidding and
procurement process, policy planning
SPECIAL ANNIVERSARY ISSUE
methodology and the linkages between
policy development and economic
growth.  The bidding and procurement
process basically goes through the
various steps, needed to get Private
Sector Participation (PSP) in various
sectors of the infrastructure. No doubt,
both PSP participation and investment
would be welcomed, but without a
transparent bidding process, there
would be sizeable irregularities, leading
to more problems. In order to get the
best value from the private sector, it
is necessary for them to compete
against each other, and to get the best
value from the society. The expertise
in setting up the criteria for the same
is what would determine the final
outcome of this process.n
Deepak Kumar,
Associate Consultant
The ICFAI Journal of Infrastructure
• All  road projects to be built on BOT
concept.
• First ever Container Terminal Project
inaugurated at  Vallarpadam,  Kochi.
• New maritime policy has been
launched.
• Establishment of Rural Infrastructure
Fund.
• Implementation of education cess of
2%.
• Launched National Literacy Mission.
• Government commitment to interlink
rivers.
• FDI in Airlines from 49% to 74%.
• Launched Rural Health Mission.
• Launched Rajiv Gandhi viduthikaran
yojana.
• Implementing irrigation projects in
Andhra Pradesh.
• 100% FDI in construction industry.
Initiatives of  UPA Government (2004-05)
TOPICAL  ESSAY

Infrastructure in India

http://128.118.178.162/eps/urb/papers/0506/0506002.pdf

Infrastructure in India

Abstract

Similar works

Full text

Available Versions

Research Papers in Economics