Infrastructure Development New (3)

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  • A case in point is the recent increase in VAT in Maharashtra on mobile handsets from 4% to 12.5%,”
    Cash Flow and earnings impact of 2-3%.
  • The port sector needs more investment-friendly policies if it has to attract private funds to the tune of $13.6 billion by 2012 against the current $3.21 billion, a study said. "In the port sector, the projected investments, under 11th Plan, is about $22 billion of which 62% is expected to be contributed by private sector ($13.6 billion)," an Assocham study has said. It further said so far only $3.21 billion worth private investments have come in the sector, despite reasonably impressive economic growth. The study said, "therefore, there is a need for investment-friendly policies in the port sector.”— PTI
     
    Why tonnage tax makes sense
    Michael Pinto / New Delhi March, 01 2004
     
    In all the hoopla around the feel-good Budget and the reduction of the fiscal deficit, commentators in general missed out on one path-breaking feature of Finance Minister Jaswant Singh’s interim Budget.
     
    By proposing the introduction of tonnage tax in place of the existing taxation regime, the finance minister not only met a long-standing demand of the shipping industry, but also created an atmosphere that enables Indian lines to compete successfully against their rivals anywhere in the world.
     
    Tonnage tax was always considered the perennial bridesmaid, forever on the verge of being introduced as law, but never quite making it at the last moment.
     
    What is tonnage tax and why is it so significant for the shipping sector? Simply put, tonnage tax is calculated not on the profit or loss of a company in a given year, but by applying a notional annual income on its net registered tonnage.
     
    This means that the tax burden is known in advance and is neutral to the performance of the company. The effect is to ring-fence the company’s tax liabilities, making financial planning and long-term strategic operations easier.
     
    Typically, tonnage tax places a negligible burden of about 2 or 3 per cent on the company. When recollected that shipping companies are currently subject to a tax liability of about 35 per cent, the benefit that tonnage tax brings to the bottomline becomes apparent immediately.
     
  • “service” or “comprehensive” port model whereby all operations, services and facilities are provided by the port authority.
    government now wants to transform the existing service ports into “landlord” ones whereby the port authority will only be responsible for regulatory functions and infrastructure, the latter to be leased out to private companies for a certain period of time.
  • References
    Indian Ports Association Vol.1 Main Report, September 2007
    Port Restructuring in Global Economy: An Indian Perspective by H.E. Haralambides and R. Behrens, International Journal of Transport Economics, Vol. XXVII, No 1, 19-39 (2000)
  • Liberalization: JNPT (Jawahar Lal Nehru Port) is the perfect example. It will introduce certain port activities to private sector to make them more efficient.
     
    Commercialization: Delegation of powers and responsibilities from Ministry to ports authority needs to be done. The Port Trust will contract out non-core business, port operations will be transferred to the private sector and whereby the Port Trust will invest in infrastructure instead of the BOT operator in order to decrease costs for port users. It will make ports run on commercial basis.
     
    Corporatization: is a possible step after commercialization. Ennore (Chennai) is the only corporatized Major Port in India.
     
    Privatization-Formation of joint-ventures with private sector operators in the total transport chain to the hinterland.
     
    Autonomy in tariff setting and investing.
     
    Establishment of Second Generation Ports- Apart from cargo handling an industrial cluster is established close to port. The industries here will import raw materials or half-products and process these to semi-finished or finished products which are exported again from the same ports.
     
    Developing India as a world Cruise Market which itself is estimated to be around $100 million by 2010. It will also result in indirect revenue for tourism in India hinterland and employment generation.
  • Thus incresing ppulation corresponds an increase in the GDP contribution from cities where major infrastructure development takes place
  • A 6 times growth of urban populaton demands a corresponding improvement in infrastructure. Sustainable insfrastructure will attract more people to a city leading to increased economic activity. Thus better infrastructure  more people  Growing ecoomnic activity
  • Infrastructure Development New (3)

    1. 1. Group 9 (Sec A) Infrastructure Development A prerequisite for Indian Economy
    2. 2. Flow of the Presentation • Introduction • Investment Plan • Budget Highlights on Infrastructure • Impact of budget on various sectors • Comparison with China • Sector wise analysis • Conclusion
    3. 3. Quote “The link between infrastructure and economic development is not a one time and for all affair. It is a continuous process; and progress in a development has to be preceded, accompanied, and followed by progress in infrastructure, if we are to fulfil our declared objectives of generating a self-accelerating process of economic development.” Dr. V. K. R.V. Rao [noted Indian economist, early 1980]
    4. 4. Our Answer •IS INFRASTRUCTURE DEVELOPMENT A PREREQUISITE FOR INDIAN ECONOMY? YES
    5. 5. Introduction • The total investment in infrastructure in 2006–07 was estimated to be around 5% of GDP. • According to XI th Plan, the total investment in infrastructure required is 9% and 11% in the ending years. • According to the budgeted plan, the total investment in infrastructure required is 7.5% • GDP growth averaging 9% per year can be achieved only by – overcoming infrastructure deficit – adequate investment takes • An investment of USD 515.05 billion is suggested in Eleventh Five Year Plan. • Achieved through a combination of public investment, public- private-partnerships (PPPs) and exclusive private investments [Source: www.planningcommission.nic.in]
    6. 6. Why so much focus on infrastructure • Critical pre-requisite for a sustainable growth of the economy • Affects international competitiveness and flow of direct international investments • Influences the living standards • Realizing their full growth potential [Source: Economic Survey 2008-09,http:/indiabudget.nic.in]
    7. 7. Investment Plan X Plan XI Plan Sectors US $ billion Share (%) US $ billion Share (%) Electricity (incl. NCE) 72.96 33.49 166.63 32.35 Roads and Bridges 36.22 16.63 78.54 15.25 Telecommunication 25.84 11.86 64.61 12.54 Railways (incl. MRTS) 29.91 13.73 65.45 12.71 Irrigation (incl. Watershed) 27.88 12.80 64.34 12.49 Water Supply and Sanitation 16.20 7.44 35.93 6.98 Ports 3.52 1.61 22.00 4.27 Airports 1.69 0.78 7.74 1.50 Storage 1.20 0.55 5.59 1.09 Gas 2.43 1.11 4.21 0.82 Total US $ billion 217.86 100 515.05 100 Rs. crore 871,445 2,060,193 [Source: www.planningcommission.nic.in]
    8. 8. Electricity 32% Roads 15%Telecom 13% Railways 13% Irrigation 12% Water Supply and Sanitation 7% Ports 4% Airports 2% Gas 1% Storage 1% XI Plan Investment [Data Source: www.planningcommission.nic.in]
    9. 9. Projected Investment in Infrastructure in the Eleventh Plan 270,724 322,390 390,957 482,455 593,666 0 100000 200000 300000 400000 500000 600000 700000 2007-08 2008-09 2009-10 2010-11 2011-12 (Rs.crore) Projected Investment in Infrastructure in the Elevent Plan (Rs. 20,60,193 crore) [Data Source: www.planningcommission.nic.in]
    10. 10. Infrastructure Deficit • Highways – 66,590 Km of NH :only 12% Four-lane; 50% Two-lane; and 38% Single-lane • Ports – Inadequate berths, rail / road connectivity and draft are constraints • Airports – Inadequate capacity: Runways, aircraft handling capacity, parking space & terminal buildings • Railways – Old technology; saturated routes: slow average speeds (freight: 22 kmph; passengers: 50 kmph); low payload to Tare ratio (2.5) • Power – 13.8% peaking deficit and 9.6% energy shortage; 40% T&D losses; absence of competition; and inadequate private investment • Telecom/IT – Only 18% of market accessed; obsolete hardware; acute human resources’ shortages [Source: www.planningcommission.nic.in]
    11. 11. Break up Investment 270,824 322,330 390,290 480,514 596,234 2,060,193 1,063,902 996,291 - 500,000 1,000,000 1,500,000 2,000,000 2,500,000 2007-08 2008-09 2009-10 2010-11 2011-12 Total XIth Plan Total Projected Investment Non-Debt Debt [Data Source: www.planningcommission.nic.in] All figures are in Rs Crore
    12. 12. Gap between Estimated Requirement and Likely Debt Available 32,513 31,869 32,110 34,202 40,057 170,752 - 200,000 400,000 600,000 800,000 1,000,000 1,200,000 2007-08 2008-09 2009-10 2010-11 2011-12 Total XIth Plan Likely Total Debt Resources Estimated Requirement of Debt Gap between Estimated Requirement and Likely Debt [Data Source: www.planningcommission.nic.in]
    13. 13. Investment by Public and Private sector 38.31 34.17 31 77 34 30 33.86 31.83 3.82 4 0 27.83 33.99 68.75 19.23 62 70 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Electricity Roads Telecom Railways Ports Airports Private State Center [Data Source: www.planningcommission.nic.in]
    14. 14. Projected vs Real Investment Projected Investment in Infrastructure 0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 US$Bn. X Plan XI Plan: Business as Usual XI Plan: Projected [Data Source: www.planningcommission.nic.in]
    15. 15. GDP vs Infrastructure Investment 2007-08 2008-09 2009-10 2010-11 2011-12 Total 11th Plan GDP 44,97,040 49,01,774 53,42,934 58,23,798 63,47,939 2,69,13,484 Public Investment 1,92,558 2,28,138 2,75,233 3,35,693 4,08,979 14,40,602 Private Investment 78,166 94,252 1,15,724 1,46,762 1,84,687 6,19,591 Total investment 2,70,724 3,22,390 3,90,957 4,82,455 5,93,666 20,60,193 All figures are Rs. crore [Data Source: www.planningcommission.nic.in]
    16. 16. Investment as Percentage of GDP 6.02 6.58 7.32 8.28 9.35 7.65 4.28 4.65 5.15 5.76 6.44 5.35 1.74 1.92 2.17 2.52 2.91 2.30 - 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 2007-08 2008-09 2009-10 2010-11 2011-12 Total 11th Plan Total Public Private [Data Source: www.planningcommission.nic.in]
    17. 17. Regression Analysis y = -6E-06x2 + 4.9659x - 996552 -100000 -50000 0 50000 100000 - 100,000 200,000 300,000 400,000 500,000 600,000 700,000 Residuals Total investment Total Investment Plot Coefficients Intercept 3052603 Total investment 5.65504 R Square: 0.990602 [Data Source: www.planningcommission.nic.in]
    18. 18. Infrastructure Investment vs IIP 36.4 36.1 40.4 48.7 56.3 67.7 80.6 5.8% 7% 8.4% 8.1% 11.4% 8.5% 2.7% 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 02-03 03-04 04-05 05-06 06-07 07-08 08-09 Infrastructure Investment IIP All figures in USD Bn. [Data Source: www.indiastat.com]
    19. 19. Budget Highlights • Rs. 1,73,552 crore for infrastructure • 46% of the total planned expenditure to infrastructure • To provide adequate funding for developing rural infrastructure: Bharat Nirman • Additional Rs. 20,000 can be invested in infrastructure bonds under section 80CCF • IIFCL would enable the funding the infrastructure projects • Imported duty-free machines allowed to be used for other road projects • Project imports status granted to Mono Rail Projects for urban transport- 5% concessional custom duty on imports [Source: www.indiabudget.nic.in]
    20. 20. IIFCL’s Loan sanctions to different sectors Power 46% 9629 cr Roads 40% 8275 cr Airports 10% 2150 cr Ports 4% 820 cr Urban Project Negligible 14 cr [Source: Company Website: www.iifcl.com]
    21. 21. Negative effect of Budget • 2% hike in excise duty for cement • Rs 50 per tonne cess on imported and domestic coal • Excise Duty hike in petrol/ diesel ; increase in prices [Source: www.indiabudget.nic.in]
    22. 22. Fund Allocation Scheme/Ministry 2009-10 (revised estimate) Rs.Cr 2010-11 (Budget allocation)Rs.Cr Change Change % Road , transport 19,941 24,079 4,138 20.8 PMGSY 10,285 10,886 601 5.8 Power 6,650 10,475 3,825 57.5 Subsidy for RGGVY 4,497 4,852 355 7.9 MNRE 573 1,009 436 76.1 Delhi Metro 5,834 4,141 -1,693 -29.0 Fertilizer Subsidy 52,980 49,981 -2,999 -5.7 Textiles 5,912 5,608 -304 -5.1 Non Plan Grant, Loans to PSU 3,468 605 -2,863 -82.6 [Source: www.indiabudget.nic.in]
    23. 23. Budget Proposal on Electricity/Power Electricity/Power • in allocation to Rs. 5130 crore ( of 152%) • in long term funding from IIFCL • in allocation to renewable sector to Rs. 1000 crore ( of 61%) • in MAT (from 15% to 18%) • Clean energy cess of Rs 50/ tonne on domestic and imported coal [Source:www.irca.org]
    24. 24. Budget Impact on Electricity/Power • Competitive bidding and regulatory clarity through Coal regulatory authority • Participation from private firms will • MAT and cess would adversely affect the profitability [Source:www.irca.org]
    25. 25. Budget Proposal on Roads • in allocation for road projects to Rs. 19,894 crore • Allocation to ministry of Road Transport and Highways is hiked by 20-30 percent • Incremental disbursement of Rs 25000 crore for next 3 yrs by IIFCL • Import Duty exemption for certain construction machinery [Source:www.irca.org]
    26. 26. Budget Impact on Roads and ports • in outlay favorable to road construction • Financing through IIFCL will facilitate long term capital • MAT would adversely affect the profitability • in Excise Duty in petro/ diesel , cement will push up cost [Source:www.irca.org]
    27. 27. Railway Budget • Rs 4411 cr allotted for new railway lines • To exceed freight loading target by eight million tonnes • Service charge on AC fares cut • Freight cut on food grain and kerosene • Mobile e-ticketing centres at hospitals, courts • Centre for railway research to be set up in IIT- Kharagpur • To introduce 54 new trains in FY 2011 • Rs 1300 cr for passenger amenities • Plan to raise Rs. 10,000 - 20,000 crore by next fiscal • Railways will not be privatized: Mamata [Source: www.indiabudget.nic.in]
    28. 28. Budget Impact on Telecom-Marginally Negative • Increase in MAT 15% from 18% will impact cash flows. • Indian telecom sector is amongst the most heavily taxed in the world(30%) • Overlook demand of rationalizing multiple taxes • Full exemption from 4% special CVD on parts for manufacture of mobile phones and accessories. • Extension of the credit period to ten years from seven years is a positive. • Increase in diesel prices will increase network operating expenses. [Source:www.irca.org]
    29. 29. Budget Impact on Port • Introduction of tonnage tax • Increase In MAT to adversely affect sector. • Hike in IIFCL disbursements targets to Rs 200bn. • Investor friendly policy - $13.6 billion to be raised through private sector. [Source:www.irca.org]
    30. 30. Our Analysis of Budget • Infrastructure received its due attention • To achieve 9% GDP growth aggressive investments in infrastructure is proposed • Govt’s commitment to road infrastructure; increase in allocation by 13% • Measures taken to increase private participation and transparency • Major focus on RGGVY, PMGSY, MNRE to enhance development and growth
    31. 31. Comparison with China
    32. 32. Economic Growth and Poverty Reduction – India and China
    33. 33. Infrastructure in China and India in 50s • In early 50s or 60s; both countries had fairly similar levels of infrastructure assets and services Sector India China Remarks Electricity output 6.3 billion kWh 7.3 billion kWh Roads Network 400,000 kms 1,200,000 kms Almost 40% of roads were paved Railway network 53,000 kms 23,000 kms [http://www.pbrc.soka.edu/Resources/Documents/KimNangia/pdf]
    34. 34. Infrastructure Development in China and India
    35. 35. Saving rates •In the 1980, China saved 35% of GDP whereas India’s savings rate was less than half at 15.5%. •Combined with higher fiscal deficits in India, it was not always possible to invest in infrastructure.
    36. 36. Investment Rate
    37. 37. Infrastructure Sector Performance Indicators
    38. 38. We may conclude • Links between infrastructure and economic growth and poverty reduction is neither certain nor automatic • results in improvements in productivity and in overall quality of life • facilitates economic growth • provides connections to the global economy that are crucial for export competitiveness and manufacturing • increased inequality and great regional disparity
    39. 39. Sector Analysis
    40. 40. Roads •Road transport accounted for around 87 per cent of passenger movement • 60 per cent of freight movement in 2005-06 •Road network consists of national highways (NHs), state highways, major district roads, other district roads and village roads. [Source: www.morth.nic.in]
    41. 41. Roads • One of the largest highway and road networks; second to the road network of US • Total length of roads exceeds 3.34 million million kilometers (source: Economic Survey 2008-09) Source:http://www.unescap.org/ttdw/Publications/TPTS_pubs/bulletin73/bulletin73_ch3.pdf
    42. 42. Roads • The Government has laid down ambitious plans for development and upgradation of the domestic road network. • Private sector participation through PPPs is being actively encouraged to achieve greater efficiencies in development, operation and maintenance. • Private projects witnessed a 17 percent slippage in time targets as opposed to a 65 percent slippage in projects funded by the NHAI. [Source: www.morth.nic.in]
    43. 43. Projected investments in Eleventh Plan 7338 7757 8469 10055 11747 5680 5956 6364 7299 8834 212 238 291 317 344 1875 2025 2150 2300 2463 15104 15976 17273 19971 23387 0 5000 10000 15000 20000 25000 2007-08 2008-09 2009-10 2010-11 2011-12 National Highways State Roads North East Roads Rural Roads Total Total investment requirement for development and upgradation of the country’s road network over the next five years is approximately US$ 55 billion. (Economic Survey 2007-08) [Data Source: www.planningcommission.nic.in]
    44. 44. National highways development projects (as in November 2009) [Source: Economic Survey 2009-10]
    45. 45. Funds and Borowings (in crore) Year Cess Funds External Assistance Borrowings Budgetary Support Grant Loan 1999-2000 1,032 492 0 656.6 0 2000-01 1,800 461 120 804.4 0 2001-02 2,100 887 113 5,592.90 0 2002-03 2,000 1,202 301 0 0 2003-04 1,993 1,159 290 0 0 2004-05 1,848 1,239 361 0 0 2005-06 3,270 2,400 500 1,289 700 2006-07 6,407.50 1,582.50 395.5 1,500 110 2007-08 6,541.50 1,789 447.2 2,000 265 2008-09 6,972.5 1,515.0 379.0 1,096.3 159.0 2009-10 8,578.5 272.0 68.0 492.4 200.0 [Source: Economic Survey 2009-10]
    46. 46. BHARAT NIRMAN (2005) A FOUR YEAR BUSINESS PLAN FOR RURAL CONNECTIVITY (2005-2009) •To connect 66,802 habitations with all weather roads •To construct 1,46,185 kilometers of the new rural roads network •To upgrade 1,94,132 kilometers of the existing rural roads network •Investment of Rs.48,000 crores over four years •Ensuring quality and transparency in the programme implementation [Source: www.planningcommission.nic.in]
    47. 47. Current Status of Bharat Nirman • provide electricity to the remaining 125000 villages and to 23 million households • to connect the remaining 66802 habitations with all weather roads • to provide drinking water to 55067 uncovered habitations • to provide irrigation to an additional 10 million hectares • to connect the remaining 66822 villages with telephones • Rs 435349 crore (or 30.3%) would be spent exclusively towards improvement of rural infrastructure by public sector. [Source: www.planningcommission.nic.in]
    48. 48. Investment in Rual Infrastructure under Bharat Nirman 7.81 9.5 3.68 58.18 20.83 Projected Investment in Rual Infrastructure Electricity Rural Roads Telecommunications Irrigation (incl. Watershed) Water Supply and Sanitation [Data Source: www.planningcommission.nic.in]
    49. 49. Power Sector • Electricity generation by power utilities during 2009-10 has been targeted to go up by 9.1 per cent to 789.5 billion KWh. • The growth of power generation during April– December 2009 was about 6.0 per cent [Source: Economic Survey 2009-10]
    50. 50. Electricity Generation •Decline in hydroelectric power generation was mainly due to poor monsoons •Coal based generation of power constituted around 80 %of thermal generation and around 66 % of the total generation of power •power sector is a major consumer of coal using 74 per cent of the coal production •total consumption of coal by the power sector: 271.0 million tonnes •16.7million tonnes of coal was imported Power Generation by Utilities (Billion KWh) [Source: Economic Survey 2009-10]
    51. 51. Power deficit [Source: Economic Survey 2009-10]
    52. 52. Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY) • During 2007- 08  electrification of 7077 villages  release of connections to 12 lakh BPL households • During 2008-09  electrification of 25,000 un-electrified villages  offering electricity connections to around 60 lakhs BPL households • During 2009- 10 up to January 15, 2010  69,963 villages have been electrified and  connections have been released to 88.8 lakh BPL households • 7.9 % increase in subsidy for 2010- 11 [Source: Economic Survey 2009-10, 2008-09]
    53. 53. Problems [Source: Economic Survey 2009-10] •Close to 66% of India’s power generation capacity is coal based, consuming 74% of domestic production. •Large-scale investments are needed to expand mine capacity and to improve the quality of domestic coal. •SEBs are unable to raise and collect sufficient revenue to cover costs •Around 400 million Indians still have no access to electricity. • Just 44 percent of rural households have access to electricity. •Power Theft
    54. 54. Suggestions • Allow the entry of the private sector in distribution • A separate policy specific to hydroelectric power • A nuclear power policy to explore the possibility of allowing the private sector into nuclear power generation. • Untapped renewable sources of energy (approximately 126,000 MW comprising 79,000 MW from ocean thermal, sea wave and tidal power; 20,000 MW from wind energy; 17,000 MW from bio-mass: and 10,000 MW from mini- micro hydel power projects).
    55. 55. Indian Railways • World’s third largest rail network • Freight Charges : – Railways have rationalized the freight structure extensively to make it simple and transparent. – Under the new pricing strategy, surcharge is levied during peak season and discounts offered during lean season • Upgradation of passenger amenities (Station Amenities) – Out of the 594 stations identified for upgradation of passenger amenities through Model Station scheme, 325 stations have already been developed, while the rest are at various stages of progress. [Source: Economic Survey 2009-10]
    56. 56. – The accidents per million train kilometre, an important index of rail safety, came down from 0.55 in 2001-02 to 0.20 in 2008-09. Year No. of consequential Accident 2001-02 415 2008-09 177 2008-09 (April to Nov) 117 2009-10 (April to Nov) 102 Rail safety [Source: Ministry or Railway]
    57. 57. Instructions have been issued to improve fuel efficiency and reduce wastage. Fuel consumption
    58. 58. Computerization of passenger and freight services [Source: Ministry of Railway]
    59. 59. Electrification Status of Indian Railways
    60. 60. Telecom Sector • Fastest growing telecom market in the world • India is 4th largest market in asia after china, japan and south korea • Indian telecom network is 8th largest in the world and 2nd largest among emerging ecomomies • Contribution of telecom sector in terms of revenue is 2.1 % of GDP as compared to 2.8% in developed economies [Source: Department of Telecommunication]
    61. 61. Telecom Sector
    62. 62. Regulatory Evolution Source: TRAI, Fitch ech Report, Dot, IBEF, Press Search
    63. 63. Opportunities • Mobile Governance • Micro Financing • Developing locally relevant content • Education • Government support • Mobile Banking and M-commerce
    64. 64. Port Sector • India’s coastline of approximately 6,000 km enfolds 192 ports. • direct jurisdiction of the Ministry of Surface Transport (MoST) • An additional 181 minor and intermediate ports are governed by the Indian Ports Act. • Currently, Ports follow “service” or “comprehensive” port model whereby all operations, services and facilities are provided by the port authority. • Transfer into landlord model whereby the port authority will only be responsible for regulatory functions and infrastructure, the latter to be leased out to private companies for a certain period of time. [Source: Economic Survey 2008-09]
    65. 65. [Source: Ministry of Ports]
    66. 66. Comparison of Major Ports in India and NW-Europe Source: Indian Ports Association September 2007 Port Restructuring in Global Economy: International Journal of Transport Economics, Vol. XXVII, No 1, 19-39 (2000)
    67. 67. Comparison Source: Indian Ports Association September 2007 Port Restructuring in Global Economy: International Journal of Transport Economics, Vol. XXVII, No 1, 19-39 (2000)
    68. 68. Shortcomings • Cargo Handling Capacity • Competition among the ports • Port Management and government control • Private Sector Participation • Port Infrastructure • Hinterland Connection • SEZ’s and Industrial clusters along the port.
    69. 69. Challenges • Indian Ports as a transshipment point are not competitive with international ports due to high port costs and tight regulations. • Lack of Private participation and investment because of lack of business environment. • Certain physical limitations like low water depth and logistics limitations like old infrastructure and cargo handling facility. • Lack of expansion capabilities since the land around ports has been inhabited and uncommitted political will make it difficult to take land for expansion. • Hinterland infrastructure like rail, roadways network is as important as the ports itself. Poor infrastructure makes it unproductive for business purposes as cost and time rises.
    70. 70. What Needs to be Done • Liberalization • Commercialization • Corporatization • Privatization • Autonomy in tariff setting and investing. • Establishment of Second Generation Ports • Developing India as a world Cruise Market
    71. 71. Facts about Port Sector • 100% FDI has been allowed in this sector • “India expects to double port capacity to 1,500 million tonnes by 2011/12 and would require 1 trillion rupees investment in the port and shipping sectors.” - Federal Shipping Secretary, A P V N Sarma [October 2008] • National Maritime Development Program includes 276 projects, with a required investment of about $15 billion over the next 10 years with private investment targeted at $8 billion
    72. 72. Most of the commercial activity perhaps other than agriculture and village merchandise takes place in Urban areas. An overcrowded city will create more problems than solving some. Hence an broad and far sighted infrastructure plan incorporates both economic growth and social well being. Thus infrastructure growth goes hand in hand with the economic growth and in most cases is a pre-requisite for growth. Cities as engines of economic growth Year Percentage of Urban Estimated contribution to total population to national income (%) 1951 17.3 29 1981 23.3 47 1991 25.7 55 2001 30.5 60 Source: Economic Survey 2008-09 2008 36.2 66 [Source:www.assocham.org/prels/shownews.php?id=1432 ] Urban Infrastructure
    73. 73. In the last 50 years: Country’s population growth: 2.5 times Urban areas population growth: 5.0 times [Source: Economic Survey 2006-07] Growth of employment during 1996-2006: In urban India : 38% Rural areas: 16% Country as a whole : 28.1% Population of cities like Mumbai and Delhi has grown more than 6 times since 1951. A weak infrastructure will deter entrepreneurs and repel money flowing into the region thus hampering the prosperity of the region. [Source: www.saarc-sec.org/data/pubs/rpp2005/pdfs/Tables/Table-4.7.pdf] Urban Infrastructure
    74. 74. Civil Aviation There are 14 scheduled airline operators having 334 aircraft. During 2007, the scheduled operators have been given permission for import of 72 aircraft. The Ministry of Civil Aviation has given approval for import of 496 aircraft and, in the next five years, more than 250 aircraft are likely to be acquired by the scheduled operators. There are also 65 non-scheduled airlines operators who have 201 aircraft in their inventory.
    75. 75. Civil Aviation • There are 14 scheduled airline operators having 334 aircraft. During 2007, the scheduled operators have been given permission for import of 72 aircraft. • The Ministry of Civil Aviation has given approval for import of 496 aircraft and, in the next five years, more than 250 aircraft are likely to be acquired by the scheduled operators. • There are also 65 non-scheduled airlines operators who have 201 aircraft in their inventory.
    76. 76. Deregulations Year of the Amendme nt Number of Aircraft Seats May provide service to: May provide service when Who can Service Fares: 1986 Max. of 10 Notified Airports Only 2 hrs before/ after National Airline National and non- scheduled Regulated by National Airline 9.8.1989 Max. of 50 seats 55 Notified airports May- December 1990 Min of 15/ No max All airports (93) Prior approval of flight times- abolished Ownership expanded to: Citizens, NRI Government Fare restriction abolished 25th Feb 1993 40 % foreign Equity allowed 1st March 1994 8.3.94 A max. of 30 seats for new entrants A company/ body registered in India* 24th Jan 1997 No restrictions No restrictions No restrictions Anyone in the aforementioned categories* NO restrictions 02 Feb 2006 do do do FDI 49% airline 100% airport No Restric.
    77. 77. Our Conclusion • Increase Private participation to fund the deficit in investment to attain GDP growth rate of 9% • Focus on balance growth theory: Investment in rural infrastructure like rural roads • Increase in Index of Industrial Production through better infrastructure • Better employment rate through infrastructure investment
    78. 78. Our Conclusion • Co-operation from state government • use of standard documents: Model Concession Document for better and fast decision making for complex PPP programme • Setting up of committee like PPPAC for better execution of project and informed decisions • Giving more authority to IIFCL for faster raising of funds for infrastructure
    79. 79. Thank You

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