1. INFRASTRUCTURE
DEVELOPMENT AND POLICY
IN INDIA
Presentation By,
Rajasekar,
Gopinath,
Karthik,
Raja,
Sureshbabu.
FW0709 FINANCE 03
GEEB

2. AGENDA
 Introduction
 Broad areas of infrastructure
 Current states of India’s infrastructure
 Factors impeding development of India’s infrastructure
 Development of infrastructure
 India and China
 Privatization
 Govt. continued to focus on infrastructure development
 Conclusion
Slide 2 of 26 - Karthik

3. INTRODUCTION
 Infrastructure in India generally refers to the elementary
supporting factors responsible for the entire frame of India.
 The infrastructure definition says that anything that forms
the core of the functioning of any country is infrastructure.
 India being the seventh-largest country in the world has
maintained an infrastructure management that has enabled
India to reach new heights.
 Infrastructure development includes economic (energy,
power, telecom, transport, InfoTech, finance, etc) and social
(education and health issues) infrastructure development.
Slide 3 of 26 - Karthik

4.  Infrastructure development is a major constraint on the
industrial growth in India. India is aiming to achieve 10-per cent
annual GDP growth by the year 2011-12, but the country
needed over $300 billion to upgrade its infrastructure over the
next five years.
 The country needed double-digit growth in manufacturing
and services sectors in the next five years, and had to double
farm output, if it was to meet the target.
 The Indian economy has grown at an average eight per cent
in the past three years, and a 10 per cent annual GDP growth is
difficult to achieve unless the country improves its
infrastructure.
CONTINUED…
Slide 4 of 26 - Karthik

5. BROAD AREAS OF INFRASTRUCTUREBROAD AREAS OF INFRASTRUCTURE
 Physical infrastructure (Economic)
• Agro – specific Infrastructure
• Transport & Communication Infrastructure
• Power Infrastructure
 Financial Infrastructure
 Social Infrastructure
• Education Infrastructure
• Health Infrastructure
Slide 5 of 26 - Karthik

6. CURRENT STATE OF INDIA’S
INFRASTRUCTURE
 Poor road conditions and electricity shortage.
 Over the past decade, electricity generation as grown up a
compound annual rate of 5.5%, but the demand grown even faster
to 12.1%.
 Poor road conditions drastically affects the business
transaction across the country and need the overall repair.
 The international trade in India is adversely affected by
inefficient ports.
Slide 6 of 26 - Gopinath

7. FACTORS IMPEDING DEVELOPMENT OFFACTORS IMPEDING DEVELOPMENT OF
INDIA’S INFRASTRUCTUREINDIA’S INFRASTRUCTURE
 Poor judicial system.
 Acquiring land in India is not easy.
 India spent just $31 billion or 6% of GDP for infrastructure
development.
 Corruption.
 Black money.
Slide 7 of 26 - Gopinath

8. DEVELOPMENT STATUS OF
INFRASTRUCTURE
 Weighted value for major infrastructures by CMIE, Transport
facilities – 26; Energy – 24; Irrigation – 20; Banking facilities –
12; Communication facilities – 6; Education facilities – 6;
Health facilities – 6;
 Development indicators related to major infrastructure to form
Composite Development Index (CDI), Surfaced roads per 100
sq.km. area, unsurfaced roads per 100 sq.km. area, railway route
length per 100 sq.km. area, percentage of villages electrified,
gross cropped area, bank branches per lakh population, post
offices per lakh population, telephone lines per 100 persons,
primary schools per lakh population, primary health centers per
lakh population and hospital beds per lakh population.
Slide 8 of 26 - Gopinath

9. CONTINUED…CONTINUED…
 On the basis of composite development index of CMIE relating
to infrastructure development of 15 major states of India in the early
1990s, Orissa’s rank was found to be 12 in the descending order.
The CDI value of Orissa was 101.45 and this was just above the
national average.
 There were only three states namely Bihar, Rajasthan and
Madhya Pradesh, which were infrastructurally most underdeveloped
occupying the last three positions in the descending order.
Slide 9 of 26 - Gopinath

10. DEVELOPMENT OF POWER SECTORDEVELOPMENT OF POWER SECTOR
 Total electricity generation capacity in India is 101500 MW out
of which 72000 MW is thermal, 24500 MW is Hydel, 2800 MW is
nuclear and the rest is renewable. Out of this generation around 30
is from Central Sector and around 62 from State Govt. and the rest
is by private sector generation.
The approximate energy consumption pattern in the country is as
below:
Domestic : 21%
Industry : 35 %
Agriculture : 31 %
Commercial : 7 %
Slide 10 of 26 - Gopinath

11. POWER SECTOR ACTSPOWER SECTOR ACTS
 Electricity generation, transmission and distribution in the
Country is primarily governed by Indian Electricity Act, 1910,
Electricity (Supply) Act, 1948.
 Other legislation, Water Act, 1974, Air Act, 1981, Forest
(Conservation) Act, 1980, wild Life Act, 1972, Environment
(Protection) Act, 1986. Factories (Amendment) Act, 1988, Town
and Country Planning Act, 1952 etc.
Slide 11 of 26 - Rajasekar

12. DEVELOPMENT OF PORTS SECTORDEVELOPMENT OF PORTS SECTOR
 India has a vast coast line to the tune of 6000 Kms and there are
11 major ports and 39 minor ports in the country classified based on
traffic handled.
 After liberalization India has embarked on privatization Ports on
priority either component wise or through Joint Venture route with
foreign Ports.
 Principal legislation's governing Indian Ports are the Indian ports
Act, 1908 and the Major Ports Trust Act, 1963.
 The activities and development of Ports are governed by
Environment (Protection) Act, 1986.
Slide 12 of 26 - Rajasekar

13.  Indian road network is around 3 million KM length and third
largest in the World.
 The National Highways in the Country are governed by National
Highway Act, 1956 which has been amended in June, 1995 after
liberalization.
OPEN AREA
NORMAL RANGE
National and State Highways 45 30-60
Major district roads 25 25-30
Other district roads 15 15-25
Village roads 12 12-18
DEVELOPMENT OF ROAD SECTORDEVELOPMENT OF ROAD SECTOR
Slide 13 of 26 - Rajasekar

14. NEED FOR CHANGENEED FOR CHANGE
 The areas to be tackled on priority is,
• Improving the existing plants productivity.
• Reduction transmission and distribution losses both technical and
non-technical.
• A strategy on demand side management with both command and
control as well as economic incentive mix.
 It is estimated there is good potential of renewable energy in India
which can be economically exploited with little shift in policies and
implementation.
Slide 14 of 26 - Rajasekar

15. CONTINUED…CONTINUED…
Potential (MW) Achieved (MW)
Wind Power 45000 1267
Biomass (Bagasse) co-generation 3500 273
Small Hydro Power 15000 1341
Biomass gasification 16000 1700
Power from solid waste 35 15.2
Solar Power 3 times to total
energy demand of Negligible
the country
(500,000 Tera
KWH)
Slide 15 of 26 - Rajasekar

16. INDIA & CHINAINDIA & CHINA
 China is to manufacturing, India is to services.
 China plowed its huge reservoir of domestic saving (about 40%
of GDP) into best infrastructure.
 Largest recipient of FDI in the world.
 India suffers in comparison basically from having none of the
above.
 India has 24% national saving rate, a little more than half that of
China.
 Internally generated funds is less to plow back into infrastructure
in India.
Slide 16 of 26 - Raja

17.  Improved modern water supply and urban sanitation facilities.
 Lagging computer infrastructure and computer literacy.
 Cellular users: 28 million in India – 270 million in China.
 Internet users: 16 million in India – 78 million in China.
 Iron and Steel production: 28mn tons in India – 225mn tons in
China.
 55% of world cement is used by China.
 Oil production: 36mn tons in India – 160mn tons in China.
-2003 report
INFRASTRUCTURE COMPARATIVE FACTS
Slide 17 of 26 - Raja

18. INDIA VS CHINA
 Raw materials.
 Education.
 Electricity.
 Water.
 Pollution.
Slide 18 of 26 - Raja

19. CRITICAL STEPS IN MAKING
INFRASTRUCTURE
 Strong Government with clear direction.
 Consistent and thoughtful marketing effort.
 Bringing in the money (FDI & Private participation).
 Creation of zones and infrastructure for businesses.
 Business-above-all attitude.
Slide 19 of 26 - Raja

20. PRIVATE DEVELOPMENT OF
INFRASTRUCTURE
 Privatization of public owned industries.
 Private investment in highways and expressways.
 Built – Operate – Transfer (BOT).
Highway/Expressway Length(km) Total Cost($ million) Cost/km($ million)
Mumbai-Pune 95 [a] 350 [a] 3.68
Mysore-Bangalore 111 [b] 630 [b] 5.67
Jalandhar-Amritsar 49 [c] 59 [c] 1.21
Chandigarh-Ambala 35 [c] 63 [c] 1.8
[a] Source: SPG Media, 2006, [b] Source: IANS, 2006, [c] Source: NHAI, 2006
Slide 20 of 26 - Raja

21. 1996 2006
024681012141618
PRIVATE PARTICIPATION IN
INFRASTRUCTURE (US$ billion)
BRAZIL
CHINA
INDIA
Source: World
Bank
Slide 21 of 26 - Sureshbabu

22. EXPECTED PUBLIC-PRIVATE SECTOREXPECTED PUBLIC-PRIVATE SECTOR
INVESTMENT CONTRIBUTION (2007-12)INVESTMENT CONTRIBUTION (2007-12)020406080100
Inpercent
Electricity
Roads
Telecom
Railways
Irrigation
Watersupply&
Sanitation
Ports
Airports
Storage
Gas
Total
Public Private
Source: Planning Commission
Slide 22 of 26 - Sureshbabu

23. GOVT. CONTINUED TO FOCUS ONGOVT. CONTINUED TO FOCUS ON
INFRASTRUCTURE DEVELOPMENTINFRASTRUCTURE DEVELOPMENT
 Facilitating the entry of private enterprises.
 Number of projects envisaged for the Eleventh Five Year Plan.
 Task force has been constituted under the Chairmanship of
Ministry of power.
 Improved resource management, through increased wagon
load, faster turn around time and a more rational pricing policy in
Railways.
 Liberalization in Civil Aviation sector.
 An investment of Rs. 3,14,152 crore has been envisaged for the
roads and bridges sector during the Eleventh Five Year Plan.
Slide 23 of 26 - Sureshbabu

24. CONTINUED…CONTINUED…
 Supportive policies in Telecom sector.
 Jawaharlal Nehru National Urban Renewal Mission.
 While sanctioning the projects, highest priority has been
accorded to sectors that directly benefit common man and urban
poor namely, water supply, sanitation and storm water drainage.
 A total investment of Rs. 3, 35,350 crore have been envisaged
by the Mission city for the development of urban services.
 The investment in physical infrastructure alone has been
estimated to be about Rs. 2,002 thousand crore (at 2006-07 prices).
Slide 24 of 26 - Sureshbabu

25. CONCLUSION
 The pace at which the government is contracting new road
contracts to private investors is phenomenal.
 India’s telecom industry is highly developed. Cell phone
services are available throughout India, even in the far flunked
rural villages.
 The power and aviation sectors have shown similar if not better
signs of development. The power providers in many states of India
are private vendors.
 If the government continues to privately contract the
infrastructural projects and encourage investment in this long held
public sector, then India can expect to continue its phenomenal
growth.
Slide 25 of 26 - Sureshbabu