CAPACITY CREATION IN INFRASTRUCTURE SECTORS PRESENT MIXED PICTURE
TELECOM AND PETROLEUM SECTORS PERFORMED WELL
Economic Survey 2008-09
Recognizing the importance of physical infrastructure on sustainability of growth and overall development, the Economic Survey 2008-09 states that spending on infrastructure has larger multiplier effects. The Economic Survey 2008-09 tabled in Parliament today mentioned that though there has been some improvement in infrastructure development in transport, communication and energy sector in the country in the recent year, there are still significant gaps that needed to be bridged. The current economic slow down provides an opportunities for countries like India that have a substantial degree of unmet infrastructure requirements.
According to the Economic Survey, the capacity creation in infrastructure sectors presented a mixed picture in 2008-09. While telecom and petroleum sectors performed well in 2008-09 as compared to the recent years, the power sector exhibited considerable shortfall. Most infrastructure sectors too witnessed subdued growth in production/services during 2008-09 because of slump in economic activity and commodity price, oil price shocks and overall global economic crisis. The Port and Air cargo growth slowed down considerably reflecting the sluggishness in import and export growth in second half of 2008-09. The rail freight growth too slowed down but to a lesser degree because the coal sector experienced robust production. In addition, the growth in telecommunication stood as exception a midst the general slowed down, the Survey adds.
In power sector, the Survey states, the growth of electricity generation by power utilities in 2008-09 was at 2.7 per cent which was much short of targeted 9.1 per cent. During 2008-09, despite the sharp decline in hydro and nuclear generation, the growth in total electricity generation was positive due to 5 per cent plus growth in thermal generation. The Survey mentions that less inflow of water into reservoirs in the case of hydro stations and for other power stations mainly due to fuel supply
constraints as the reasons for negative growth in power generation. Keeping in view the target set by the National Electricity Policy 2005, a capacity addition of 78,700 MW has been set for the XIth Five Year Plan, of which 19.9 per cent is in the hydel sectors, 75.8 per cent thermal and the rest nuclear. The Survey mentions that a number of projects envisaged for the XIth Plan have made steady progress, with most of these in a position to be commissioned within the plan period. The Survey also lists out major reforms initiated in order to help power utilities to improve efficiency and commercial viability. The Ministry of Power signed the MOUs with the States to undertake time bound distribution reforms, the Survey adds. With a view to provide impetus to electrification of villages under the Rajiv Gandhi Grameen Vidyutikaran Yojana, the Economic Survey states that 59,882 villages have been electrified during the XIth Five Year Plan and electricity connections to 53.78 lakh BPL households have been released up to 31st March 2009.
The Survey states that during 2008-09, the petroleum sector has been affected by the wild swings in the international oil prices. The production of crude and its products witnessed slack growth in 2008-09 as compared to the previous year. The growth of 3 per cent in refinery production was mainly on account of impressive performance of private sector production. In 2008-09, while the production of crude oil declined but its consumption increased. In comparison, production of petroleum products increased by 3.9 per cent in the same year, while its consumption declined. The growth in diesel consumption declined to 8.4 per cent in 2008-09 as compared to 11.1 per cent in 2007-08 because of industrial and business slow down in sectors like automobiles etc. Giving details of the progress under New Exploration Licensing Policy (NELP), the Survey states that 203 Production Sharing Contracts have been signed since 1999, thereby increasing the area under exploration more than four times. As on April 1, 2009, investment commitment under NELP is about 10 billion US dollar on exploration, against which actual expenditure so far under the policy is about 4.7 billion US dollar. In addition, 5.2 billion US dollar investment has been made on development of discoveries, the Survey adds.
In the coal sector, raw coal production is provisionally estimated at 493.20 million tonnes in 2008-09 as against 457.08 million tonnes during corresponding period last year, thereby registering a growth rate of 7.90 per cent. The cooking coal production was 29.76 million tonnes during April-February 2009 as against 29.70 million tonnes in the corresponding period last year. The Survey mentions that due to the enhanced production by all stakeholders, the growth rate of raw coal production was increased to about 8 per cent during 2008-09 as compared to 6 per cent in the corresponding period.
Regarding National Highways Development Project (NHDP), being implemented by the National Highways Authority of India, the Survey states that 11,037 KM of National Highways has been completed by 31st March 2009, the bulk of which lies on Golden Quadrilateral (GQ). Nearly 98 per cent works on GQ have been completed by March this year and the North-South and East-West corridors are
expected to be completed by December this year. The Survey further adds that the Government has given approval for upgradation of 12,109 KM under NHDP phase III at an estimated cost of Rs. 80,626 crore; two-laning for 5,000 KM of National Highways under NHDP Phase IV at an estimated cost of Rs. 6,950 crore; six laning of 6,500 KM of National Highways under NHDP Phase V at a cost of 41,210 crore; 1000 KM express ways with full access control at a cost of Rs. 16,680 crore under NHDP Phase IV and construction of ring road grade separation intersection, flyovers, elevated highways, underpasses and service roads at a cost of Rs. 16,680 crore under NHDP Phase VII. For improving the road connectivity to the state capitals, district headquarters and remote places in the north-eastern region, a scheme Special Accelerated Road Development Programme is being implemented. The High Powered Inter-Ministerial Committee under the programme has approved the sub-subjects covering 1065 KMs at a cost of Rs. 3,378 crore under Phase A of the programme. The Survey mentions that the XIth Five Year Plan has projected an investment requirement of Rs. 41,347 crore (at 2006-07 prices) in rural roads. During the first two year of the plan an expenditure of Rs. 25, 780.70 crore has been incurred on rural roads under the Pradhan Mantri Gram Sadak Yojana.
Regarding Civil Aviation Sector, the Survey states that the expansion of the sector continued. However, the sector showed signs of slow down due to steep rise in cost of air turbine fuel and global economic slow down. The number of domestic passengers declined by 5 per cent during 2008 as compared to 2007. The silver lining was a growth of 14.55 per cent in the domestic cargo. The Surveys mentions about the massive modernization/expansion programme of International Airports at New Delhi, Mumbai, Kolkatta and Chennai. The Survey further adds that the Airports Authority of India is upgrading and modernizing 35 non-metro airports in the country in a time bound manner. Development of Airports in the North-Eastern Region is being taken up on priority basis.
The telecom sector continued to register significant growth during the year. With about 414 million connections till February this year, India’s telecommunication network is the 3rd largest and the second largest wireless network in the world. At the current growth rate, the target of 500 million connections by 2010 is well within reach. The tele-density also increased from 12.7 per cent in March 2006 to 35.65 per cent in February this year. The Government has taken several steps directed at reduction in entry barriers, creation of a level playing field between incumbents and new entrants and forward looking regulation. With the special thrust given to rural telephony, the number of rural telephones went up from 12.3 million in March 2004 to 112.71 million in January this year. Consequently the rural tele-density reached 13.81 per cent. Since January 2000 to December 2008, the total Foreign Direct Investment is Rs. 27,482.96 crore of which the inflow during 2008 is Rs. 11,595.48 crore. Recognizing the importance of increase broadband connectivity for growth of knowledge based society, several steps have been taken to promote broadband in the country. As a result, the broadband subscribers increased from 0.18 million in March 2005 to about 5.69 million by February this year.
Regarding Urban Infrastructure, the Survey states that under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), an additional central assistance of Rs. 50,000 crore for 7 years and an equal amount from the State Governments and urban local bodies was provided to the Mission cities for improvement in their civic services levels. Memorandum of Agreement for Urban Reform Agenda has been signed with 62 mission cities and 6 urban local bodies. The Mission cities have undertaken fresh initiatives under JNNURM with an objective to contribute to sustainable functioning of local bodies. Under a parallel scheme of Urban Infrastructure Development Scheme for Small and Medium towns for Non-Mission cities and towns launched in 2005-06, 747 projects have been sanctioned at an approved cost of Rs. 12,793.81 crore for 632 towns till March this year. The year 2008 being International Year of Sanitation, a National Urban Sanitation Policy was launched in November 2008 for transforming all towns and cities of the country into 100 per cent sanitized, healthy and livable spaces and ensuring sustained public health and improved environment to its citizen.
Recognizing the importance of quality infrastructure for sustainable growth, the Economic Survey emphasized the need of better coordination between two approaches being followed for infrastructure building so as to promote its balanced development through out the length and breath of the country. The Survey mentioned that a tangible progress has been made in attracting private investment infrastructure. However, such public initiatives are constrained by factors like inadequate shelf of bankable projects and shortage of long- term finance for projects. These are difficult issues but not insurmountable, given the resilience that the Indian economy its financial system has demonstrated amidst adversities, the Survey states.
TELECOM AND PETROLEUM SECTORS PERFORMED WELL
Economic Survey 2008-09
Recognizing the importance of physical infrastructure on sustainability of growth and overall development, the Economic Survey 2008-09 states that spending on infrastructure has larger multiplier effects. The Economic Survey 2008-09 tabled in Parliament today mentioned that though there has been some improvement in infrastructure development in transport, communication and energy sector in the country in the recent year, there are still significant gaps that needed to be bridged. The current economic slow down provides an opportunities for countries like India that have a substantial degree of unmet infrastructure requirements.
According to the Economic Survey, the capacity creation in infrastructure sectors presented a mixed picture in 2008-09. While telecom and petroleum sectors performed well in 2008-09 as compared to the recent years, the power sector exhibited considerable shortfall. Most infrastructure sectors too witnessed subdued growth in production/services during 2008-09 because of slump in economic activity and commodity price, oil price shocks and overall global economic crisis. The Port and Air cargo growth slowed down considerably reflecting the sluggishness in import and export growth in second half of 2008-09. The rail freight growth too slowed down but to a lesser degree because the coal sector experienced robust production. In addition, the growth in telecommunication stood as exception a midst the general slowed down, the Survey adds.
In power sector, the Survey states, the growth of electricity generation by power utilities in 2008-09 was at 2.7 per cent which was much short of targeted 9.1 per cent. During 2008-09, despite the sharp decline in hydro and nuclear generation, the growth in total electricity generation was positive due to 5 per cent plus growth in thermal generation. The Survey mentions that less inflow of water into reservoirs in the case of hydro stations and for other power stations mainly due to fuel supply
constraints as the reasons for negative growth in power generation. Keeping in view the target set by the National Electricity Policy 2005, a capacity addition of 78,700 MW has been set for the XIth Five Year Plan, of which 19.9 per cent is in the hydel sectors, 75.8 per cent thermal and the rest nuclear. The Survey mentions that a number of projects envisaged for the XIth Plan have made steady progress, with most of these in a position to be commissioned within the plan period. The Survey also lists out major reforms initiated in order to help power utilities to improve efficiency and commercial viability. The Ministry of Power signed the MOUs with the States to undertake time bound distribution reforms, the Survey adds. With a view to provide impetus to electrification of villages under the Rajiv Gandhi Grameen Vidyutikaran Yojana, the Economic Survey states that 59,882 villages have been electrified during the XIth Five Year Plan and electricity connections to 53.78 lakh BPL households have been released up to 31st March 2009.
The Survey states that during 2008-09, the petroleum sector has been affected by the wild swings in the international oil prices. The production of crude and its products witnessed slack growth in 2008-09 as compared to the previous year. The growth of 3 per cent in refinery production was mainly on account of impressive performance of private sector production. In 2008-09, while the production of crude oil declined but its consumption increased. In comparison, production of petroleum products increased by 3.9 per cent in the same year, while its consumption declined. The growth in diesel consumption declined to 8.4 per cent in 2008-09 as compared to 11.1 per cent in 2007-08 because of industrial and business slow down in sectors like automobiles etc. Giving details of the progress under New Exploration Licensing Policy (NELP), the Survey states that 203 Production Sharing Contracts have been signed since 1999, thereby increasing the area under exploration more than four times. As on April 1, 2009, investment commitment under NELP is about 10 billion US dollar on exploration, against which actual expenditure so far under the policy is about 4.7 billion US dollar. In addition, 5.2 billion US dollar investment has been made on development of discoveries, the Survey adds.
In the coal sector, raw coal production is provisionally estimated at 493.20 million tonnes in 2008-09 as against 457.08 million tonnes during corresponding period last year, thereby registering a growth rate of 7.90 per cent. The cooking coal production was 29.76 million tonnes during April-February 2009 as against 29.70 million tonnes in the corresponding period last year. The Survey mentions that due to the enhanced production by all stakeholders, the growth rate of raw coal production was increased to about 8 per cent during 2008-09 as compared to 6 per cent in the corresponding period.
Regarding National Highways Development Project (NHDP), being implemented by the National Highways Authority of India, the Survey states that 11,037 KM of National Highways has been completed by 31st March 2009, the bulk of which lies on Golden Quadrilateral (GQ). Nearly 98 per cent works on GQ have been completed by March this year and the North-South and East-West corridors are
expected to be completed by December this year. The Survey further adds that the Government has given approval for upgradation of 12,109 KM under NHDP phase III at an estimated cost of Rs. 80,626 crore; two-laning for 5,000 KM of National Highways under NHDP Phase IV at an estimated cost of Rs. 6,950 crore; six laning of 6,500 KM of National Highways under NHDP Phase V at a cost of 41,210 crore; 1000 KM express ways with full access control at a cost of Rs. 16,680 crore under NHDP Phase IV and construction of ring road grade separation intersection, flyovers, elevated highways, underpasses and service roads at a cost of Rs. 16,680 crore under NHDP Phase VII. For improving the road connectivity to the state capitals, district headquarters and remote places in the north-eastern region, a scheme Special Accelerated Road Development Programme is being implemented. The High Powered Inter-Ministerial Committee under the programme has approved the sub-subjects covering 1065 KMs at a cost of Rs. 3,378 crore under Phase A of the programme. The Survey mentions that the XIth Five Year Plan has projected an investment requirement of Rs. 41,347 crore (at 2006-07 prices) in rural roads. During the first two year of the plan an expenditure of Rs. 25, 780.70 crore has been incurred on rural roads under the Pradhan Mantri Gram Sadak Yojana.
Regarding Civil Aviation Sector, the Survey states that the expansion of the sector continued. However, the sector showed signs of slow down due to steep rise in cost of air turbine fuel and global economic slow down. The number of domestic passengers declined by 5 per cent during 2008 as compared to 2007. The silver lining was a growth of 14.55 per cent in the domestic cargo. The Surveys mentions about the massive modernization/expansion programme of International Airports at New Delhi, Mumbai, Kolkatta and Chennai. The Survey further adds that the Airports Authority of India is upgrading and modernizing 35 non-metro airports in the country in a time bound manner. Development of Airports in the North-Eastern Region is being taken up on priority basis.
The telecom sector continued to register significant growth during the year. With about 414 million connections till February this year, India’s telecommunication network is the 3rd largest and the second largest wireless network in the world. At the current growth rate, the target of 500 million connections by 2010 is well within reach. The tele-density also increased from 12.7 per cent in March 2006 to 35.65 per cent in February this year. The Government has taken several steps directed at reduction in entry barriers, creation of a level playing field between incumbents and new entrants and forward looking regulation. With the special thrust given to rural telephony, the number of rural telephones went up from 12.3 million in March 2004 to 112.71 million in January this year. Consequently the rural tele-density reached 13.81 per cent. Since January 2000 to December 2008, the total Foreign Direct Investment is Rs. 27,482.96 crore of which the inflow during 2008 is Rs. 11,595.48 crore. Recognizing the importance of increase broadband connectivity for growth of knowledge based society, several steps have been taken to promote broadband in the country. As a result, the broadband subscribers increased from 0.18 million in March 2005 to about 5.69 million by February this year.
Regarding Urban Infrastructure, the Survey states that under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), an additional central assistance of Rs. 50,000 crore for 7 years and an equal amount from the State Governments and urban local bodies was provided to the Mission cities for improvement in their civic services levels. Memorandum of Agreement for Urban Reform Agenda has been signed with 62 mission cities and 6 urban local bodies. The Mission cities have undertaken fresh initiatives under JNNURM with an objective to contribute to sustainable functioning of local bodies. Under a parallel scheme of Urban Infrastructure Development Scheme for Small and Medium towns for Non-Mission cities and towns launched in 2005-06, 747 projects have been sanctioned at an approved cost of Rs. 12,793.81 crore for 632 towns till March this year. The year 2008 being International Year of Sanitation, a National Urban Sanitation Policy was launched in November 2008 for transforming all towns and cities of the country into 100 per cent sanitized, healthy and livable spaces and ensuring sustained public health and improved environment to its citizen.
Recognizing the importance of quality infrastructure for sustainable growth, the Economic Survey emphasized the need of better coordination between two approaches being followed for infrastructure building so as to promote its balanced development through out the length and breath of the country. The Survey mentioned that a tangible progress has been made in attracting private investment infrastructure. However, such public initiatives are constrained by factors like inadequate shelf of bankable projects and shortage of long- term finance for projects. These are difficult issues but not insurmountable, given the resilience that the Indian economy its financial system has demonstrated amidst adversities, the Survey states.
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