Infrastructure

Learning Outcomes:

1. Understand the various components classified under economic and social infrastructure.
2. Comprehend the role and importance of Public-Private Partnerships (PPPs) in infrastructure development.
3. Identify the transport systems in India, including road, rail, water, and air transport, and related government initiatives.
4. Evaluate key government schemes for infrastructure, such as the 12th Five Year Plan, PMGSY, NHDP, and more.

Definition of Infrastructure

The Rakesh Mohan Committee in its 1996 report, “The India Infrastructure Report,” classified infrastructure sectors such as electricity, gas, water supply, telecom, roads, railways, ports, airports, industrial parks, and urban infrastructure. This classification aids in policy formulation, target setting, and monitoring for economic growth.

Economic Infrastructure

Economic infrastructure involves components like power, transport, and communication that underpin economic growth. Without a robust economic infrastructure, achieving efficient and sustainable economic progress is not feasible.

Social Infrastructure

Social infrastructure focuses on social changes such as schools, colleges, hospitals, and nursing homes, driving the nation’s human resource development. The goal is to create skilled, healthy, and efficient human capital for sustained social development.

Infrastructure in the 12th Plan

The 12th Five Year Plan aimed for significant investment in infrastructure:

1. Estimated investment: ₹56.3 lakh crore (approx. US $1 trillion), nearly double that of the 11th Five Year Plan.
2. Private sector participation: Increased from 22% in the 10th Plan to 35% in the 11th Plan, expecting 48% in the 12th Plan.
3. Public sector funding: Over 50% of the resources needed, emphasizing fiscal space creation and rational pricing policy.

Infrastructure Targets in the 12th Plan

1. Increase infrastructure investment to 9% of GDP.
2. Expand the Gross Irrigated Area to 103 million hectares.
3. Provide electricity to all villages and reduce AT&C losses to 20%.
4. Connect all villages with all-weather roads.
5. Upgrade National and State Highways to at least two-lane standards.
6. Complete the Eastern and Western Dedicated Freight Corridors.
7. Boost rural teledensity to 70%.
8. Ensure 50% of the rural population has 55 LPCD piped drinking water supply.

Funding of Infrastructure

Public-Private Partnerships (PPPs)

1. Definition: PPPs involve the private sector in financing, designing, constructing, operating, and maintaining public sector projects.
2. Objectives: Enhance resource availability and improve efficiency in service delivery.
3. Notable Projects: Delhi, Mumbai, Hyderabad, and Bengaluru airports; ultra-mega power projects; and container terminals at major ports.
4. Scope Expansion: Government emphasizes PPPs in social sectors like health and education.

Viability Gap Funding (VGF) Scheme

1. Introduction: Launched in 2004 to support PPPs by providing grants to make projects commercially viable.
2. Funding: Covers up to 20% of the total project cost. An additional 20% can be granted from government budgets.
3. Launch of FTSE-IDFC Infrastructure Index: On 24th July 2007, aimed at attracting retail investors into infrastructure businesses.
4. India Infrastructure Project Development Fund (IIPDF): Announced in 2007-08, contributing up to 75% of preparatory expenditure.

Infrastructure Debt Funds (IDFs)

1. Launch: Introduced on 5th March 2012 to mobilize long-term lending.
2. Investment: A $2 billion fund sponsored by commercial banks and NBFCs targeting domestic and offshore investors.
3. Objective: Source debt capital from pension, insurance, and sovereign wealth funds.

Transport Systems in India

The transport system encompasses air, rail, road, and water transport.

Road Transport

India has the world’s second-largest road network, including National Highways (NHs), State Highways, district, and rural roads.

1. National Highways: Comprise 2% of total road length but handle 40% of traffic.
2. NH Development Project (NHDP): Largest highway upgrade project, covering phases from I to VII, including the Golden Quadrilateral and the North-South/East-West Corridors.
3. State Highways: Account for 154.5 thousand km, connecting cities and state resource centers.
4. PM Gram Sadak Yojana (PMGSY): Launched in 2000, it aimed to provide all-weather connectivity to unconnected habitations.
5. PM Bharat Jodo Pariyojana: ₹40,000 crore project for four-lane highways connecting cities not covered by NHDP.
6. Setu Bharatam Programme: Launched in 2016, aimed to eliminate railway crossings on highways and widen British-era bridges.

Railways

Indian Railways, the country’s largest national enterprise, operates on 17 zones.

1. First Railway Line: Started in 1853, between Bombay and Thane.
2. Segments: Majorly divided into freight and passenger segments, with freight contributing to two-thirds of revenue.
3. Railway Budget: Separated from the Union Budget in 1921.
4. Gauges: Includes Broad, Metre, Narrow (762 mm and 610 mm), serving varying regions.
5. Public Undertakings: 13 undertakings like IRCON, IRFC, RVNL, RailTel, DFCCIL, etc.
6. Dedicated Freight Corridor (DFC): Addresses growing freight traffic due to GDP growth.
7. Railway Vision 2020: Aims to increase railway sector GDP share to 3%, with speed upgrades and high-speed lines.

Water Transport

Includes inland water and shipping.

1. Inland Water Transport (IWT): Spanning 14,500 km, known for its fuel efficiency, and environmental friendliness.
2. Shipping: Handles 95% of trade volume, supported by a vast coastline with 13 major ports.
3. Policy: Promotes self-reliance in overseas trade through national shipping.

Air Transport

Civil Aviation serves 486 airports, with 34 designated as international airports.

1. FDI Policies: Allow 100% for greenfield projects and 49% for scheduled air transport.
2. National Civil Aviation Policy (NCAP) 2015: Aims to enhance airline services, cargo, and maintenance operations.

Important Note: The National Civil Aviation Policy (NCAP) 2015 aims to achieve 30 crore domestic ticketing by 2022 and 50 crore by 2027.

Major Schemes and Initiatives

UDAY Scheme

1. Objective: Financial turnaround of State-run power distribution companies.
2. Components: States take over 75% of debts, issue bonds to secure financial stability.

UJALA Yojana

1. Launch: In 2016, to reduce electricity bills and promote energy efficiency.
2. Implementation: Consumers access LED bulbs for reduced electricity consumption.

Comparative Summary: Major Transportation Schemes

Green Initiatives in Infrastructure

1. Green Highways Policy 2015: Promotes greening of highway corridors to enhance employment and environmental benefits.
2. Railways: Adopted bio-toilets, LED lights, regenerative braking for eco-friendly operations.
3. Project Green Ports: Launched in 2016, aimed at making ports cleaner and greener.

Important Concept: **Project

Green Ports** encompasses 12 initiatives, focusing on environmental sustainability and cleanliness under Swachh Bharat Abhiyaan.

One MCQ for Practice

Question: Which scheme focuses on connecting rural areas with all-weather roads?

1. National Highway Development Project (NHDP)
2. Pradhan Mantri Gram Sadak Yojana (PMGSY)
3. Setu Bharatam Programme
4. UDAY Scheme

Answer: 2. Pradhan Mantri Gram Sadak Yojana (PMGSY)