Infrastructure

INFRASTRUCTURE

NAME-AMIT PATIDAR MBA(PM)

SAP ID:500034638

DEFINATIONS:

• Infrastructure defines as : 1-The basic structural foundation of an economy. 2-An underlying base or foundation especially for an organization or system.

The infrastructure sector covers:

1- Economic Infrastructure

2-Social infrastructure

Economic Infrastructure

• Energy( electricity, coal, oil and gas)• Transport( railways, roads, ports, civil aviation)• Telecommunication(including posts)• Special economic zones• Urban infrastructure(water supply, sewerage,drainage,city roads)• Rural infrastructure

Social Infrastructure

• Human development and social security.• Poverty and poverty alleviation programmes.• Health and family welfare.• Education and training.• Labour Employment and Welfare.• Empowerment of women.• Empowerment of socially disadvantaged groups.

“Infrastructure Facility” means:

• A road,bridge,airport,port,inland waterways and inland ports,etc.• A highway project including housing or other activities• A water supply project,irrigation project,etc.

The Rangarajan Commission indicated six characteristics of infrastructure sectors:• Natural Monopoly• High-Sunk costs• Non-tradability of output• Non-rivalness(up to congestion limits) in consumption• Possibility of price exclusion• Bestowing externalities on society

• Dr. Rakesh Mohan Committee in “The Indian Infrastructure Report” included electricity,gas,water supply,telecom,roads,industrial parks,railways,ports,airports,urban infrastructure,and storage as infrastructure.• Except industrial parks and urban infrastructure,all these sub-sectors

are treated by central statistical organization also as infrastructure.

Power Sector

• The electricity sector in India had an installed capacity of 237.742 GW as of February 2014, the world's fourth largest. • Captive power plants(it is associated with specific industrial

complexes, and their output is almost entirely consumed by that industrial plant) generate an additional 39.375 GW.• Non Renewable Power Plants constitute 87.55% of the installed

capacity, and Renewable Power Plants constitute the remaining 12.45% of total installed Capacity

• The power sector in India has undergone significant progress after Independence. • When India became independent in 1947, the country had a power

generating capacity of 1,362 MW. • Hydro power and coal based thermal power have been the main

sources of generating electricity. • Generation and distribution of electrical power was carried out

primarily by private utility companies. Notable amongst them and still in existence is Calcutta Electric.

• Power was available only in a few urban centers; rural areas and villages did not have electricity. • After 1947, all new power generation, transmission and distribution in

the rural sector and the urban centers (which was not served by private utilities) came under the purview of State and Central government agencies. State Electricity Boards (SEBs) were formed in all the states. • In spite of the overall development that has taken place, the power

supply industry has been under constant pressure to bridge the gap between supply and demand.

Structure of power sector

• Majority of Generation, Transmission and Distribution capacities are with either public sector companies or with State Electricity Boards (SEBs).

• Private sector participation is increasing especially in Generation and Distribution - Distribution licences for several cities are already with the private sector - Many large generation projects have been planned in the private sector

Policy- Power sector

•100% FDI permitted in Generation, Transmission &Distribution - the Government is keen to draw private investment into the sector•Policy framework in place: Electricity Act 2003 and National Electricity Policy 2005

• Incentives: Income tax holiday for a block of 10 year since the first 15 years of operation; waiver of capital goods import duties on mega power projects (above1,000 MW generation capacity)• Independent Regulators: Central Electricity Regulatory Commission

for Central PSUs and inter-State issues. Each State has its own Electricity Regulatory Commission.

Railways

The lifeline of the country, Indian Railway is famous worldwide for its efficient and reliable services. Headed by the single headed management under the Government of India, Indian Railways is proudly largest Asian railway network.

It is also the world’s second largest utility employer with more than 1.36 million employees, empowering the network with smooth and efficient services.

The well defined railway track net runs over 60,000 kilometers, connects 7500 stations and serves as an important mode for nearly 20 million passengers every day.

The extensive rail network connects the cultural, regional and economic fabric of the country by reaching in all directions, states, cities, junctions and suburbs.Many known train routes include Rajdhani Express, Shatabdi Express, Jan Shatabdi Express, Superfast Express, etc.

Apart from these trains, Indian Railways also offer experience of Indian luxury and grandeur on the go through six luxury trains including Palace on Wheels, Royal Rajasthan on Wheels, The Golden Chariot, Deccan Odyssey, The Indian Maharaja and Maharajas’ Express featuring Princely India Tour, Royal India Tour, Classical India & Celestial India.

Another feather to the crown of Indian Railways includes the toy train. This route in Eastern Railways known as Darjeeling Himalayan Railway is famous for its spectacular views of city’s tea gardens in a vintage way. Followed by Hill Cart Road, this route is recognized as a world heritage site by UNESCO.

Metro Railways are a new face of Indian Railways linking various nearest cities. Apart from Kolkata and Delhi NCR, Metro Rapid Transit System is ready to track the suburbs like Bangalore, Chennai and Hyderabad.

In present scenario, Indian Railway Network is growing extensively reaching every nook and corner along with providing value added services to the passengers

MISSION 2020 OF INDIAN RAILWAYS

• High speed rail travel• Raising the speed of regular passenger trains from 100-130 khph to 160-200 kmph• To develop 50 world class stations which can be recognized internationally• Segregating passenger and freight tracks completely

Roadways

• India has second largest Road network, in the world.

• About 60 per cent of freight and 87 per cent passenger traffic is carried by road. Although National Highways constitute only about 2 per cent of the road network, it carries 40 per cent of the total road traffic.

 Important Development projects

• The Golden Quadrilateral (GQ-5846 kms of 4 lane highway)• North-South & East-West Corridor (NSEW-7142 kms of 4 lane

highways) • Four-laning of 12,109 km under NHDP-III -Program for 6-laning of

6,500 km of National Highways under NHDP- V.

Policy

• 100% FDI under the automatic route is permitted for all road development projects• 100% income tax exemption for a period of 10 years • Grants / Viability gap Funding for marginal projects by NHAI. • Formulation of Model Concession Agreement

Telecommunication

• 3rd largest in the world & 2nd largest in Asia.• Mobile subscriber base-936.12 million.• Overall Tele- density 77.57%• Broadband Subscriber 13.42 million

Aviation

• The Indian aviation industry is one of the fastest growing aviation industries in the world. • The governments open sky policy has led to many overseas players

entering the market and the industry has been growing both in terms of players and number of aircrafts.• Today, private airlines account for around 75 per cent share of the

domestic aviation market.

• India is the 9th largest aviation market in the world. • It is predicted that international passengers will grow up to 50 million

by 2015. • Further, due to enhanced opportunities and international

connectivity, 69 foreign airlines from 49 countries are flying into India.

Oil and gas

• India 5th largest Consumer of energy• About 5.7 billion barrels of proven oil reserves

Developments & Investments

• KG Basin-Reserves of 56.6 BCM.• Reliance Industries J- 3 mega petrochemical Project• IOCL to set up refinery in Gujarat• ONGC & IOCL seeking refinery options in Srilanka• Petronet LNG Ltd planning to set up its third terminal in the east coast of India.

IRDA

• The IRDA vide their notification dated 14th july 2000,regarding registration of Indian Insurance companies regulation,2000 stipulates that every insurer in business of life insurance shall invest and all time keep invested not less than 15% of his controlled funds in infrastructure and social sector

• For this purpose,IRDA defines infrastructure to include road,highway,bridges,airport,port,railways including BOLT,road transport system,water supply project,water treatement system,solid waste management system,generation-transmission-distribution of power,telecom,project for housing,or any other public facility as may be notified in the official gazette.

RBI

• The RBI defined Infrastructure as: “Developing or developing and operating or developing,operating and maintaining an infrastructure facility in energy,logistics and transportation,telecom,Urban and industrial infrastructure,agro processing,construction for storage agro products,schools and hospitals,pipelines for oil,petroleum and gas,water and santation.”

WORLD BANK

• The world bank treats power,water supply,sewerage,communication,Roads&bridges,ports,airports,railways,housing,urban services,oil/gas production and mining sectors as infrastructure.

Economic Survey

• The economic Survey considers power,urban services,posts,road,Ports,telecommunications,civil aviation,and railway under infrastructure sector.

Income Tax Department

• For an Infrastructure Company, it allows deduction of 100% profit from its income during initial 5 years of operation and then 30% deduction of profit from income during another 5 years.

• For this purpose infrastructure covers electricity,water supply,sewerage,telecom,roads &bridges,ports,airports,railways, irrigation,storage(at ports) and industrial parks/SEZ.

Infrastructural requirement scenario in India• Urban population is expected to grow about 50% by 2025• Growth in GDP is predicted to be 8-9% per annum• Road Traffic growth will be 15% per year

Steps taken for infrastructural development• IIFC - India Infrastructure Finance Corporation• Setup to fund infrastructure funds in India & is owned by government• Will lend money at low rates to public and private infrastructure

projects• Would be able to borrow at low rates as they are guaranteed by GoI.• Government has started the Jawaharlal Nehru National Urban

Renewal Mission (JNNURM) to improve Urban infrastructure

Conclusion

• Infrastructure inadequacies in both rural and urban areas are a major factor constraining India's growth.• India needs a lot more infrastructure to meet its needs.• The government is focusing on this and has created a set of programs and reforms aimed at addressing this issue.