INFRASTRUCTURE

What is infrastructure?
• Infrastructure provides supporting services in the main areas of industrial
and agricultural production, domestic and foreign trade and commerce.
These services include
• Roads
• Railways
• Ports
• Airports
• Power etc.

• Infrastructure is also divided into-social (healthcare, education etc which provide

the basic needs of the society) and physical (airport, port, roads etc are directly
concerned with the needs of the production)
Infrastructure - Features
• Investment requirements are high

• Long term loans are required

• Usually, the sector is sensitive to policies of the government

• The services that are produced have to be consumed and cannot be stored

• Associated with demand, growth, employment etc

PM Gati Shakti
• Approved by the cabinet in 2021

• It is a digital platform to bring 16 ministries

• This is for integrated planning and coordinated implementation of infrastructure

projects

• It will provide integrated and seamless connectivity for movement of people,

goods and services from one mode of transportation to another
PM Gati Shakti
Need

• Lack of coordination amongst various ministries

• Efficient allocation of resources (in absence of the coordination the

cost of project would be higher, wastage of time etc.)

• Improve the quality of life of citizens

• Improve export competitiveness

 Power Sector – Issues
• High Aggregate Technical & Commercial losses (AT&C Losses).
• Losses because of theft, inefficiency in billing, default in payment, inefficiency in collection
etc.

• Distress in Discoms
• Average Cost of Supply (ACS) – the cost/expenditure incurred to supply electricity.
• Average Revenue Realized (ARR) – the revenue collected by the discoms.
• The ACS is higher than the ARR.

• Fuel adequacy
• Coal is imported.
• The solar modules are imported.
• Nuclear energy raw material is imported.
 Power Sector – Issues
● Cross-subsidization – practice of charging higher price to some consumers
and lower to other consumers

● Energy Security
● Energy security is uninterrupted power supply.
● India is yet to achieve energy security in rural parts.
 Power Sector – Measures

● Revamped Distribution Sector Scheme

• AT&C losses to be reduced to 12 to 15% by 2024-25.

• Gap between ACS and ARR to be reduce to zero by 2024-25.

• Improve quality, reliability, affordability in power supply to consumers.

• Many of the schemes such as IPDS, DDUGJY etc have been subsumed.

• It will be till 2025-26.

● PM Saubhagya (Pradhan Mantri Sahaj Bijli Har Ghar Yojana)

• Free electricity connection to poor households.

• REC (Rural Electrification Corporation) is the Nodal Agency for operationalization of the
scheme.
 Power Sector – Measures
• LED program – UJALA (Unnat Jyoti by Affordable LEDs for All).
• Implemented by Energy Efficiency Services Limited (EESL).
• Promotes usage of LED bulbs.
• More than 36 crore LED bulbs have been distributed.

• Thrust to Renewable energy

• Govt has set up a target of achieving renewable energy

capacity of 175 GW of renewable energy capacity by 2022.
 Railways – Issues
• Proportion of freight transportation in railways is declining
• Roadways accounts for majority of freight transportation.
• Number of competitors in case of roadways is higher.
• Handling points much lower in roadways – damages/theft is lower.
• Dealing with railway official/government officials is difficult.
• Low passenger to freight ratio
• Charges higher for freight movement.

• Private sector participation – policy making, implementation etc is undertaken by

the government (now govt is allowing private sector participation in operating
some routes).

• High operating ratio – expenditure incurred for generating revenue.

 Railways – Reforms
• Bullet train project

• Benefits

• Introduction of new technology.

• Time taken for commutation would be coming down reducing the chances of migration.

• Decongest the road mode of transportation.

• Concerns

• Cost of the project

• Cost of service

• Land acquisition

• Merger with Union Budget

• Not a constitutional provision.

• It makes better sense for the ministry of finance to allocate the finances for all the infrastructure projects.

• The size of railway budget as a percentage of union budget was shrinking.

 Railways – Reforms
• Private sector operating trains.
• Benefits
• Investment will increase.
• Govt doesn’t have to spend money and the private sector would be providing the
services.

• Customers/travellers can expect better services.

 Railways – National Rail Plan 2030
● Increase the modal share of Railways to 45% in freight by 2030.

● Net Zero emitter by 2030.

● To create capacity ahead of demand by 2030, which in turn would cater to growth in demand
right up to 2050.

● For successful implementation of the National Rail Plan, the Railways will be looking to engage
with Private Sector, PSUs, State Governments.
 Roads – Basics
• India has about 66.71 lakh kms of road network (second largest in the
world) (As of 5th January 2024)
• National Highways: 1,46,145 km
• State Highways: 1,79,535 km
• Other Roads: 63,45,403 km
 Roads – Issues
• Land acquisition for development of infrastructure is a problem.

• Very low proportion of NHs.

• Cost of transportation is higher.

• Delays in completion of the projects.

 Roads – Reforms
● New models of investment – HAM (discussed under PPP).

● Steps taken to reduce cost of transportation

● GST

● Fastag
• Road connectivity – Bharatmala Pariyojana
• Total length of road network – 34800 kms.
• Border roads, coastal roads etc. will be developed under this.
• Asset Monetization
 Roads – Reforms
● Logistics has been given infrastructure status

● Once infrastructure status is provided – benefits.

● Can borrow for long term investors such as pension funds, insurance funds.

● Can borrow at lower rate of interest from external market.

● Will become eligible to borrow from institutions such as India Infrastructure

Financing Company.
 Roads – Reforms

• New Logistics Division

• Was Created in 2017.

• It has been Tasked with integrated development of logistics sector (Action

Plan), it will be involved in

• Recommending policy changes.

• Improvement in existing procedures.

• Identification of issues.

• Introduction of technology in this sector.

 Civil Aviation – Issues
• Airports usually act like a monopoly

• Larger cities have only one airports.

• Customers do not have any option.

• Air travel is comparatively costlier.

• Aviation Turbine Fuel (ATF) amounts to around half of the travel cost
• ATF was deregulated in 2002.

• ATF attracts taxes from both centre and states.

• Connectivity issues in lower tier of cities.

 Civil Aviation – Reforms – UDAN
• Ude Desh ka Aam Nagarik (Regional Connectivity Scheme – RCS).
• Announced in Civil Aviation Policy 2016.
• To connect tier 2 and tier 3 cities.
• The airlines and they will have to offer at least 50% of the seats at subsidized rates of ₹ 2500
per hour of flight.
• The target of achieving connectivity for 100 airports by 2024.
• So far
• More than 400 routes launched.
• Many of the routes have been discontinued.
• Pandemic has affected the demand.
• Cost of operations in these routes has increased.
 Civil Aviation – Reforms – Krishi UDAN
• Was launched in August 2020 (2.0 was launched in 2021)

• To help the farmers transport their output so that the value realization improves

• Krishi Udan 2.0 was launched in October 2021 enhancing the existing provisions,
mainly focusing on transporting perishable food products from the hilly areas,
North-Eastern states and tribal areas

• The Scheme covers 58 airports in the country, primarily focusing on 25 airports

focusing on North-Eastern, Hilly and Tribal region besides 33 airports in other
regions/areas.
 Civil Aviation – Reforms – Krishi UDAN

• FDI is allowed

• PPP in airports.
 Ports – Issues
• High turnaround time – the average time taken between arrival and departure time for the
vessels.

• Port infrastructure not adequate

• Sub optimal modal mix

• Most of the transportation is done through the road network.

• Issues with linkages with other regions.

 Ports – Reforms – Sagaramala Project
Aim
• Reduce the cost of transportation.
• Promoting export competitiveness.
• Locating the future industries near the coast.
• Optimizing time/cost of exim container movement.

Port Led Development

• Port Modernization – developing new ports.
• Port Connectivity – upgrading rail/road connectivity, inland water transport.
• Port led Industrialization – coastal SEZs, industries.
• Coastal Community development – coastal tourism projects, fish processing centers
etc.
 Ports – Reforms – National Waterways
• Inland waterways (IW) - rivers, lakes, canals, creeks etc which can be used for
transportation.
• India has an extensive network of inland waterways
• The total navigable water in India is over 20200 kms (river + canal).

• The government previously had declared five inland waterways as National

Waterways.
 Ports – Reforms – National Waterways

• The National Waterways Act 2016 declares 111 inland waterways as

National waterways

• The IW has immense potential for passenger and cargo transportation.

• Inland waterways are better compared to other modes (roadways and

railways) in terms cost of transportation, emissions caused/carbon
footprint.
 Inland Waterways – Advantages
• Comparatively very efficient.

• Job opportunities.

• Reduce the cost of transportation.

• No land acquisition problem.

• Will benefit not only freight transportation, but also passenger

transportation, tourism sector etc.
 Inland Waterways – Issues

• These waterways require constant dredging on account of silting.

• Silting – deposition of silt (soil)
• Dredging – clearing the riverbed

• All the rivers in India do not have high flow throughout the year.

• Investment requirement.

• Loss of ecology.
Thank You