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Infrastructure

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Infrastructure

March, 2012

Introduction

Infrastructure sector in any country holds immense strategic importance and hence enjoys high priority treatment from the administrative bodies as well. In Indian context, rapid urbanisation and massive Government support has given a make-over to the infrastructure sector. In addition to this, increasing foreign investments and private participation have also given an impetus to the pace of growth.

The sector enjoyed high inflows in terms of foreign direct investment (FDI) over April-December 2011, registering a growth of 23.6 per cent over the previous year.

Infrastructure majorly involves sub-sectors namely roads, railways, ports and power. Recent developments, investments and Government initiatives pertaining to these have been discussed hereafter.

Roads

India's road network of 4.1 million km is the second largest in the world. With the number of vehicles growing at an average annual pace of 10.16 per cent, Indian roads carry about 65 per cent of freight and 80 per cent of passenger traffic.

National Highways (NH) constitute 1.7 per cent of the entire network but carry 40 per cent of the traffic on Indian roads. To augment it, the Government plans to build 7,300 km of roads every year.

The highways regulator, National Highways Authority of India (NHAI), has recently announced that it will award Rs 914.5 crore (US$ 181.94 million)-road project in Rajasthan to Sadbhav Engineering. The project, entailing four-laning of 83 km stretch on NH 8 will be implemented under design, build, finance, operate and transfer (DBFOT) toll mode and the concession period is for 27 years. It is being executed under National Highways Development Project (NHDP) phase 4.

Alongside, while Delhi Development Authority (DDA) is contemplating on three concentric ring roads to connect the capital with national highways, Maharashtra's State Government is planning to develop a comprehensive network of urban freeways and highways to connect Mumbai with major satellite townships.

Railways

Indian Railways have generated Rs 92,985 crore (US$ 18.5 billion) of revenue earnings from April 2011 to February 2012 as against Rs 84,402 crore (US$ 16.79 billion) during the corresponding period last year, registering an increase of 10.17 per cent.

While total goods earnings increased 10.24 per cent from Rs 56,394 crore (US$ 11.22 billion) during April 2010 - February 2011 to Rs 62,171 crore (US$ 12.36 billion) during April 2011 - February 2012, total passenger revenue earnings increased by 9.57 per cent, jumping from Rs 23,600 crore (US$ 4.69 billion) in April 2010 - February 2011 to Rs 25,858 crore (US$ 5.14 billion) in April 2011 - February 2012.

The revenue earnings from other coaching amounted to Rs 2,580 crore (US$ 513.17 million) during April 2011- February 2012 witnessing a growth of 12.45 per cent.

Indian Railways has inked a Memorandum of Understanding (MoU) with the Government of Chhattisgarh for the development of three rail corridors for handling freight and passenger traffic. The project would be implemented by some Special Purpose Vehicles (SPVs) or any other appropriate model of Public Private Partnership (PPP) and it would also be granted with concession from the Ministry of Railways.

Meanwhile, The Mumbai Metropolitan Region Development Authority (MMRDA) has recently tested and tried electrical Mumbai monorail over a stretch of 4.5 km. The first phase of the project (from Wadala to Chembur) is anticipated to be completed by November 2012. The project is being implemented by MMRDA, with Larsen & Toubro (L&T) and a consortium of Malaysian infrastructure Scomi Engineering.

Ports

Indian ports contribute significantly to the country's shipping industry as around 95 per cent of the trade by volume and 68 per cent in terms of value is being transported by sea. Continuous modernisation of ports and upgradation of port infrastructure have given an impetus to the sector as a whole.

Endorsing private participation for capacity expansion and technological make-over, the recent Economic Survey 2011-12, tabled in the Parliament, has stated that Indian port sector would require investments worth over Rs 150,000 crore (US$ 29.83 billion) over 2012-17.

Also, the shipping ministry has proposed development of two new major ports—one each on east and west coasts—and build facilities for full mechanisation of cargo handling and movement, besides two hub ports each on the west and east coasts existing already (Mumbai [JNPT], Kochi, Chennai, and Visakhapatnam).