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Infrastructure

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Infrastructure

October, 2012

Introduction

Infrastructural development mirrors the overall health of a nation’s economy. Infrastructure can be defined as major components, such as basic buildings, institutions and facilities or other essential elements, that are necessary to sustain and enable economic growth. Physical infrastructure is directly proportionate to the growth and development of a country.

The Government of India has always been quite forthcoming when it comes to the upgrade of infrastructure. There has been a strong focus on assuring effective implementation of associated projects though budgetary allocations, tariff policies, fiscal incentives, private sector participation and public-private partnerships (PPPs).

IDFC has estimated that India’s spending on infrastructure is 8 per cent of the gross domestic product (GDP) as of March 2011 and it needs to be increased further to over 10 per cent of GDP by 2017 to sustain the growth targets.

Roads

Indian road network is the second largest in the world with a total length of 4.1 million kilometres (km). As per present estimate given by the highways regulator, National Highways Authority of India (NHAI), 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 Yamuna Expressway, a 165-km six-lane expressway, has recently been opened to traffic. The stretch has been built in order to reduce the travel time between Delhi and Agra by almost half.
  • The Government of India has recently given its nod to various projects under the Integrated Action Plan (IAP) for construction of 9,070 km of roads in rural Bihar, at a projected cost of US$ 614.12 million.
  • India’s one of the largest road developers, Reliance Infrastructure Limited, has started working on its sixth project involving four laning of Gurgaon - Faridabad and two laning of Ballabhgarh - Sohna road. The Rs 800 crore (US$ 147.33 million) project is being executed though the company’s special purpose vehicle (SPV).

Railways

The Government has envisaged ‘The Indian Railways Vision 2020’ which aims to tackle infrastructure obstacles and deliver best services while building capacity.

  • The Government has signed a US$ 150 million-loan agreement with the Asian Development Bank (ADB) as the first tranche of railway sector investment programme, aimed at improving rail freight services and passenger transport routes. ADB will also co-operate on improving operational and financial efficiency at Indian railways. Installation of new signals, reduction in fuel consumption and enhancement of overall railway performance would be the major focus areas under the programme. The total cost of the railway sector investment program is US$ 1.45 billion, out of which loan assistance from ADB is US$ 500 million dollar (in four tranches) and the Government's commitment is US$ 644.6 million.
  • Furthermore, owing to the initiatives taken by the Prime Minister’s Office (PMO) to speed up the implementation of various key infra projects, a technical feasibility study for the Elevated Rail Corridor in Mumbai has been completed and a draft State Support Agreement has been agreed upon between the Maharashtra Government and the Central ministry. The Railways Ministry will now form a Project Steering Group (PSG) and the operations would be executed under the PPP model.