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National Seminar on India’s Economic Growth and Environmental Sustenance June 05, 2008 Infrastructure Development and Economic Growth Rajiv Kumar ICRIER 1 Overview of Indian Infrastructure Total Telephone Subscribers per ‘000 Population Note: Total telephone subscribers refer to the sum of main telephone lines and cellular mobile subscribers Source: ITU Electric power consumption (kWh per capita) Source: WDI and Economic Survey, India Average Turn Round Time - All Major Ports (In Days) A study by Crisil Infrastructure reveals that the cost incurred on transporting commodities from ships to factories in India accounts for 11 per cent of the cost of production. The global average is around 6 per cent. (Businessworld, June 2008) Railways, goods transported (million ton per km) Definition: Goods transported by railway are the volume of goods transported by railway, measured in metric tons times km traveled. Source: WDI Public-Private Share in Irrigation Source : Statistical Abstract, 2005 7 Infrastructure: Deficit Roads • 65,569 Km of NH comprise only 2% of network carry 40% of traffic; 12% 4 - laned; 50% 2 – laned; and 38% single - laned Ports • Inadequate berths and rail / road connectivity Airports • Inadequate runways, aircraft handling capacity, parking space and terminal building Railways • Old technology; saturated routes: slow speeds ( freight: 22 kmph; passengers: 50 kmps); low payload to tare ratio POWER • 11% Peaking deficit; 7 % energy shortage; 40 % transmission and distribution losses; absence of competition Irrigation Telecom • 1123 BCM Utilisable water resources; yet near crisis in per capita water availability and storage; only 43% of net sown area irrigated • Only 22 % of market accessed; acute human resources shortage Infrastructure & Economic Growth Infrastructure Index 2004-05 Note: Infrastructure Index consists of four indicators are Teledensity, percapita Electricity Consumption, Road density and Railways line density Principal components analysis technique used to construct the index 10 Relationship Between Per capita Income and Infrastructure Index (2004-05) 11 Relationship Between Poverty and Infrastructure Index (2004-05) 12 Development of Infrastructure & 11th Plan Projected Investment in Infrastructure in the 11th Plan (as % of GDP) Total Investment in the 11th Plan Projected investment in Infrastructure during 11th Plan is US$ 494 Billion Source: 11th five year plan Sectors Tenth Plan Eleventh Plan Anticipated Projected (US $ billion) Electricity 71.2 150.4 Roads and Bridges 35.3 76.1 Telecommunication 30.1 65.1 Railways 29.2 62.9 Irrigation 27.2 54.4 Water Supply and Sanitation 15.8 48.6 Ports 1.0 18.0 Airports 1.7 8.5 Storage 1.2 5.5 Gas 2.1 5.0 214.8 494.4 Total Projected Share of Private Investment to the Total Infrastructure Investment in the 11th Plan ? Source: 11th five year plan Projected Investment: Source Wise Note: IBER- Internal and External Budgetary Resources Central Budget Expenditure on Infrastructure (% to GDP) 2007-08 Communications Transport Energy BE 0.05 0.58 0.17 RE 0.04 0.65 0.11 GOVERNANCE ISSUES: THE KEY USER CHARGES: LACK OF FISCAL SPACE INTER-GOVT CONFLICTS INTER-MINISTERIAL ISSUES PRIVATE VERSUS PUBLIC SECTOR CONFLICTS (BSNL AND MTNL VERSUS PVT TELECOM Cos) POWER SECTOR REFORMS: INEFFECTIVE REGULATORS INEFFECTIVE LOCAL GOVERNANCE SOME SUGGESTIONS FOCUS ON POWER SECTOR REFORMS AND IMPROVING RURAL TRANSPORT CONNECTIVITY INCENTIVES FOR OPEN ACCESS IMPLEMENTATION: NTPC POWER SEGREGATE URBAN AND RURAL POWER SUPPLY CAPACITY BUILDING FOR DESIGN AND EXECUTION SPECIALLY AT THE STATE LEVELS: FOLLOW MP MODEL INCREASE BORROWING FROM MDBs FOR INFRASTRUCTURE DEVELOPMENT Thank you 21