Infrastructure

(INFRASTRUCTURE CONTINUES TO BE A FOCUS AREA)

India is on the verge of witnessing a sustained investment phase in infrastructure buildup.

With a slew of announcements in housing, road, port and airport development, we are
seemingly on a path of sustained higher economic growth on the back of improvement in
infrastructure construction in the country.

Story Behind:
The government, in its mid-term appraisal of the tenth five-year plan (2002-07), has
revised upwards its infrastructure investment target from Rs 10,890 bn to around 11,100
bn (US bn) over the next five years. From a policy perspective, there has been a growing
consensus that a private-public partnership is required to remove difficulties concerning
the development of infrastructure in the country. A substantial chunk of the
abovementioned investment target is likely to come from the private sector.

Budget over the years

Budget 2004-2005

• Outlay of Rs 53.6 bn towards ?Road Transport and Highways? sector, including

investment in NHAI amounting to Rs 18 bn.
• Outlay of Rs 127 bn towards ?Roads and Bridges? sector, excluding provision for
North-Eastern region.

Budget 2005-2006

• Grant of Rs 14 bn for the National Highway Development Programme (NHDP)

III towards developing four-lane road of 4,000 kms.
• Rs. 4.5 bn allocated for the development of roads in the North-Eastern region.
• Establishment of SPV to finance infrastructure projects in specified sectors.
• Provision of Rs 15 bn for ?viability gap? funding for infrastructure projects.
• Outlay of Rs 55 bn for the National Urban Renewal Mission, including a grant
component of Rs 16.5 bn.
Budget 2006-2007

• Increase in allocations for National Highway Development Programme (NHDP)

from Rs 93.2 bn in FY06 to Rs 99.5 bn in FY07.
• 54% hike in the budgetary support to the Bharat Nirman Programme, amounting
to Rs 187 bn.
• Increase in corpus of the Rural Infrastructure Development Fund to Rs 100 bn.
• Grant of Rs 46 bn for the National Urban Renewal Mission.
• Exemption under Section 10 (23G) of the Income Tax Act removed. The section
exempted income by way of dividend, interest and long-term capital gains arising
out of investments made in an enterprise engaged in the business of developing,
maintaining and operating an infrastructure facility.
• Plan allocation for Department of Shipping increased by 37% to Rs 7.4 bn to
facilitate investment in National Maritime Development Programme

Budget 2007-2008

• 12,198km of rural road has been built till December

• 15,054 villages to be connected by phones till December
• Allocated Rs40 billion for rural roads
• 75 per cent growth rate in electricity generation in April - December
• Govt to award two more ultra power projects by July
• Imperative to take new steps to up power generation
• Rural electrification allocation at 39.83 billion rupee FY 08
• Rajiv Gandhi Vidyatikaran Yojana allocation 39.8 billion rupee
• National highway plan to get 106.7 billion FY 08
• FY 08 APDRP support raised to 8 billion rupees versus 6.5 billion
• Energy security high on government agenda
• Rs120 billion more earmarked for RIDF for FY 07-08
• Separate window for rural roads under RIDF to continue
AVIATION
On the face of it budgetary allocation for the aviation industry for the fiscal 2007-08 has
gone up from Rs2,256.36 crore to Rs12,192.09 crore.

Key Proposals
 Customs duty of 3% imposed on aircrafts; and parts of aircrafts, imported for use
in such aircrafts.
 Countervailing duty (CVD) of 16%, and special additional duty of customs of 4%
also imposed on such aircrafts. However, such duties not applicable to imports by
scheduled airline operators and Government

 In 2001, 'Aviation Turbine Fuel sold to turbo-prop aircraft' was included in the list
of declared goods under section 14 of the CST Act (thereby capping the CST at
4%). The provision amended to cover all small aircraft with maximum takeoff
mass of less than 40,000 kgs operated by scheduled airlines.

 Peak rate of customs duty proposed to be reduced from 15% to 12.5%.

 Customs duty on Aluminium, Zinc, Copper, stainless steel and other ferroalloys
reduced from 7.5% to 5% in January 2007

Impact
 Airlines operating smaller air-crafts will be positively impacted with the reduction
in ATF prices which is likely as a result of tax cut on ATF fuel.

 The increase in duty and CVD will not impact the ‘scheduled’ airline operators.

 The massive hike in outlay has been made primarily to help public sector carriers
Indian and Air India fund their fleet acquisition of 111 aircraft.

 The hike will also aid the Airport Authority of India (AAI) develop 35 non-metro
and other airports.
ROADS & PORTS

Proposals
 Examine recommendations of Deepak Parekh committee of using forex reserves
for funding infrastructure projects.

 Higher budgetary support to ‘Bharat Nirman’ (increase by 31%).

 Increase in NHAI Outlay from Rs. 9,945 crore to Rs. 10,667 crore.

 Thrust on Public Private Participation (PPP). To set up a revolving fund with a

corpus of Rs.100 crore to quicken project preparation.

 Initiatives to reduce Cement Price.

 Mutual Funds can open dedicated infrastructure Funds.

Impact

• The increased thrust on PPP and increased outlay under Bharat Nirman
and NHAI could favourably impact the pace of project execution. The
efficacy of the measures which have been announced to rein in cement
prices remains to be seen. The extent to which long term finances become
available for the sector as a result of the policy pronouncements made is
also uncertain at this stage

• Provision for National Highway Development Programme to increase

from Rs.9,945 crore to Rs.10,667 crore; road-cum-rail bridge at Bogibeel,
Assam, over Brahmaputra, to be taken up as a national project.
Overview of Rail Budget 2007-08
CAPACITY OF PASSENGER COACHES INCREASED
 The railways have decided to start production of new design coaches from 2007-
08.
 The newly designed coaches will have significantly higher capacity than the
previous coaches. The capacity of sleeper coaches has been increased from 72 to
84, AC Chair Car from 67 to 102, AC 3 Tier from 64 to 81, AC 2 Tier from 46 to
48 and AC 1st from 18 to 22. The rail coaches designed at Kapurthala factory are
convenient and comfortable for passengers.

2007-08 ANNOUNCED AS YEAR OF CLEANLINESS

300 MORE STATIONS TO GET MODERN FACILITIES AND FACELIFT

 Union Minister for Railways, Shri Lalu Prasad announced that the year 2007-08
will be observed as ‘Cleanliness Year’ by the Indian Railways.
 Special campaign will be launched to ensure cleanliness and hygiene at station
premises, in passenger trains, railway lines and waiting rooms etc.

In the previous Rail Budget in 2 years people will observe a perceptible

improvement in the get-up and facilities available at all major stations. By March
2007, work will be completed at 225 such stations and the Ministry proposes to
provide similar facilities in another 300 stations this year.
ANNUAL PLAN OUTLAY UP BY 32 PER CENT

The Union Minister for Railways, Shri Lalu Prasad has proposed an outlay
of Rs. 31,000 crore for the Annual Plan 2007-08. The outlay exceeds plan size for
the current year by 32 per cent and would be the largest Annual Plan for the
Railways so far.
The outlays of the Annual Plans over the last three years have increased by about
two and a half times and three-fourths of the Plan would be sourced from
Internal and Extra Budgetary Resources (IEBR).

• Rs. 17,323 i.e. 61 per cent from IEBR.

• Extra budgetary resources would include Rs. 5000 crore for leasing of
rolling stock through IRFC.
• Loan of Rs. 240 crore to be raised by RVNL.
• Investment of Rs. 500 crore under the wagon investment scheme.

The total budgetary support of Rs. 7611 crore includes

• Rs. 1165 crore for SRSF,
• Rs. 725 crore from Central Road Fund and
• Rs. 5721 crore for the remaining projects.

 The Railway Ministry has sought additional fund of Rs. 2725 crore
from Ministry of Finance for the national projects of Jammu and Kashmir
and North Eastern Region.
These include Udhampur-Srinagar-Baramulla,
Jiribam-Imphal Road (Tupul) and Kumarghat-Agartala new line and
Lumding-Silchar-Jiribam gauge conversion projects.

 Rs 1330 cr for Dedicated freight corridor

 Rs 1610 cr for new lines
 Rs 2404 cr for gauge conversion
 Rs 300 cr for electrification
 Rs 722 cr for metropolitian transport
 Pre feasibility study on high speed passenger corridors.
 Metre gauge to be converted to broad gauges to optimize revenue.
 Suburban services to be improved and modernized.
 States willing to share 50% cost to get priority.

RAILWAY RESERVATION AT E-SEVA OF STATE GOVERNMENTS, POST

OFFICES, PETROL PUMPS AND ATMS OF BANKS

 E- ticket charge for sleeper/AC slashed

 Train enquiry call centers introduced
 Hand held computer terminals for ties
 8000 UTS counters & 6000 automatic ticket vending machines for
unreserved travel

NEW INITIATIVES AIMED AT MAKING UNRESERVED TRAVEL

COMFORTABLE

• 50% consessions to students appearing in UPSC/SSC exams.

The Railway Ministry has also proposed to give
50 per cent concession to students appearing in the main written examination
conducted by Union Public Service Commission and Central Staff Selection
Commission. Last year, the Ministry had announced concessions for
unemployed youths appearing for interviews for jobs in Central and State
Government exams.
• Earmarked coaches for vendors in passenger trains.
Vendor coaches will be provided on sections
where transportation of milk, fruit and vegetables through passenger trains is
common. The initiative is aimed at ensuring safe travel to vendors who at
present carry their milk cans and baskets hanging from the windows.

RAILWAYS JOINT VENTURE WITH KERALA GOVERNMENT TO

MANUFACTURE PASSENGER COACHES

The Railway Minister Shri Lalu Prasad has announced that a Joint Venture
 Company would be set up with the Steel Industries Kerala Limited, Aleppey, a
public sector undertaking of Government of Kerala to manufacture the
passenger coaches.

NO INCREASE IN PASSENGER FARES

The Union Minister for Railways announced that there would be no increase
in passenger fares during the year 2007-08 for any class of travel. A Variable
Fare Scheme has been proposed to be introduced under Dynamic Pricing
Policy. Discounts in fares at the rates indicated below shall be given in various
classes of travel.
Class Busy Season Lean Season
AC First 3% 6%
AC 2-Tier 2% 4%
AC-3 Tier (81 berths) 4% 8%
AC-3 Tier (64 berths) Nil Nil
AC CC (102 seats) 4% 8%
New Sleeper Coaches (84 4% 4%
berths)
Sleeper Class (72 berths) Nil Nil

In Popular trains, class-wise discounts indicated above for Busy Season shall be
applicable through out the year. The list of popular trains shall be notified separately.

Supplementary charges for Superfast Trains for Second Class shall be reduced from Rs.
10 to Rs. 8.

It has been proposed to introduce Tourist Tickets for any station to any station in Mumbai
Suburban area as a pilot project. The fares for Second Calls Tourist Tickets shall be as
under: -
1 Day Rs. 40.00
3 Day Rs. 75.00
5 Day Rs. 90.00

Daily tickets for Non-suburban Second Class Ordinary trains and Non-superfast
Mail/Express trains shall be reduced by Re. 1.00 per passenger.
FREQUENCIES OF 14 TRAINS TO BE INCREASED
The frequency of the following trains will be increased during this year. This was
announced by the Union Railway Minister Shri Lalu Prasad during his Budget speech in
the Parliament.

• 9311/9312 Indore-Pune Express (from 2 days in a week to 3 days in a week)

• 1561/1562 Miraj-Belgaum Passenger (from 6 days in a week to daily)
• 2149/2150 Pune-Patna Express (from 2 days in a week to 4 days in a week)
• 2843/2844 Puri-Ahmedabad Express (from 3 days in a week to 4 days in a week)
• 2345/2346 Howrah-Guwahati Saraighat Express (from 5 days in a week to daily)
• 1563/1564 Miraj-Belgaum Passenger (from 6 days in a week to daily)
• 2309/2310 New Delhi-Patna Rajdhani Express (from 2 days in a week to daily)
• 6603/6604 Thiruvananthapuram-Mangalore Express (from 3 days in a week to
daily)
• 2835/2836 Hatia-Yesvantpur Express (from weekly to 2 days)
• 209/210 Machilipatnam-Tirupati Passenger (from 3 days to daily)
• 6595/6596 Patna-Bangalore Express (from 2 days in a week to 6 days in a week)
• 2419/2420 New Delhi-Lucknow Gomti Express (from 6 days in a week to daily)
• 6527/6528 Yesvantpur-Kannur Express (from weekly to 3 days in a week)
• 6315/6316 Bangalore-Kochuvelli Express (from weekly to 3 days in a week)

EXTENSION OF RUN OF 23 EXISTING TRAIN ROUTES

The Union Railway Minister, Shri Lalu Prasad announced in his Budget speech,
presented in Lok Sabha today, that the run of the following existing trains will be
extended :-

• 4517/4518 Allahabad-Ambala Cantt. Unchahar Express upto Chandigarh

• 207/208 Tirupati-Guntakal Passenger upto Hubli
• 2315/2316 Sealdah-Ajmer Ananya Express upto Udaipur
• 2105/2106 Mumbai-Nagpur Vidarbha Express upto Gondia
• 1103/1104 Agra Cantt.-Nizamuddin Intercity Express upto New Delhi
• 9165/9166 Ahmedabad-Faizabad Sabarmati Express upto Varanasi
• 4649/4650 Amritsar-Darbhanga Saryu Yamuna Express upto Jai Nagar (After
Gauge Conversion)
• 2705/2706 Secunderabad-Vijayawada Express upto Guntur
• Shikohabad-Farrukhabad Passenger upto Kasganj (After Gauge Conversion)
• 3185/3186 Sealdah-Darbhanga Gangasagar Express upto Jai Nagar (After Gauge
Conversion)
• 364 Kottayam-Thiruvananthapuram Passenger upto Nagarcoil
• 571/572 Manduadih-Mau Passenger upto Azamgarh
• 209/210 Howrah-Darbhanga Passenger upto Jai Nagar (After Gauge Conversion)
• 5037/5038 Kanpur-Farrukhabad Express upto Kasganj (After Gauge Conversion)
• 6509/6510 Ajmer-Bangalore Express upto Mysore
• 4673/4674 Amritsar-Darbhanga Shaheed Express upto Jai Nagar (After Gauge
Conversion)
• 531A/532A Parli-Latur Passenger upto Osmanabad (After Gauge Conversion)
• 2413/2414 Jammu Tawi-Jaipur Express upto Ajmer
• 5107/5108 Lucknow-Kanpur Utsarg Express upto Kanpur Anwarganj
• 469/470 Lucknow-Farrukhabad Passenger upto Kasganj (After Gauge
Conversion)
• 5309/5310 Aishbagh-Bareilly Rohilkhand Express upto Kasganj
• 2465/2466 Jodhpur-Sawai Madhopur Express upto Indore
• Gaya-Kiul Passenger upto Jhajha (1 pair)