INFRASTRUCTURE DEVELOPMENT IN INDIA

PRESENTED BY:
MOHASIN ATHANIKAR 204 MUKESH KHINCH 235 ABHIMANYU PATIL 251 DHIRAJ RATHI 262 ANIL YADAV 280

Expanding investment in infrastructure can

play an important counter cyclical role. Projects and programmes [are] to be reviewed in the area of infrastructure development, including pure public private partnerships, to ensure that their implementation is expedited and does not suffer from [the] fund crunch.
Mr. Manmohan Singh, Indian Prime Minister,

Definition
The Rangarajan Commission indicated six characteristics of infrastructure sectors,

1. 2. 3. 4.

Natural monopoly High-sunk costs Non-tradability of output Non-rivalness (up to congestion limits) in consumption 5. Possibility of price Exclusion 6. Bestowing externalities on society.

Government is committed to PPP mode- Why?

Maximizing investment Budgetary constraints Development of assets of world class standards Improved maintenance and management of assets Provision of efficient services Affordable prices through greater competition Risk Sharing

Country
Brazil

Program
Growth Acceleration Program

Description
This strategic investment program oversees and approves initiatives and public works investment. PAC, the first phase of the program launched in 2007, invested $349 billion in areas, including energy, urban infrastructure, sanitation, and transportation. PAC-2 is a $900 billion extension of the PAC program for 20112014. The 12th Five-Year Plan, which began in 2011, is allocating some $1 trillion in infrastructure spending over five years. The program is developed by the Central Committee with help from the Ministry of Housing and Urban-Rural Development. Much of the investment will go toward building high-speed rail, with a secondary emphasis on water supply, electricity, and highways The 11th Five-Year Plan, which began in 2007, is developed and implemented by Indias Planning Commission. Of the plans estimated $500 billion in total infrastructure investment, one-third will flow to roads, including a project to upgrade, rehabilitate, and widen major highways in India. The rest will be spent on transit, water, electricity, and other infrastructure sectors. The countrys 12th Five-Year Plan, which runs from 2012 to 2017, will double the amount spent on infrastructure to $1 trillion.

CHINA

12th Five-Year Plan

INDIA

11th and 12th Five-Year Plans

Budget 2012-Infrastructure Sector gets major boost

Size Power Sector

Generation capacity of 122 GW; 590 billion units produced (1 unit = 1kwh) -CAGR of 4.6% over the last four years. India has the fifth largest electricity generation capacity in the world -Low per capita consumption at 606 units; less than half of China Coal-fired plants constitute 57% of the installed generation capacity, followed by 25% from hydel power, 10% gas based, 3% from nuclear energy and 5% from renewable sources

Structure of power sector

Majority of Generation, Transmission and Distribution capacities are with either public sector companies or with State Electricity Boards (SEBs). Private sector participation is increasing especially in Generation and Distribution - Distribution licences for several cities are already with the private sector - Many large generation projects have been planned in the private sector

Policy- Power sector

100% FDI permitted in Generation, Transmission & Distribution - the Government is keen to draw private investment into the sector Policy framework in place: Electricity Act 2003 and National Electricity Policy 2005 Incentives: Income tax holiday for a block of 10 years in the first 15 years of operation; waiver of capital goods import duties on mega power projects (above 1,000 MW generation capacity) Independent Regulators: Central Electricity Regulatory Commission for Central PSUs and inter-State issues. Each State has its own Electricity Regulatory Commission.

KeY Players-Power Sector

Major Players Capacity G Public sector T D

NTPC
National Hydro Electric Power Corporation NPC

23,749
3615 2770

Yes
Yes

No
No

No
No

Yes

NO

No

Domestic Private sector

Tata Power RPG Group - CESC Reliance Energy China Light and Power (CLP) Marubeni Corporation 885 655 330 2203 yes 1005 Yes yes Yes yes yes yes yes No No Yes Yes Yes No No

International Private Sector

G - Generation T - Transmission D - Distribution

Opportunity
Over 150,000 MW of hydel power is yet to be tapped in India India requires an additional 100,000 MW of generation capacity by 2012

Large demand-supply gap: All India average energy shortfall of 7% and peak demand shortfall of 12% The implementation of key reforms is likely to foster growth in all segments: - Unbundling of vertically integrated SEBs - Open Access to transmission and distribution network - Distribution circles to be privatised -Tariff reforms by regulatory authorities Opportunities in Generation for: - Coal based plants at pithead or coastal locations (imported coal) - Natural Gas/CNG based turbines at load centres or near gas terminals - Hydel power potential of 150,000 MW is untapped as assessed by the Government of India -Renovation, modernisation, up-rating and life extension of old thermal and hydro power plants Total investment opportunity of about US$ 200 billion over a seven year horizon

Potential

ROADWAYS
India has second largest Road

network, in the world. Total length is 33 lakh kms Carry 65% of fright & 80% passengers National highway constitute only 1.7% of roads but carries about 40% of traffic Annual projected growth is 1215% for passenger traffic & 1518% for cargo traffic

ROADWAYS (cont.)
Important Development projects -The Golden Quadrilateral (GQ-5846 kms of 4 lane highway) - North-South & East-West Corridor (NSEW-7142 kms of 4 lane highways) - Four-laning of 12,109 km under NHDP-III -Program for 6-laning of 6,500 km of National Highways under NHDP- V.

Roadways (cont.)
Investment plan
25000 20000 15000 10000 5000 Total Investment

0
2007-08 2008-09 2009-10 2010-11 2011-12

Railways
About 64000 km of rail network Connects 7083 stations Carry 2.20 crore passengers & 2.50 million tones of goods everyday About 1.5 millions of workforce

Railways
In 1947 rail network of about 53000 km Added only 11000 km of network in last 65 years Modifications like-Gauge changing -Electrification -Computerization -Double tracks

Investment Plan
Investment of Rs. 57630 cr the year 2011-12 for the development, highest ever by Indian railways in any financial year -Target of laying 1075 km of new lines in 2012 -800 km of gauge conversion -700 km of Doubling of lines

MISSION 2020 OF INDIAN RAILWAYS

High speed rail travel Raising the speed of regular passenger trains from 100-130 khph to 160-200 kmph To develop 50 world class stations which can be recognized internationally Segregating passenger and freight tracks completely

DMIC project
Mega infrastructure project of USD 90 billion To connect Delhi & Mumbai through road and railway network of 1483 km Delhi, U.P., Haryana, Rajasthan, Gujarat, Maharashtra this states will be connected to form a corridor of international standard.

Oil & Gas

India 5th largest Consumer of energy About 5.7 billion barrels of proven oil reserves. FDI worth US$ 3, 332.78 million during April 2000 to December 2011

Market Dynamics
Production
Crude oil 31.87 MMT from April-Jan 12. Natural Gas 40157 MCM 1.04 million barrels per day Gas 50 BCM

Consumption
Diesel 1.44 million b/d. Petrol 388000 b/d. Gas 58 BCM

Developments & Investments

KG Basin-Reserves of 56.6 BCM. Reliance Industries J- 3 mega petrochemical Project IOCL to set up refinery in Gujarat ONGC & IOCL seeking refinery options in Srilanka Petronet LNG Ltd planning to set up its third terminal in the east coast of India.

Government Initiatives
Indian Government has encouraged Saudi Arabia to get involved in the country's petroleum upstream and downstream sector OPaL's Petrochemical project at Dahej, OMPL's Petrochemical project at Mangalore, IOC's LNG project at Ennore, Bharat Petroleum Corporation's LNG terminal at Kochi, Hindustan Petroleum Corporation's grass-root refinery in Visakhapatnam.

Road Ahead
Mr S Jaipal Reddy, Junior Oil Minister, India, expects investments worth US$ 75 billion in South Asian nation's oil and gas sector from April 2012 to March 2017 Eventually, the development plan will also cut India's import bill.

Telecommunication
3rd largest in the world & 2nd largest in Asia. Mobile subscriber base-936.12 million. Overall Tele- density 77.57% Broadband Subscriber 13.42 million

Market Dynamics
The Indian handset market made a volume sale of 182 million. The Indian handset market is led by Nokia with 37.2 per cent market share, followed by Samsung (14.9 per cent), G'Five (7.5 per cent) and Micromax (5.8 per cent).

Key developments & Gov. Initiative

Complaint centre by TRAI Hybrid power Easier & standardized municipal laws for Towers Subsidy for Solar panels & use of nonconventional resource of energy. Increased trend of sharing infrastructure.

NEED FOR INFRASTUCTURE DEVELOPMENT IN AIRPORTS

Air traffic has increased rapidly in recent years, although this slowed in 2007. A number of Indian airlines have faced challenging market conditions in 2008 Indians are still flying in much greater numbers. Estimates made in 2007 by the Indian Governments Committee on Infrastructure suggest

that passenger traffic will grow at a CAGR of over

15% in the next 5 years

AIRPORT DEVELOPMENT PLAN

(During the XI Plan Period 200712)

Main Objectives
To boost Infrastructure in Aviation sector. To provide WorldClass infrastructure facilities. To meet the increased demand by enhancement of Aircraft/Cargo handling capacity. To provide safe Air Traffic Services. To achieve efficiency by improving Air Traffic Flow

Management.

INVESTMENT BY AAI
XI Plan (200712)
Planned Investment $10 billion . Financing Mainly through Internal Resources Relatively small portion through Budgetary Support Balance through Borrowings. Issue of Bonds in Domestic Market. Exploring Loan from JBIC/World Bank.

Credit Rating Awarded AAA stable by CRISIL and L AAA by ICRA for AAI Bonds. Awarded A1+ by ICRA for Shortterm Loan/ Commercial Papers

STEPS TAKEN BY GOVERNMENT FOR DEVELOPING AIRPORTS

The Airports Authority of India (AAI) manages and operates 126 airports and 329 airstrips The Government established the Airport Economic Regulatory Authority (AERA) State governments are also getting involved and looking to facilitate the development of new airports. The total investment on new airports has been proposed at about $10 billion by 2012. Greenfield airport projects are planned in resort destinations and emerging metros Further, 35 non-metro airports are proposed for development.

NEED OF DEVELOPMENT OF PORTS

With 12 major ports and 187 minor ports, 7,517 km long Indian coastline plays a pivotal role in the maritime transport helping in the international trade Increasing connectivity with inland transport networks is challenges currently facing Indias ports which have seen massive swells in the amount of goods transported. Traffic is estimated to reach 877 million tonnes by 201112, and containerised cargo is expected to grow at 15.5% (CAGR) over the next 7 years. Indias existing ports infrastructure is not sufficient to handle the increased loads cargo unloading at many ports is currently inadequate, even where ports have already been modernised

STEPS TAKEN BY GOVERNMENT FOR DEVELOPING PORTS

An estimated investment of around $22 billion is targeted for port projects in the five year period from 2007-12. The National Maritime Development Programme includes 276 projects, with a required investment of about $15 billion over the next ten years, with private investment targeted at around $8 billion. Projects related to port Development will provide a major opportunities for E&C companies. Recent deregulation of the sector now permits 100% FDI, and an independent tariff regulatory authority has been set up to facilitate projects at major ports.

Infrastructural requirement scenario in India

Urban population is expected to grow about 50% by 2025 Growth in GDP is predicted to be 8-9% per annum Road Traffic growth will be 15% per year Air traffic is growing by 25% per year 101,000 MW of new power needed by 2012 Sanitation Coverage is only 35% currently

Steps taken in the 11th 5- year plan 2007-2012

Actions taken in the 11th 5 year plan 2007-2012: The amount of money spent on infrastructure will be raised to 8% of GDP (earlier, infrastructure spending was only 4.6% of GDP) One Half of all new investments in the 11th plan will be in infrastructure The planning Commission has estimated that a total investment of $450 Billion in infrastructure is required the next 5 years to meet Indias infrastructure needs. Port capacity will be increased from 520MT to 800MT 60000 MW of new power is to be added by 2012

over

Steps taken for infrastructural development

IIFC - India Infrastructure Finance Corporation 1. Setup to fund infrastructure funds in India & is owned by government. 2. Will lend money at low rates to public and private infrastructure projects 3. Would be able to borrow at low rates as they are guaranteed by GoI. Government has started the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) to improve Urban infrastructure

Conclusion
Infrastructure inadequacies in both rural and urban areas are a major factor constraining India's growth. India needs a lot more infrastructure to meet its needs. The government is focusing on this and has created a set of programs and reforms aimed at addressing this issue.