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Development of infrastructure in India


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For the development of any country, infrastructure compressing transportation (railways, roads and civil aviation) communication, water supply and sanitation forms one of the most critical aspect. Infrastructure is one of the important factors for high and sustained growth. Without a proper development of power, transport and communications, growth and expansion of business activities is not possible.


Infrastructure is often described as social overhead capital (SOC) in economics. According to Albert O. Hirschman, SOC (infrastructure) is usually defined as comprising those basic services without which primary, secondary and tertiary productive activities cannot function. It includes all public services from law and order to education and public health to transportation, communication, power and water supply, as well as such 6/2/12 agricultural overhead capital as irrigation

1. Infrastructure is a source of external economics. Once it is constructed all people located on its route benefit from it. 2. Infrastructure falls in the category of public goods. 3. Infrastructure development involves heavy costs. 4. Infrastructural development is a kind of investment which creates conditions for innovations. 6/2/12

Interest of international investors

Strong interest evinced by international investors in Indias infrastructure

This includes Private Equity

3i, Blackstone etc



Macquarie Bank (Australia), Mizuho (Japan), Deutche Bank



institutions including World Bank,


1. Infrastructure contributes to economic growth, both through supply and demand channels by reducing costs of production, contributing to the diversification of the economy and providing access to the application of modern technology 2. It contributes to raising the quality of life by creating amenities, providing consumption goods (transport and communication services) and contributing to macroeconomic stability. 6/2/12

Major Issues in Infrastructure With Reference To Transport: world, transport along In the modern the basic infrastructural with energy is

requirement for industrialization and, accordingly, the developing countries have accorded it an important place in their programmers of economic development. Transport provides a vital link between production centers, distribution areas and the ultimate consumers. It also exercises a unifying and integrating influence upon the 6/2/12 economy. Important means of transport


India has one of the largest railway networks in the world (63,000 route KMs network) Accounts for 30% of total freight traffic Traffic volumes set to double by 2012 Potential for rolling stock, locomotives, passenger coaches, track equipment, signaling equipment

Rail Transport

The development and expansion of railways has revolutionized the transport system the world over. It is a convenient mode of transport for long distances and is most suitable for carrying heavy and bulky goods like iron ore, iron and steel, heavy machinery, minerals etc Railways carry raw materials from the mines and the quarries and other interior areas of the country to the industrial centers. They link up the 6/2/12 various regions of the economy and

Railways and the plans:

At the time of independence the railways were under severe strain and therefore the First plan was devoted mainly to the rehabilitation and modernization of rolling stock and of fixed assets. On account of the heavy replacements demands, the need for expansion could not be fully met in the first plan. The Second plan also had to make a substantial provision for rehabilitation of 6/2/12

The Third plan envisaged a rapid expansion of railways due to their important for industrial program (particularly, the carrying of heavy goods like coal, iron ore and other materials for the steel plants, etc). The basic objective of the Fourth plan of the railways was to provide in full for the increase in traffic expected, to modernize the railway equipment and practices within the limits of the funds available.
6/2/12 The Fifth plan recognized the important

The Sixth plan kept an outlay of Rs 5100crore for railways of which Rs2100crore was to be for rolling stock and Rs500crore for track renewals. The actual expenditure in the sixth plan was around Rs6573crore. The railways recorded an excellent performance during the Seventh plan in terms of additional transport effort, rehabilitation of the system, financial performance, and better productivity, 6/2/12 technological up gradation,

The main thrust in the Eighth plan for railways was on capacity generation. Some other aspects which received special attention during the eighth plan were rehabilitation, modernization, energy conservation, man power planning, financial viability, safety and customer satisfaction through better quality of services. The main thrust of the Ninth plan has been on strengthening the capacity of the Indian railways as the prime carrier of long distance bulk freight and 6/2/12 passenger traffic.

During the Tenth plan the thrust is on modernization needs grater attention so as to improve reliability, reduce maintain cost and increase customer satisfaction.


Problems and Issues in Railway Development

The Status Paper of the Ministry of Railways highlighted the following six issues in railway development. 1) Technology up gradation 2) Expansion of network 3) Financial arrangements 4) Capital restructuring required. 5) Tariff policy 6) Passenger services and freight 6/2/12 movements.

Roads - Potential

100% foreign direct investment allowed Opportunities in construction equipment (earth moving, material handling equipment etc), and advisory (architecture, structural design, soil investigation etc)



Roads are generally classified into the following categories: 1.National highways- These roads are the primary roads of the country and connect large cities and big industrial centers. Their development and maintenance is the responsibility of the central government. 2.State highways- These roads link all the important centers of industry, trade and commerce of the state and national highways. 3.District roads- These roads connect different parts of the district,
6/2/12 4.Rural roads-These are roads found in villages

Importance of Road Transport in India

1. A large number of places (particularly far fetched villages, interior countryside and hilly areas) are not connected by railways. Therefore, the only means of transport in these areas is the road transport. 2. Road transport is complementary to railways. It provides feeder services as goods arriving at railway stations are dispatched to their destination through trucks or other means of road transport
6/2/12 3. Road transport provides door to door

4. It is better means of transport as compared to railways for carrying perishable and less bulky goods. 5. The change of delay, damage or loss is less in the case of road transport as compared to railways. 6. From the point of view of the defense of the country, road are very important. Since railway tracks cannot reach all nooks and corners of the country, it is the roads that enable the defense forces to move to areas inaccessible by railways in times of need.

Problems of Road Transport

A more serious problem is that large tracts of rural roads are kutcha (mud) roads which cannot be used for the plying of heavy vehicles and become unusable in rainy season. A number of urban roads are also poorly maintained. This is due to constraints of financial resources, organizational inadequacies, procedural delays, shortage of essential materials etc Another problem is that most of the 6/2/12 state road transport corporations are

The Problem of Rail-Road Coordination

Rail and road transport are complementary to each other. Taken together, they form the principal means of connecting all parts of the country with one another.

The road transport provides an important link between farmers in the villages and the local mandis or the nearest railway station. The railways on the other hand, provide connections between the areas of production and the areas of consumption separated from 6/2/12 other each

Since railways cannot reach every nook and corner of the country, they need to assistance of road transport. Trucks and other means of road transport must collect goods from production centers and bring them to the railway stations. Heavy machinery, iron and steel, cement, coal and other minerals etc. which are heavy and bulky goods cannot be transported by trucks .these requires assistance of railways.

Power generation

Crucial for economic devpt agriculture & industry Electricity generated- 724 billion KWH (208-09), 2001-2002 515 billion KWH Critical evaluation

has been an inordinate delay in installing & commissioning of projects due to land acquisation, interstate water dispute, poor project mgt, late delivery of 6/2/12 structural steel, cement & power


recovery in distribution is very slow. Many state govt are providing electricity for agri at very low rate



On account of the above reasons, railways have lost ground to road transport as would be evidenced from the fact that the share of road transport in freight traffic as well as passenger traffic has increased steadily. The government, however, feels that the railways operate under conditions which are very much different from the conditions under which road transport operates. Therefore, railways can never compete with road transport. Nonetheless railways have an important role in the countrys transport system and precisely for this reason they should be given protection against competition from road transport. 6/2/12