Overall index of six core industries – electricity, coal, steel, crude oil, petroleum refinery products and cement having a direct bearing on infrastructure registered a growth of 8.3 per cent in April-December, 2006 as compared to 5.5 per cent registered during corresponding period of last year. According to the Economic Survey 2006-07 tabled in Parliament today, crude petroleum, refinery products and electricity generation registered an acceleration in their growth rates in the first nine months of 2006-2007. However, there was a decline in growth rates of coal, cement and finished steel during this period.

The Survey states that provision of quality and efficient infrastructure services is essential to realise the full potential of growth impulses surging through the economy. It mentions that an investment of Rs. 14,50,000 crore would be required in the infrastructure during the 11th five-year plan. These investments are to be achieved through a combination of public investment, public-private-partnerships and exclusive partnerships wherever feasible.

In the Power sector, the Survey states, the growth of power generation in April-December 2006 was at 7.5 per cent as compared to 4.8 per cent in the corresponding period of last year. During April-December 2006, the Plant Load Factor (PLF) of the Central Sector Plants was higher than that of State Electricity Boards. Average PLF of private plants was higher than that of public sector. The Ministry of Power has launched an initiative for development of coal-based Ultra-Mega Power Projects (UMPPs) in the country each with a capacity of 4000 mega watts or above. Nine sites have been identified by the Central Electricity Authority (CEA) in nine States for the proposed UMPPs. The Survey recognizes the importance of formation of a strong National power grid for development of power system for cost-effective fulfillment of the objective of “Electricity to All” at affordable prices. It further states that a strong all-India grid would enable exploitation of unevenly distributed generation resources in the country to their optimum potential.

The Survey mentions that India’s Telecom sector has been one of the biggest success stories of the market oriented reforms and the country is now amongst the fastest growing telecom markets in the World. As a result of various policy initiatives, telecom tariffs which were among the highest in the world less than 4 years ago have now dipped to be among the lowest. Tele-density also increased from 12.7 per cent in March 2006 to 16.8 per cent in December 2006. About 5 million subscribers are being added every month. With this growth, the number of telephones is expected to reach 250 million by end of 2007.

The Survey observes that there is a need to increase the broadband connectivity for knowledge-based society to grow quickly and for reaping the consequent economic opportunities. The total Foreign Direct Investment (FDI) approved and actual inflow upto July 2006 were Rs. 38,923.38 crore and Rs. 11,801.46 crore respectively. The Universal Service Obligation (USO) Fund is also proposed to be used for creating infrastructure for mobile and broadband services in rural areas. With a view to meeting the demand for telecom equipment in the country, a proposal for setting up Telecom Equipment and Services Export Promotion Council and Telecom Testing and Security Certification Centre is in the pipeline, the Survey adds. With these initiatives, India is expected to become a manufacturing hub for telecom equipment.

In Road sector, the Survey states that 6,776 km of national highways pertaining to the National Highways Development Project (NHDP) with the bulk of 5,475 km lying on the Golden Quadrilateral (GQ) was completed till 30th November, 2006. Listing out the constraints faced in the timely completion of NHDP projects, the Survey states that merely 93 per cent works on GQ have been completed by November 2006 and North-South and East-West corridors are expected to be completed by December 2009. The Survey says that a substantial impact upon the economy is already visible with the completion of about 93 per cent of GQ. There is a need to focus attention on corridor management and road safety and the National Highway Authority of India (NHAI) has already put in place a Corridor Management Policy. With a view to encouraging participation of the private sector, the Department of Road Transport and Highways has laid down comprehensive policy guidelines in this regard. It has also been decided that all the sub-projects in NHDP Phase-III to Phase-VII would be taken on the basis of public private partnership on Build Operate and Transfer mode. The private sector participation envisaged in Phase-II of NHDP has also been increased, the Survey adds.

The Survey states that operation and management and development of Airports at Delhi and Mumbai were handed over to joint venture companies for its modernisation and upgradation. Construction work at Greenfield airports of international standards at Hyderabad and Bangalore is in progress. The two airports are likely to be operational by the middle of 2008. The State governments are encouraged to set up Greenfield airports with private sector participation. Proposal to set up Greenfield airports in Navi Mumbai, Kannor in Kerala, Goa and Pakyong near Gangtok in Sikkim are in the pipeline. Airports Authority of India (AAI) has decided to develop and modernize 35 non-metro airports in the country.

The Committee on Infrastructure has approved the report of the task force for the development of 35 non-metro airports. The Survey mentions that the policy initiatives have had a marked impact upon airline traffic. During the period April-September, 2006 international and domestic passengers recorded growth of 15.8 per cent and 44.6 per cent respectively leading to an overall growth of 35.5 per cent.

Regarding urban infrastructure, the Survey states that the Jawaharlar Nehru National Urban Renewal Mission (JNNURM) was launched to encourage cities to initiate steps to bring about improvement in the existing service levels. A provision of Rs. 50,000 crore has been agreed to as central assistance for JNNURM for a period of 7 years beginning from 2005-06. An amount of Rs. 2,500 crore has also been provided in the year 2006-07 for the sub-mission on Urban Infrastructure and Governance. Recognizing the urban transport as one of the key elements of the urban infrastructure, the Survey states that a National Urban Transport Policy has been formulated with the objective of ensuring easily accessible, safe, affordable, quick, comfortable, reliable and sustainable mobility for all.

With a view to bridging the infrastructure deficit in the country, the Survey mentions that government is actively pursuing Public Private Partnership (PPP). Several initiatives have been taken during the last three years to promote PPP in the sectors like Power, Ports, Highways, Airports, Tourism and Urban infrastructure. Under the overall guidance of the Committee of Infrastructure headed by the Prime Minister, the PPP programme has been finalized and implementation of various schemes is being closely monitored by the Ministries/Departments under this programme. However, the Survey observes that PPP is still a nascent concept in India and expertise at the level of project authorities both at the central and state levels is limited. All the State Governments and the Central Ministries have been advised to set up a PPP Cell to promote this programme.

The Survey mentions that the constraints, which inhibited the growth performance of the economy, appear to be easing. It further states that there are signs of tangible progress in areas such as power, roads, ports and airports. Following the road shows abroad for attracting global financial capital, the setting up of US$5 billion fund to finance Indian infrastructure on 15th February this year by four major financial institutions is an encouraging development. The Survey also adds that outlook for infrastructural improvement looks promising. With experience gained in PPPs, formulation of model PPP and concession agreements, infrastructure investments should gain momentum over the coming months and year.