Editorials, GS-3, Indian Economy, Uncategorized

The turnaround in infrastructure

The government has achieved a breakthrough, unblocking previously stuck road projects, while also accelerating the initiation of new projects. Of the total number of stuck projects worth Rs 3.8 lakh crore, this government has already unblocked Rs 3.5 lakh crore worth of projects. Consequently, road construction has risen from 8.5 kilometres a day during the last two years of the previous government to 11.9 kilometres in 2014-15 and 16.5 kilometres in 2015-16. The construction of national highway projects awarded has risen from 3,500 kilometres in 2013-14 to 8,000 kilometres in 2014-15 and 10,000 kilometres in 2015-16.

In railways, the average rate of expansion of tracks has risen to 7 kilometres per day during 2015-16 from 4.3 kilometres per day during the previous six years. Investment in railways during 2015-16 has been double the average during the preceding five years. The government has approved the construction of the first high-speed rail between Ahmedabad and Mumbai, the modernisation of 400 major railway stations, the construction of dedicated eastern and western freight corridors of 1,305 km and 1,499 kilometres, respectively, and laying down of 1,875 kilometres of new railway lines. Connectivity of the north-eastern region with the rest of India has received particular attention.

In domestic civil aviation, the total number of passengers carried has jumped from 66.4 million in 2014 to 80.8 million in 2015. Internationally, the figure has increased from 16.9 million in 2014 to 18.4 million in 2015. Freight shows a more mixed picture, with domestic freight carried rising from 435,339 tonnes in 2014 to 456,894 tonnes in 2015 and international freight carried marginally declining from 251,561 tonnes in 2014 to 247,415 tonnes in 2015.

Efficiency at major ports has improved, with operating profits shooting up 43 per cent in 2014-15 over that of 2013-14 and 16.2 per cent in 2015-16. In 2015-16, addition of 93 million tonnes to port capacity was the highest ever. Imparting high priority to port-led development, the prime minister launched the Sagarmala project aimed at modernising existing ports; improving port connectivity to roads, railways and inland waterways; and developing coastal economic zones. Under the National Waterways Bill, 2015, cleared by the Cabinet, 106 waterways will be declared national waterways compared with just five in the last 30 years.

Turning to energy, when the government came to office, there was near-crisis in coal supply. The government quickly passed an ordinance (later replaced by an Act) and auctioned coal blocks to alleviate the shortages. It transferred Rs 3.44 lakh crore of revenues over the lifetime of the blocks to the states containing those blocks; Rs 1,396 crore has already been transferred to these states.

Coal production has now acquired momentum, with the output rising by 32 million tonnes in 2014-15 against the increase of 31 million tonnes in the previous four years taken together. Growth during 2015-16 is reported to be nine per cent. The government is also making steady progress towards underground coal gasification, with three lignite blocks identified as candidates.

In power, the government has already electrified 6,816 villages in the last two years compared with 5,189 villages in the three years before that. The prime minister has now announced his intention to bring electricity to the 12,000 villages or so that are yet to be electrified, by May 1, 2018. As of March 15, the outstanding debt of electricity distribution companies (discoms) was Rs 4.3 lakh crore. Discoms in such deep debt are not credible buyers of electricity and this undermines electricity generation. Therefore, the government has launched the Ujwal Discom Assurance Yojana to transfer 75 per cent of the debt to state budgets, while leaving the rest for the banks to convert into loans or bonds. By March 2016, 18 states had given in-principle consent and nine had even signed memoranda of understanding with the central government.

The government has launched the Integrated Power Development Scheme to arrest future distribution losses. As part of it, underground cabling, end-to-end metering and IT-enabled energy accounting are envisaged. An amendment to the Electricity Act, 2003, approved by the Cabinet, will give consumers the option to choose from multiple suppliers of electricity. Expansion of transmission lines has been accelerated 30 per cent more in 2014-15 than in 2013-14.

Solar power has received a major boost under the present government. Installed capacity until the end of March 2015 was 3.7 Gw. During 2015-16, 1.5 Gw was added. The process has gained more momentum recently, with 32 solar parks of 20 Gw capacity approved in 20 states. Land has been identified in all cases and the projects are predicted to be complete by 2019-20.

After one and a half decades of stagnation, there are hopes of revival in oil and gas, too. The recently adopted Hydrocarbon Exploration and Licensing Policy introduces a uniform and open acreage licensing policy. It also provides for marketing and pricing freedom for gas from deep, high-pressure and high-temperature fields. There is enthusiasm among oil majors not seen in years.

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