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Power generation above target.
Revenue earning freight traffic registers sizeable growth.
Record cargo handling at major ports.
Strong positive growth rates experienced in Civil Aviation.
Tele-density to grow to 15 by 2006 or 2007.
The growth rate in many key infrastructure sectors accelerated in April-December, 2004-05. Strong growth rates have been noticed for Electricity Generation, Railways, Ports and Civil Aviation. This has been reported in the Economic Survey 2004-05, tabled in the Parliament today.
The overall power generation of 438 Billion Units (BU) during April-December, 2004-05 was marginally above the target of 437 BU and was 6.5 per cent above the power generation achieved in the same period of the previous year. Hydel power generation continued to enjoy high growth in the current year. Thermal and nuclear power generation grew by 4.7 per cent in this period as against 2.4 per cent achieved in the corresponding period of the previous year.
The weighted average growth of Energy, Steel and Cement put together registered a growth of 5.4 per cent in April-December, 2004-05.
The revenue earning freight traffic of 438.36 million tonnes carried by the railways in April-December, 2004-05 was 2.4 per cent above the target of 428.19 million tonnes and 7.7 per cent over the traffic achieved in the corresponding period of the previous year. Cargo handled at major ports also exceeded the target of 270.35 million tonnes by 2.1 per cent in the first ten months of the current year and 11.1 per cent above the achievement in the same period of the previous year.
In the Civil Aviation sector, strong positive growth rates were experienced in passenger traffic (21.8 per cent) as well as export and import cargo handled (18.3 per cent) at the international and domestic terminals in April-December, 2004-05 compared to the growth rates in the corresponding period of the previous year.
The Telecom sector witnessed a sharp decline in telecom tariff particularly in the Mobile, National Long Distance and International Long Distance segments. New cell phone connections grew by 20.8 per cent in April-December, 2004-05 as compared to 13.1 per cent growth in the same period of the previous year. The target of a tele-density of 7 envisaged to be attained by March 2005 in the New Telecom Policy 1999 (NTP 99) has already been surpassed, with the tele-density of 8.62 at the end of 2004. With the current growth momentum, the telecom sector is expected to achieve a tele-density of 15 by the year 2006 or 2007.
The Survey states that improvements in infrastructure will have a strong impact upon GDP growth and poverty alleviation. A delicate system of checks and balances is required with careful calibrations of incentives, so as to give the private sector the right incentives to invest adequately while at the same time, preventing it from extracting monopoly rents. A key part of this is establishing a framework of rules and limiting arbitrary State power, to give the private sector confidence in embarking upon multi-decade horizons of this project.
In this sphere, the Survey has observed that the Telecom sector will feature lively competition between multiple private firms, with the strong role for Telecom Regulatory Authority of India (TRAI) for establishing pro-competitive policies. The sharp drop in broadband telecom prices in late 2004 may represent the beginning of a phase of hectic expansion of the broadband telecom sector. This may have an even bigger impact upon the economy as compared with the growth in ordinary voice telephony. An important area requiring a fresh policy impetus is that of reducing the extent to which a State-led planning approach is used in the utilisation of the electromagnetic spectrum.
In the area of Roads, the Survey has recommended that for completed stretches, of the Golden Quadrilateral, the focus needs to shift from construction to corridor management, that is for optimally utilising the capital assets to deliver the maximum throughput and world class levels of road safety. At the same time, a continuous, competition driven process needs to be in place for upgradation from four-lane highways to expressways in high-density stretches and for construction of new links such as a highway from Mumbai to Kolkata.
The Survey feels that despite the sharp improvements in efficiency parameters of the ports sector, more work needs to be done in crafting an adequate policy framework. This requires a fresh examination of questions of port-connectivity through rail and road, and international bench marking on performance parameters and price. The growth of ports needs to be planned in a futuristic way, reflecting projections for traffic rather than meeting existing needs, so as to ensure that India's needs are adequately met.
The Survey calls for substantial reforms in the functioning of the railways. The transformation of telecom, roads and ports can serve as role models for the scale of transformation that may be required.
Commending the major progress, which has been achieved in the civil aviation sector in 2004, the Survey has stated that the improvements in the degree of competition have helped deliver lower prices and a sharp increase in both domestic and international traffic.
The Economic Survey has pointed out that in the area of power, policy bottlenecks continue to inhibit supply of power into the 'unscheduled interchange' market from the private sector. The losses in power distribution in the country are enormous. Improvements in distribution alone could account for over 1 per cent of GDP of fiscal correction.
Focusing on the urban infrastructure of India, the Survey has noted that the techniques and strategies, which worked for national public goods, cannot be directly applied to local public goods. Here, the focus has to be on the 74th Amendment to the Constitution, on empowering cities, on supporting institutional reforms in cities and directing fiscal transfers for paying transition costs and poverty targeting.
HB/MC/SK
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