07 Jan Infrastructure in India
History
The model envisaged a dominant role of the state as an all-pervasive entrepreneur and financier of private businesses. The Industrial Policy Resolution (IPR) of 1948 proposed a mixed economy. Earlier, the ‘Bombay Plan’, proposed by eight influential industrialists envisaged a considerable public sector with State interventions and regulations so as to guard indigenous industries. The political leadership believed that since planning wasn’t possible during a free enterprise , the state and public sector would inevitably play a number one role in economic progress.
India found out the design Commission in 1950 to oversee the whole range of designing , including resource allocation, implementation, and appraisal of five-year plans. The Five-Year Plans were centralised economic and social growth programmes modelled after those prevalent within the USSR. India’s first Five-Year Plan, launched in 1951, focused on agriculture and irrigation to spice up farm output as India was losing precious foreign reserves on foodgrain imports. The First Five-Year Plan was supported the Harrod–Domar model with few modifications. By the end of the Plan in 1956, contracts were signed to start five steel plants, which came into existence in the middle of the Second Five-Year Plan.
The Second Five-Year Plan and therefore the Industrial Policy Resolution 1956 (long considered the economic constitution of India) paved the way for the event of the general public sector and ushered in the License Raj. The Second Plan focused on the event of the general public sector and rapid Industrialisation’. The Plan followed the Mahalanobis model, an economic development model developed by the Indian statistician Prasanta Chandra Mahalanobis in 1953.
From the Second Five-Year Plan, there was a determined thrust towards substitution of basic and capital good industries. Hydroelectric power projects and five steel plants at Bhilai, Durgapur, and Rourkela were established with the assistance of the Soviet Union , Britain, (the UK), and West Germany respectively. Coal production increased enormously.
Power and steel were identified as the key bases for planning. In the second plan Germany was contracted to build a steel plant in Rourkela, while Russia and Britain would build one each in Bhilai and Durgapur, respectively. Nationalisation of 14 public sector banks was a major event during the Fourth Plan (1969-74) which had a huge impact on the Indian economy & infrastructure. The Indian National transportation system was introduced and lots of roads were widened to accommodate the increasing traffic during the Fifth Plan (1974-78).
Infrastructure provisioning requires massive investments, often over a protracted duration of your time , including procedural delays and returns expected after an extended period of investment. Consequently, given the high fiscal requirements, particularly of large-scale infrastructure development projects, public investments alone might not be sufficient to fund infrastructure development in India. Consequently, time and again there have been recommendations to encourage private participation in infrastructure development through various forms of Public-private Partnerships (PPPs)
Real Estate (Regulation and Development Act) [RERA]
Proactive measures, such as the Real Estate (Regulation and Development) Act, 2016 (RERA), Real Estate Investment Trusts (REITs), the Benami Transactions (Prohibition) Amendment Act 2016, higher tax breaks on home loans, the products and Services Tax (GST), land-related reforms, optimising development control rules, rationalising of the stamp tax and registration charges, digitalisation, etc., have also been introduced by the govt . Before RERA, the Indian land sector was largely unregulated till 2016, which led to several anomalies leading to various unfair practices, ultimately affecting the homebuyers adversely.
Responding to the demand and provide gap in affordable housing, the govt of India launched Pradhan Mantri Awas Yojana (PMAY)- Urban in 2015. The larger goal is to satisfy the housing needs of homeless urban poor and enable them to have decent pucca houses with basic infrastructure facilities by 2022. Based on demand assessment at the state level, the state has the mammoth task of constructing about 12 million houses under the EWS/LIG segment of the society so as to achieve the goal of Housing for All.
These initiatives will be effective in spurring housing and construction activities, providing huge relief to real estate developers. Also, these would attract private and foreign investments within the housing sector, having a positive multiplier effect on GDP and labour market.
The availability of encumbrance-free land within existing municipal areas for urban housing schemes isn’t a simple task. Therefore, provision has been made to incorporate rural areas falling within the notified Planning/Development areas, under the ambit of PMAY (U). It would leverage the availability of additional land at a cheaper cost for the construction of affordable houses.
Bharatmala Pariyojana may be a new umbrella programme for the highways sector that focuses on optimising the efficiency of freight and passenger movement across the country by bridging critical infrastructural gaps through effective interventions like the development of Economic Corridors, Inter Corridors, and Feeder Routes, National Corridor Efficiency Improvement, Border and International connectivity roads, Coastal and Port connectivity roads, and Green-field expressways.
Urban Mass Rapid Transport- DMRC
The concept of mass rapid transit for brand spanking new Delhi first emerged from a traffic and travel characteristics study which was administered within the city in 1969.
While extensive technical studies and the raising of finance for the project were in progress, the city expanded significantly, resulting in a two-fold rise in population, and a five-fold rise in the number of vehicles between 1981 and 1998. To rectify things , the govt of India and therefore the Government of Delhi jointly found out a corporation called the Delhi Metro Rail Corporation (DMRC) on 3 May 1995, with E Sreedharan as the Managing Director.
Way Forward
The Introduction of ‘MetroLite’ or ‘MetroNeo’, as recommended by the Government, is mandated in cities with lower capacity requirements. This is considering the significantly less capital cost which has a bearing on the overall funding requirement and commercial sustainability.
Over the short term, unbundled private participation for all new/expansions of existing metro systems may be taken up. Herein, various high capital expenditure components such as stations, rolling stock, maintenance facilities, etc., should be undertaken through long-term contract/concession for private investment. Also, securitisation of operational assets should be tested in the market. Innovative financing mechanisms to fund metro projects are required to be explored and Non-Fare Box revenue streams are to be augmented. Provisions have been made in Metro Bill to attract private investment.
The quality of structure development in India needs critical attention if the country intends to realise its profitable and growth eventuality. Structure development remains a crucial constraint in India’s profitable development Although investments in structure alone don’t guarantee growth, in general, scholarly studies estimate that a strong association exists between the vacuity of structure vittles and profitable growth measured in terms of gross domestic product (GDP). In other words, artificial growth is contingent upon the development of other infrastructural installations similar as transportation, energy, and electricity, and dispatches Still, structure development in itself remains both a fiscal and a nonsupervisory challenge. In order to do so, in addition to the available vittles for public investments, sweats must be made to adequately channelise the openings for private participation in the real estate/ casing sector.
Plutus IAS Current Affair Team Member
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