Economic Survey 2018 - Vol. 2, Ch.8: Industry and Infrastructure (Download PDF)

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Industry - Several industry specific reform initiatives taken by the Government since 2014 have significantly improved the overall business environment in the country. 📹 📝 Some of the reforms are

  • implementation of the Goods and Services Tax

  • Insolvency and Bankruptcy Code

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Insolvency & Bankruptcy Code & IBBI (Current Affairs/GS 2017 - 18) - WW. 51

Dr. Manishika Jain explains Insolvency & Bankruptcy Code & IBBI

  • introduction of inflation targeting regime and announcement of bank recapitalization

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Yojana January 2018 Summary: Banking Reforms (Special Issue)

Dr. Manishika Jain explains Yojana January 2018: Banking Reforms (Special Issue)

  • initiation and simplification of online application for Industrial License and Industrial Entrepreneur Memorandum

  • integration of twenty services with the eBiz portal which functions as a single window portal for obtaining clearances from various Government agencies

  • limiting the number of documents required for export and import to three by DGFT

As per the latest Quarterly Estimates of Gross Domestic Product, overall industrial sector growth was significantly higher at 5.8 % in Q2 as compared to 1.6 % in Q1 of 2017 - 18. This was mainly due to the robust growth of 7.0 % in manufacturing sector in Q2 of 2017 - 18.

Index of Industrial Production (IIP)

  • The Index of Industrial Production (IIP) is another measure of industrial performance, released by Central Statistics Office (CSO).

👌 CSO revised the base year of IIP in May, 2017 from 2004 - 05 to 2011 - 12.

  • IIP registered a 25 month high growth of 8.4 % with manufacturing growing at 10.2 % in November 2017.
  • The major industry groups that have contributed positively to growth during this period are coke and refined petroleum products; pharmaceuticals, medicinal chemicals and botanical products; basic metals; computer, electronic and optical products; and motor vehicles, traillers & semi-trailers.
  • The industry groups that have contributed negatively are tobacco products; wearing apparel; rubber and plastic products; other non-metallic mineral products and electrical equipment
  • As per the Use-based classification of IIP, in 2017 - 18 (April-November), Consumer nondurables have shown consistency.
  • Growth of the Index of Primary Goods has witnessed a comparatively lower rate at 3.4 % during this period mainly due to suboptimal performance of Mining Sector and Petrol/Motor spirit industry.

Eight Core Industries

  • The Index of Eight Core Industries measures the performance of eight core industries i. e. Coal, Crude Oil, Natural Gas, Petroleum Refinery Products, Fertilizers, Steel, Cement and Electricity.
  • Department of Industrial Policy and Promotion, revised the base year of Index of Eight Core Industries from 2004 - 05 to 2011 - 12. The details of growth in the production of eight core industries are given below in the table.
Image of growth in the production of eight core industries

Image of Growth in the Production of Eight Core Industries

Image of growth in the production of eight core industries

  • In 2016 - 17, Steel registered a robust growth of 10.7%, which can be attributed to the positive measures taken by the Government such as imposition of Minimum Import Price (MIP), antidumping duty etc. on Steel imports in February 2016.

Corporate Sector Performance

  • Growth in Sales (Y-o-Y) of over 1700 nongovernment non-financial (NGNF) listed manufacturing companies in first two quarters of 2017 - 18 has improved. This has been on account of improved performance of industries like Iron & Steel and Motor Vehicles & other Transport Equipment within the manufacturing sector.
  • During Q1 & Q2 of 2017 - 18 there was negative growth in profits mainly on account of postponement of production related to implementation of GST.
  • Lower credit supply can be attributed to impaired balance sheets of public sector banks due to higher Non Performing Assets but it could also reflect weak demand for credit.
  • The Government has recently announced bank recapitalisation to the tune of Rs. 2.11 lakh crore. The move is aimed at easing the balance sheets of the public sector banks, conditional on cleaning up their balance sheets, thereby helping banks to accelerate the pace of credit disbursement.

Foreign Direct Investment

  • FDI has been an important source of financing for the economy. FDI policy reforms announced in 2016 brought most of the sectors under automatic approval route, except a small negative list.
  • Total FDI inflow grew by 8%. It is the highest ever for a particular financial year.

Key initiatives taken by Government to boost industrial performance

  • Government has undertaken a number of economic and institutional reforms, which have led to significant up-gradation in the ranking of Ease of Doing Business of World Bank Report 2018
Chart of Ease of Doing Business of World Bank Report 2018

Chart of Ease of Doing Business of World Bank Report 2018

Chart of Ease of Doing Business of World Bank Report 2018

  • Improved ratings had an immediate positive impact on economic indicators. The immediate impact was seen in terms of the Daily Sensex rising roughly 700 points in a span of few days.
  • The immediate impact was also visible in terms of the rupee appreciation reflecting better investment sentiment and expectations. The rating upgrade is also expected to reduce the cost of borrowing for the Indian Government.

📝 Make In India

  • The Government has identified ten ‘Champions sectors’ that have potential to become global champion, drive double digit growth in manufacturing and generate significant employment opportunities. The sectors have been identified for renewed focus under the Make in India version 2.0
  • The different sectors include Capital goods, Auto and Auto Components, Defence & Aerospace, Biotechnology, Pharmaceuticals and Medical Devices, Chemicals, Electronic System Design & Manufacturing (ESDM), Leather & Footwear, Textiles & Apparels, Food Processing, Gems & Jewellery, New & Renewable Energy, Construction, Shipping and Railways.

Intellectual Property Rights (IPR) Policy

  • In May, 2016, Government for the first time adopted a comprehensive National Intellectual Property Rights (IPR) policy to lay future roadmap for intellectual property
  • This aims to improve Indian intellectual property ecosystem, hopes to create an innovation movement in the country and aspires towards “Creative India; Innovative India” roadmap for intellectual property.

Start-up India

  • “Startup India, Standup India” initiative mainly allows startups to focus on their core business. The initiative aims to create an ecosystem that is conducive to growth of Startups.
  • An Action Plan for Startup India comprising 19 action points was unveiled on 16th January, 2016. Government has acknowledged the need to reduce the regulatory burden on Startups and have allowed them to self-certify compliance under 3 labour laws and 6 environment laws.
  • The initiative allows Startups to focus on their core business and keep compliance cost low. Startup India hub has been developed as a single point of contact for the entire Startup ecosystem and enables knowledge exchange along with access to funding.
  • Several steps have also been taken to promote Industry-Academia Partnership and Incubation. With an aim to foster and facilitate Bio-entrepreneurship, Bio-clusters, Bio incubators, Technology Transfer Offices (TTOs) and Bio-Connect, offices are being established in research institutes and universities across India.
  • Seed Fund and Equity Funding support is also provided to bio-tech Startups under the initiative.

Sector Wise Issues and Initiatives

Steel sector

  • In order to address the issue of dumping cheap steel, apart from raising customs duty and imposition of anti-dumping duty, Minimum Import Price (MIP) on a number of items was introduced in February 2016 with a sunset clause of one year.
  • These measures helped the domestic producers and exports recovered since February 2016 until March 2017. Subsequently exports started declining. The Government notified anti-dumping duties and Countervailing Duties on various steel products in February 2017 as follows:
  • Anti-dumping duties were imposed on import of seamless tubes, pipes and hollow profiles of iron, alloy or non-alloy steel originating and exported from China.
  • The Government also imposed Anti-Dumping duty on HR Coils, HR Plates, CR Products, Wire Rod and Color Coated steel.
  • The Government levied Countervailing duty on imports of cold rolled flat products of stainless steel of all grades/series from China, Korea, European Union, South Africa, Taiwan, Thailand and USA.
  • The government has rolled out a New Steel Policy in May 2017. A policy on preference to domestically manufactured select iron & steel products has been enforced since May 2017. Global trends of steel prices (post June 2017) along with measures undertaken by the Government led to rise in exports of steel for the period April – December 2017.

MSME

  • As per the National Sample Survey (NSS) 73rd round, for the period 2015 - 16, there are 633.8 lakh unincorporated non-agriculture MSMEs in the country engaged in different economic activities providing employment to 11.10 crore workers.
  • The MSME sector faces a major problem in terms of getting adequate credit for expansion of business activities. The MSME received only 17.4 % of the total credit outstanding. Growth of credit to Micro and Small enterprises increased by 4.6%, while credit to Medium enterprises decreased by 8.3%

Major schemes implemented for the development of MSME sector are as follows:

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Yojana November 2017 Summary: Micro, Small & Medium Enterprises (MSME)

As a country we want to play with High Technology Risk (high returns) but MSME’s typically deal with only Low Technology Risk decisions (risk averse).

  1. Prime Minister’s Employment Generation Program (PMEGP) is aimed at generating self-employment opportunities through establishment of micro-enterprises in the non-farm sector by helping traditional artisans and unemployed youth.

  2. Credit Guarantee Scheme for Micro and Small Enterprises covers collateral free credit facility (term loan and/or working capital) extended by eligible lending institutions including Non-Banking Financial Company (NBFC) to new and existing micro and small enterprises.

  3. Credit Linked Capital Subsidy Scheme (CLCSS) aims at facilitating technology upgradation of the MSME sector.

  4. The Government has also initiated the Pradhan Mantri Mudra Yojana for development and refinancing activities relating to micro industrial units. The purpose of Micro Units Development and Refinance Agency (MUDRA) is to provide funding to the non-corporate small business sector. The Government has also set up the MUDRA Bank.

Textiles and Apparels

The sector witnesses a historic opportunity with China losing market share in clothing exports due to rising labour costs. India has not been able to leverage this opportunity due to India’s competitors i. e. Bangladesh, Vietnam, Ethiopia having duty free access to markets of EU and USA.

High domestic taxes on manmade fabrics vis a vis cotton fabrics; stringent labour laws; and high logistics cost are the main reasons for high cost in textiles.

The government package launched in June 2016 included

  • enhanced subsidy under Amended Technology Upgradation Fund Scheme for concessional import of machinery from 15 % to 25per cent (conditional on firms generating requisite employment);

  • implementation of Rebate of State Levies on Export (RoSL) for state levies which were not refunded through duty drawback earlier

  • Government to bear 12 % of the employers’ contribution of the full EPFS for new workers;

  • increasing overtime caps in line with ILO norms;

  • introduction of fixed term employment.

The Government has in December 2017 approved the scheme for Capacity Building in Textile Sector (SCBTS). The scheme will be applicable from 2017 - 2018 to 2019 - 2020 with an outlay of Rs. 1, 300 crore.

The above scheme shall have the National Skill Qualification Framework (NSQF) compliant training courses, with funding as per the common norms notified by Ministry of Skill Development and Entrepreneurship (MSDE).

Since the scheme implementation in June 2016, the package did have a positive impact on the exports of Ready Made Garments (RMG) of Manmade fibres. The impact of the package increased over time and did not show any signs of attenuation.

Leather sector

  • The global demand for footwear is moving towards non leather footwear, while Indian tax policies favour leather footwear production. India also faces high customs tariffs in a number of developed country markets of leather goods and non-leather footwear.
  • The issues in labour and employment have been recently addressed. The scheme would lead to development of infrastructure for the leather sector, address environment concerns specific to the sector, facilitate additional investments, employment generation and increase in production.
  • Enhanced tax incentive would attract large scale investments in the sector. Reforms in labor laws, in view of seasonal nature of the sector, will support economies of scale.
  • The scheme proposes to assist for Placement Linked Skill Development, training to unemployed persons; incentives for investment for new plant and machinery; modernization of existing plant and machinery; support for up-gradation/installation of Common Effluent Treatment Plants (CETPs); brand promotion; and providing employer’s contribution to Employees Provident Fund etc.

Gems and Jewellery

It is one of the fastest growing sectors and is export oriented and labour intensive. Exports of the sector have risen from 0.7 % in 2014 - 15 to 12.8 % in 2016 - 17.

The import duty on goldsmith tools is 30.15%. Duty drawback rate on gold jewellery is 246.5 per gram of gold content in the jewellery.

In view of the tremendous scope in gems and jewellery sector, following programs may be taken up for promoting employment in this sector:

  • Public Private Partnership models could be explored for training in jewellery designing. The jewellery training institutes may be affiliated with the Gems and Jewellery Sector Skill Council.

  • Setting up infrastructure such as refineries, hallmarking centres etc. , to promote jewellery manufacturing in rural areas.

  • Creation of multiple jewellery parks (accommodating manufacturers, shared services, testing, banking, logistic support etc. ) so as to promote production in a more organized environment.

Infrastructure Sector

  • In order to ensure high and sustainable growth, there has been a substantial step up of investment in infrastructure mostly on transportation, energy, communication, housing & sanitation and urban infrastructure sector.
  • Enhanced investment on infrastructure sector will certainly help in creating jobs both directly and indirectly.
  • The Global Infrastructure Outlook reflects that rising income levels and economic prosperity is likely to further drive demand for infrastructure investment in India over the next 25 years.
  • The graph given below shows the year on year requirement of infrastructure investment forecasted by Global Infrastructure outlook and current investment trend in India.
Global Infrastructure outlook & current investment trend India

Global Infrastructure Outlook & Current Investment Trend India

Global Infrastructure outlook & current investment trend India

  • There was massive under-investment in infrastructure sector until the recent past when the focus shifted to invest more on infrastructure. The reasons behind the shortfall in investment were: collapse of Public Private Partnership (PPP) especially in power and telecom projects; stressed balance sheet of private companies; issues related to land & forest clearances.
  • The need of the hour is to fill the infrastructure investment gap by financing from private investment, institutions dedicated for infrastructure financing like National Infrastructure Investment Bank (NIIB) and also global institutions like Asian Infrastructure Investment Bank (AIIB), New Development Bank (erstwhile BRICS Bank) which is focusing more on sustainable development projects and infrastructure projects.

Policy Intervention in the Road Sector

  • Apart from facilitating the movement of goods and passengers, road transport plays a key role in promoting equitable socio-economic development across regions of the country.
  • Easy accessibility, flexibility of operation, door-to-door service and reliability have earned road transport a greater significance in both passenger and freight traffic vis-a-vis other modes of transport.
  • In 2016, total road length increased to 56, 17, 812 km while the total number of motor vehicles grew by four times to 229 million. The composition of vehicle shows that the share of two wheelers and passenger cars, jeep & taxis has increased on Indian roads while the share of public transport like buses and also goods vehicles contracted over the period.

Conversion of State Highways to National Highways

National Highways (NHs) /Express Ways in India accounted for 2.06 % of the total road length. For the last few years the construction of NHs has been accelerated rapidly.

Government received proposals for declaration of more than 64, 000 km of State roads as National Highways (NHs) from various State Governments, against which the Ministry has declared about 10000 km of Roads/routes as new National Highways.

India’s road density at 1.66 km/sq. km of area was higher than that of Japan.

The Government’s focus on constructing National Highways in Indian States has a significant impact on trade and per capita income. Two interesting relationship can be established as follows:

  1. Higher the Density of National Highways, higher the Interstate Trade (Export + Import) as % of Gross State Domestic Product (GSDP) in Indian States

  2. Higher the density of National Highways (NHs), higher the Per capita GSDP.

The density of national highways and state highways can be seen in the map given below.

Map of density of national highways and state highways

Map of Density of National Highways and State Highways

Map of density of national highways and state highways

Policy for Construction of Other PWD Road, Especially District Roads

  • The share of OPWD roads (district roads and rural roads) which serve as the main roads for intra district movement has decreased over the period of time.
  • Government is connecting habitations with rural roads through the Pradhan Mantri Gram Sadak Yojana (PMGSY), which is a centrally sponsored scheme.
  • Density of PMGSY road is more in States like Bihar, Odisha, Madhya Pradesh, West Bengal, Sikkim and Tripura; while the density is less in J&K, Gujarat, Kerala and Arunachal Pradesh.
  • The relatively developed States like Gujarat, Kerala with higher density of NHs and SHs have lower density of rural roads constructed under PMGSY.
  • In many under developed States with lower Per capita GSDP like Bihar, Odisha, Chhattisgarh, Jharkhand and Jammu & Kashmir, West Bengal, Madhya Pradesh, the density of OPWD/District Road is very low.
  • The density is higher in many North Eastern States like Nagaland, Tripura, Assam and Manipur. There is a need for developing OPWD roads including District Roads through special projects, so as to provide access to district headquarter, market hubs etc. and to facilitate connectivity to State highways, thereby enhancing economic activities.

Status of Stalled Projects and NPAs in Road Sector

  • As on September 2017, out of the 1263 total ongoing monitored projects across sectors, there are 482 projects in Road Transport and Highways.
  • Some of the projects under different phases of National Highway Development Program are delayed mainly due to problems in land acquisition, utility shifting, poor performance of contractors, environment/forest/wildlife clearances, Road Over Bridge (ROB) & Road Under Bridge (RUB) issue with Railways, public agitations for additional facilities, and arbitration/contractual disputes with contractors etc.
  • Share of Non-Performing Assets (NPAs) out of total advances in road sector increased from 1.9 % in 2012 - 13 to 20.3 % in September 2017 - 18.

Measures Taken for Revival of Stalled Projects on NHs

  • Ministry of Road Transport & Highways and National Highway Authority of India (NHAI) have been monitoring the stalled projects.
  • Wherever physical completion is established, one-time fund infusion by NHAI is being done to revive stalled projects. The funds are being arranged through the common fund available with NHAI for development of roads.
  • In order to expedite completion of delayed projects, regular meetings are held with project developers, State Governments and contractors, concessionaires/contractors. Various steps have been taken for streamlining of land acquisition & environment clearances, exit for equity investors, premium re-schedulement, revamping of dispute resolution mechanism, frequent reviews at various levels etc.
  • In order to facilitate implementation of the projects, Hybrid Annuity Model (HAM) instead to Engineering, Procurement and Construction (EPC) has been adopted. Capital expenditure is deferred under HAM and requires lesser amount of funds during construction years in comparison to projects on EPC mode.
  • Further, initiatives such as monetization of projects through the Toll-Operate in Transfer model, securitization of toll revenue, adopting the ’Infrastructure Investment Trusts route, other innovative financing options including LIC, Long Term Pension Funds etc. , have been taken to attract fresh capital from the market on the strength of already operational projects.
  • With proactive policy interventions, around 88 % of these projects have now been put back on track, or appropriately re-engineered and restructured and the total number of stalled projects have been reduced to three.

📹 Bharatmala Pariyojana

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Bharatmala Pariyojana (Current Affairs/GS 2017 - 18) - WW. 52

Dr. Manishika Jain explains Bharatmala Pariyojana as an umbrella program

  • Bharatmala Pariyojana is a new umbrella program for the highways sector that focuses on optimizing efficiency of freight and passenger movement across the country by bridging critical infrastructure gaps through effective interventions.
  • The interventions include 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.
  • The objective of the program is to achieve optimal resource allocation for a holistic highway development/improvement initiative.

Railways

The Government is initiating various transformative measures to keep railways on track. These measures are focusing on prioritizing investments in important areas, viz. dedicated freight corridors, high speed rail, high capacity rolling stock, last mile rail linkages, port connectivity, and attracting private and foreign direct investment.

The share of Indian Railways in freight movement has been declining over a period of time primarily due to non-competitive tariff structure.

To make rail transportation attractive and arrest the declining trend of rail share, various initiatives were taken in 2016 - 17.

📝 The initiatives include

  • tariff rationalization,

  • classification of new commodities,

  • new policy guideline for station to station rates,

  • expansion of freight basket through containerization,

  • withdrawal of dual freight policy for export of iron ore,

  • rationalization of coal tariff,

  • policy guidelines of Merry Go Round System,

  • discount for loading of bagged consignment in open and flat wagons,

  • new delivery models like Roll-on Roll-off services,

  • re-introduction of short lead concession and reduction in minimum distance for charge,

  • digital payment for freight business,

  • Long Term Tariff Contract Policy (which provides tariff stability and attractive rebate in freight to customers),

  • liberalised Automatic Freight Rebate scheme for traffic loaded in empty flow directions etc.

Infrastructure Status to Station Redevelopment

  • The station redevelopment has been undertaken through various modes such as Zonal Railways, Indian Railway Stations Development Corporation Ltd. (IRSDC), JV with Smart City SPVs, Railway PSU and Co-operation with State Government.
  • Commercial development undertaken near the stations will become the nerve centres of the city and provide quality retail, commercial and hospitality development.
  • MOU has been signed by Ministry of Railways with Ministry of Housing and Urban Affairs for integrated planning for station redevelopment projects in cities identified as SMART cities.

Metro Rail System

  • Government of India has been providing financial assistance to cities for improving public transport including metro rail projects. There are 425 km of metro rail systems operational in the cities of Delhi, NOIDA, Gurugram, Kolkata, Mumbai, Chennai, Bengaluru, Hyderabad, Jaipur, Lucknow and Kochi and another about 684 km are under construction in various cities by December 2017.
  • As metro rail projects are highly capital intensive, it is difficult to fund metro rail projects from Government exchequer only. In this context, in order to create an ecosystem for proliferation of metro rail in country, Government of India has notified Metro Rail Policy, 2017. The policy imbibes on the learnings from international examples and bridges the much needed gap for enhancing the feasibility of metro rail projects from economic, social and environmental perspective.

Civil Aviation

Domestic passenger traffic registered a compound annual growth rate (CAGR) of 9.89 % during 2007 - 08 to 2016 - 17.

📝 Recent Initiatives taken for the growth of the Civil Aviation sector are as follows:

  1. Regional Connectivity Scheme – ‘Ude Desh ka Aam Naagrik’ (RCS-UDAN): 27 States/UTs have already signed MOUs with the Central Government under RCS-UDAN. Many private sector airlines are actively participating under this scheme.

  2. Airport Development: Provision of Rs. 4, 500 crore for revival of 50 unserved and underserved airports/air strips has been taken up with budgetary support of Government to be completed by December 2018.

    Government has granted in-principle approval for setting up 18 Greenfield airports in the country, government has granted “site clearance” for 5 Greenfield airports.

  3. Liberalization of Air Services: The decision to establish an Air Freight Corridor between Afghanistan and India was taken in September 2016.

Air Services Agreement between India and Serbia:

Shipping

To encourage the growth of Indian tonnage and for higher participation of Indian ships in Indian trade, the Government has implemented several measures which include

  • reduction of GST from 18 % to 5 % on bunker fuel used in Indian flag vessels;

  • brought parity in the tax regime of Indian seafarers employed on Indian flag ships vis-a-vis those on foreign flag ships;

  • removing obstacles in the smooth implementation of the India Controlled Tonnage (ICT) scheme which allows Indian companies to directly own ships in foreign flags;

  • easing many procedural compliance issues like ship registration, procuring chartering permission and payment of chartering fees online.

Scope for Shipbuilding and ship-repair industry

  • Major shipbuilding nations support their industry through direct financing, and fiscal incentives. It is important to note that India is located strategically on the international trade route, whereby it can attract ships plying from west to east in the trade route for its ship-repair activity.
  • Geostrategic location of India, abundance of labour and quality of work are the strengths for the ship-repair business. There is a scope for ship building industry that can be unlocked, which will not only create a strong manufacturing base but also generate millions of jobs.

Port Development

In 2017 - 18, projects with an investment of around `10, 000 crore and capacity addition of about 80 MMTPA are targeted for award. Of these, 15 projects involving an investment of around `3159 crore and capacity addition of 18 MMTPA have already been awarded (as on 31.12. 2017).

  1. In addition, the Government has taken following initiatives to improve the performance of Major Ports: Major Ports have been benchmarked to international standards and 116 initiatives were identified of which 86 initiatives have been implemented and remaining will be implemented by 2019.

  2. 👌 Major Ports Authorities Bill, 2016 to replace Major Ports Trust Act, 1963 to modernize the institutional structure of Major Ports has been introduced in the Parliament on 16.12. 2016.

  3. 👌 Radio Frequency Identification System (RFID) to reduce dwell time, transaction time and ease congestion has been operationalized in 9 Major Ports. The remaining Major Ports are in the process of operationalizing RFID which would be completed by March, 2018.

  4. Direct port delivery and direct port entry initiated at Major Ports for EXIM containers.

Sagarmala Program

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Sagar Mala Project - Closer to Success of Blue Revolution with Key MAP Locations

We expect atleast one question from this lecture! Dr. Manishika Jain explains the concept, structure, pillars and main proposals of Sagar Mala Project.

  • The Sagarmala program is the flagship program of the Ministry of Shipping to promote port-led development in the country through harnessing. The main vision of the Sagarmala Program is to reduce logistics cost for international and domestic trade.

Inland Waterways Transport (IWT)

  • The ‘Jal Marg Vikas Project’ on National Waterways-I (NW-I) in river Ganga, a large integrated IWT project, has been launched between Varanasi and Haldia covering a distance of 1380 kms.
  • Many other developments are being done under this scheme.

Telecom

  • Over the last few years the Indian telecom sector has shown remarkable growth as a result of key reforms viz. , spectrum management, Bharat Net program and umbrella scheme like ‘Digital India’ in order to convert India into a digital economy and a knowledge based society.
  • The mobile industry in India is currently employing over 4 million people both directly and indirectly. The telecom sector is going through a stress period with growing losses, debt pile, price war, reduced revenue and irrational spectrum costs.
  • A new entrant has disrupted the market with low-cost data services and the revenue of incumbent players has fallen. The crisis has also severely impacted investors, lenders, partners and vendors of these telecom companies.
  • The Government is implementing the flagship ‘Bharat Net’ project (in two phases), to link each of the 2.5 lakh Gram Panchayats of India through optical fibre network. This is the largest rural connectivity project of its kind in the world, and is the first pillar of Digital India Program.
  • The Government has launched Phase II of Bharat Net project with an outlay of `30, 920 crore on 13th November, 2017. The phase II, which will connect 1.5 lakh Gram Panchayats through high speed broadband, is likely to be completed by March 2019.
  • Government is in the process of formulating the New Telecom Policy, targeted to be released in 2018, after holding wide range of consultations with various stakeholders. The major themes that new Telecom Policy shall try to address include Regulatory & Licensing frameworks impacting the sector, Connectivity for All, Quality of Services, Ease of Doing Business and Absorption of New Technologies including 5G and Internet of Things.
  • Telecom Regulatory Authority of India (TRAI) has also recommended new policy on ‘Net Neutrality’ which prohibits discriminatory tariffs for data services.

Power

  • The All-India installed power generation capacity has increased substantially over the years and reached 330860.6 MW as on 30th November, 2017. The peak deficit has declined from around 9 % in 2012 - 13 to 1.6 % during 2016 - 17.
  • In order to enhance power supply in rural areas, Deen Dayal Upadhyaya Gram Jyoti Yojana was launched in December 2014 to extend financial assistance for capital expenditure by distribution companies (discoms) for strengthening and augmenting distribution infrastructure Programs have been taken up to address improvement in performance of distribution companies.
  • A new scheme, Saubhagya (Pradhan Mantri Sahaj Bijli Har Ghar Yojana), was launched in September 2017 to ensure electrification of all remaining willing households in the country in rural and urban areas.
  • Government has also approved establishment of a National Smart Grid Mission in power sector to plan and monitor implementation of programs related to smart grid activities in India.

👌 Energy Conservation

  • A number of initiatives have been taken up by the Government to ensure commercial energy efficiency in the country including the following:
  • National LED program: The program includes two components (a) Unnat Jyoti by Affordable LED (b) All Street Lighting National Programme (SLNP)
  • The Bureau of Energy Conservation is simultaneously taking up number of programs for energy conservation including standardization and labelling of appliances, buildings, passenger cars and heavy duty vehicles etc.

Logistics Sector: Exploring the Unexplored

  • Logistics sector in India remains unorganized largely.
  • In order to develop this sector in an integrated way, it is important to focus on new technology, improved investment, skilling, removing bottlenecks, improving intermodal transportation, automation, single window system for giving clearances, and simplifying processes.
  • With the implementation of Goods and Services Tax (GST), the Indian logistics market is expected to reach about US $215 Billion in 2020, growing at a CAGR of 10.5%.
  • Apart from increasing trade, better performance in logistics will augment the program like Make in India, and also enable India to become an important part of the global supply chain.
  • Realizing the importance of the sector and to address the inefficiencies, the Government has included the Logistics sector in the Harmonized Master List of Infrastructure Subsector.

👌 Petroleum & Natural Gas

Some of the important new initiatives taken to transform hydrocarbon sector in India are as under:

  • Complete mapping of sedimentary basins

  • Refining Capacity

  • National Gas Grid: The Government has approved partial capital grant for constructing 2650 km Jagdishpur-Haldia & Bokaro-Dhamra Pipeline (JHBDPL) natural gas pipeline project, popularly known as Pradhan Mantri Urja Ganga of Eastern India. This project will connect Eastern part of the country with National Gas Grid.

  • Households covered under DBTL

  • LPG Connections to BPL Houses- Pradhan Mantri Ujjwala Yojana

Housing for All – Some Issues

  • A successful housing policy should enable horizontal or spatial mobility, namely the ability to move to, between and within cities as job opportunities arise.
  • It should also deliver vertical mobility, so that an aspirational population can climb the socio-economic ladder. These concerns should be embedded in policies ranging from urban design to those related to transaction costs in the secondary market.

The Importance of Rental Housing

  • Most parts of the country have witnessed a decline in the share of rentals, it is not uniform.
  • Rent control, unclear property rights and difficulties with contract enforcement have constrained the market in India in recent decades. These problems need to be resolved in order to allow horizontal and vertical mobility.

The Problem of Vacant Housing

  • According to the national census, vacant houses constitute around 12 % of the share of the total urban housing stock.
  • The phenomenon of high vacancy rates is not fully understood but unclear property rights, weak contract enforcement and low rental yields may be important factors.
  • India’s housing requirements are complex but till now policies have been mostly focused on building more homes and on home ownership.
  • The above data suggests that we need to take a more holistic approach that takes into account rentals and vacancy rates.
  • The policy-makers need to pay more attention to contract enforcement, property rights and spatial distribution of housing supply vs. demand.

- Published/Last Modified on: March 28, 2018

Economy

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