Chapter-27 Infra Manish

8/3/2019 Chapter-27 Infra Manish

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With the effect f the glbal financial crisis f 20089n the Indian ecnmy wearing ff and a new gvern-ment taking charge in India, the fcus during 200910was t rejuvenate the pace f infrastructure develpment.Cnsidering the limited prgress in capacity epansin inthe infrastructure sectrs in 20089, the GI cnstituteda high-pwered cmmittee in July 2009 t fast-track im-plementatin f prjects and mnitring their perfrm-ance. It was empwered t take all decisins, includingapprval f all infrastructure related prpsals cstingver Rs 150 crre.

Besides this attempt t imprve the pace f award andeecutin f infrastructure prjects, the year saw regulatryrefrms in almst all sectrs. Cncerns in the regulatryframewrk fr private sectr participatin (PSP) in natinalhighways were irned ut, there was a prpsal fr settingup f a Majr Prt Regulatry Authrity (MPRA) withmre teeth, the Airprts Ecnmic Regulatry Authrityf India (AERA) began functining, and the creatin f acal regulatr was annunced. Tese refrms are epectedt imprve the investment climate fr PSP and thus,attract greater private capital.

But the resurgence in the investment climate was tem-pered by tw curt cases, under different legal jurisdic-

tins, which wuld impact setting up f Special PurpseVehicles (SPVs) fr prjects planned thrugh the PublicPrivate Partnership (PPP) rute (see B 27.1). Te judg-ments f the High Curts f Karnataka and Maharashtran public scrutiny f activities f SPVs imply that suchSPVs wuld be amenable t the writ jurisdictin f theHigh Curt r the Supreme Curt and can als be e-psed t the Right t Infrmatin (RI) Act, since theyperfrm a public functin and receive cncessins r ther

T I S Id,200910Mh G

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financial aid frm the central r state gvernments. Tere-fre, SPVs wuld be pen t public scrutiny and wuldbe als required t disclse prcedural and cmmercialinfrmatin, including cntracts. Tis view was substan-tiated by the Central Infrmatin Cmmissin (CIC),the appellate authrity under the RI Act. Te CIC, ina judgment, bserved that all cntracts related t a PPPprject must be disclsed in their entirety t ensure trans-parency. Tese judgments imply that any SPV, regardlessf whether a gvernment has a stake in it, wuld need tfunctin under public scrutiny and transparency.

A review f the develpments in the individual infra-structure sectrs is presented belw.

elecomTe telecm sectr was characterized by intense cmpeti-tive activity due t the entry f new players and epansinby smaller players, particularly in the wireless segment.Tis increase in cmpetitin was evident frm the aggres-sive tariff plans intrduced by the wireless peratrs tattract custmers. Nt surprisingly, teledensity grew frm37 per cent as at the end f FY 20089 t 53 per cent atthe end f FY 200910. As has been the case ver the pastfew years, the main cntributin t grwth in teledensity

came frm wireless subscribers wh registered an increasef almst 50 per cent during the same perid. Te bulkf this increase in wireless subscribers came frm semi-urban and rural areas, which als increased by 50 per centgrwth ver this perid.

Hwever, there is a large variatin in teledensity acrssstates. Many less develped states, which includeChhattisgarh, Jharkhand, and Uttaranchal, and parts fthe Nrth-East have teledensity well belw 20 per cent.


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436 India Infrastructure Reprt 2010

Te prblem is mre prnunced in case f rural teleden-sity, which still remains lw at 21 per cent. Tis is a matterf cncern, in view f the fact that nly 40 per cent ffunds cllected as universal service levy frm telecmperatrs since 20023 have been utilized till date (seeable 27.1) fr increasing the penetratin f telecmservices in rural and remte areas.

able 27.1 Status f Funds Cllected and Allcated by theUniversal Service Obligatin Fund

(in Rs Crore)

Opening Funds collected Funds

balance as USL allocated

20023 0 1653.61 300

20034 1353.61 2143.22 200

20045 3296.83 3457.73 1314.59

20056 5439.97 3533.29 1766.85

20067 7206.41 4211.13 1500

20078 9917.54 5405.46 1290

20089 14033.00 5759.52 1600

200910 18192.52 2400

tal 26163.96 10371.44

Source: Department f elecmmunicatins, Gvernment f

India.

Te year saw declines in average revenue per user(ARPU), revenue grwth and prfitability f the industrydue t cmpetitive tariffs, increasing number f rural sub-scribers, and grwth in the share f pre-paid subscribers(see able 27.2). Value-added services (VAS) are therefreincreasingly being cnsidered by service-prviders t bstARPUs and als differentiate their services. Currently, the

cntributin f VAS t the ttal mbile revenues f thetelecm peratrs is just 910 per cent, but is epectedt grw manifld with the GI finally undertaking theauctin f 3G spectrum.

able 27.2 ARPUs f Mbile Service-prviders

(in Rs)

As of As of31 March 2009 31 December 2009

Average Revenue Per User(ARPU) GSM 205 144

Average Revenue Per User

(ARPU) CDMA 99 82

Source: elecm Regulatry Authrity f India.

Tugh much delayed, the GI has at the end f FY200910 initiated the prcess f auctining 3G spectrumand Bradband Wireless Access (BWA). Te GI has setthe date 9 April 2010 fr the auctin f 3G spectrum, with the auctin f BWA stated t start tw days afterthe clse f the 3G auctin. Te GI has fied the basereserve price fr the all-India 3G spectrum at Rs 3,500crre fr ne slt and Rs 1,750 crre fr an all-India rllut f bradband services. Successful bidders are required

t pay the entire bid amunt within a perid f 10 days,althugh they can cmmercially use the 3G spectrumnly frm 1 September 2010.

One f the disappintments in the sectr has beenthe slw prgress in implementatin f Mbile NumberPrtability (MNP). Te deadlines t implement MNP inthe metrs and categry A circles by the middle f 2009,and in the rest f the cuntry by the end f 2009, havent been met and are nw prpsed as 30 June 2010.

Box 27.1Public Scrutiny f SPVs Frmed t Eecute Infrastructure Prjects thrugh the SPV Rute

Te Fleming Duty-free Shps Pvt. Ltd. (FDSL) filed a writ petitin against the Bangalre Internatinal Airprt Ltd. (BIAL) in the

High Curt f Karnataka n the grunds that BIALs shrtlisting f bidders fr establishment f retail and duty-free shps in theinternatinal terminals at new BIAL, fllwing the ntificatin f Epressin f Interest (EI) which did nt detail the evaluatincriteria, was arbitrary and discriminatry in nature. Tis vilated Article 14 f the Cnstitutin f India. Te High Curt fKarnataka tk the view that BIAL discharges the statutry functins/duties under Sectin 12-A f the Airprts Authrities f IndiaAct, 1994 and is therefre a State. Further, under Article 226 f the Cnstitutin f India, any agency including an SPV perfrmingpublic duty is an instrumentality f the State and under Article 12 f the Cnstitutin f India, is the State itself. Tis means thatthe SPV wuld be pen t scrutiny in a manner that any gvernment department wuld be and, by etensin, culd be asked tfllw the prcesses as in any agency which is an arm f the State.

Te High Curt f Maharashtra, n a similar writ petitin filed against the Mumbai Internatinal Airprt Ltd. (MIAL) issued ajudgment in favur f the petitiner. It held that thugh MIAL is a registered private cmpany, it perfrms a public functin and isa State as defined by the Cnstitutin. Terefre, MIAL cmes under the purview f the Right t Infrmatin (RI) Act.

Source:Authrs wn.


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Te Infrastructure Sectr in India, 200910 437

Te elecmmunicatins Regulatry Authrity f India(RAI) has ntified the key charges fr the implementa-tin f MNP. A subscriber wuld be able t prt her/hisnumber nce in every 90 days (within the same circle).

Te subscriber may be required t pay a prting charget the recipient peratr, that is, the peratr t whmthe subscriber is prting his/her number, which wuld besubject t a maimum f Rs 19 per prting. Te mai-mum time fr cmpleting the prting prcess wuld befur days (12 days fr the circles f Jammu and Kashmir,Assam, and the Nrth-East).

Te ceiling set by RAI fr prting charges will make itcnsiderably cheap fr subscribers t prt their numbersand is likely t be a majr factr driving the increasingusage f the MNP facility as and when it cmmences,given the current dissatisfactin amng cnsumers withquality f service (QS), and the array f chices f pera-trs and attractive plans.

ransport

Rd

Te year 2008 had seen virtually n prgress in the devel-pment f natinal highways due t several reasns, whichinclude issues in standard bidding dcuments (SBD) andMdel Cncessin Agreement (MCA), glbal ecnmicslwdwn, impediments in land acquisitin, frest andenvirnment clearances, shifting f utilities, etc. Terewas a distinct slwdwn in the award f new prjects in

20089 with nly eight prjects being awarded during theyear and the implementatin f nging prjects wassluggish. Te challenge in 2009 therefre was tw-fld:regain the lst mmentum f prject award and achieve a

quantum jump in the pace f highway cnstructin. Butnaturally, the sectr received the sptlight in 2009.Te MRH targeted at accmplishing cnstructin fnatinal highways at the pace f 20 km per day, targeting

the cmpletin f 35,000 km f natinal highwaysduring 200914. Achieving this ambitius target requiredreslutin f several impediments and radblcks men-tined abve.

Accrdingly, the GI cnstituted a cmmittee underthe Chairmanship f B.K. Chaturvedi, Member, Plan-ning Cmmissin (the B.K. Chaturvedi Cmmittee rBKCC) t reslve prcedural impediments and develpa financing plan fr the Natinal Highways DevelpmentPrject (NHDP). Te implementatin f Part 1 f thisCmmittees recmmendatins remved several impedi-ments t the award f highway prjects. Amendmentshave been made in the SBD and MCA (see B 27.2).Te viability gap funding has been increased frm 10per cent t 20 per cent fr lw-traffi c stretches in PhaseV f the NHDP and frm 5 per cent t 10 per centfr the si-laning prgramme. Te entire VGF will bereleased in ne g as against the previus nrm f releas-ing 50 per cent f the amunt during cnstructin and50 per cent during maintenance. Te psitive impactf these changes have resulted in the speedy prgress fthe highways sectr and is evident frm the award f 34prjects since these recmmendatins were effected inNvember 2009 (see able 27.3).

Te prject delivery strategy f the NHAI has als been

changed. Te sequential prject award strategy f firsttesting the award n a build-perate-transfer (BO) tllbasis, then n BO annuity basis and finally, n a engi-neering, prcurement, and cnstructin (EPC) basis in

Box 27.2Key Changes t Te Standard Bid Dcuments and Mdel Cncessin Agreement fr Natinal

Highways as Per Recmmendatins f Te B.K. Chaturvedi Cmmittee

Returns: Te cncessin agreement can be etended by five years if the cncessinaire undertakes capacity augmentatin inrespnse t the actual traffi c eceeding the designed rad capacity. Hwever, the cncessinaires IRR wuld be capped at15 per cent. Earlier, the cncessin was terminated if the traffi c eceeded capacity fr mre than three years.

Conflict of interest: Te limit fr cmmn sharehlding between varius bidders has been raised frm 5 per cent t 25 per cent,

and the NHAI is empwered t make prject-specific eemptins where the cnflict still eists. Entry: Te bidders technical capacity-related entry threshld with respect t the size f the past prject eperience has

been reduced. Funds: Te lenders are permitted t create a charge n the escrw accunt maintained by the cncessinaire in relatin t tll

cllectins n the rad prject thereby making lending t rads prjects secure. Exit: Prmters hlding majrity sharehlding can fully divest tw years after prject cmpletin, a significant change frm the

present situatin wherein the prmters share culd fall t 26 per cent three years after prject cmpletin and wuld remaincnstant fr the rest f the cncessin perid.

Source: B.K. Chaturvedi Cmmittee Reprt (2009).


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case the prject is fund unviable n BO annuity basisand has been changed. Prjects will nw be implementedn all the three mdes f delivery, that is BO tll,BO Annuity, and EPC cncurrently rather than sequen-tially. Tis will speed up the award f prjects by iden-tifying the mde f develpment upfrnt as against thesequential award prcess, which invlved testing prjects

fr the BO tll mde even if they were nt suitable frthis mde because f traffi c being belw a certain thresh-ld. Further, the NHAI is nw empwered t take deci-sins n single bids after eamining their reasnableness.

Te revised financing plan fr NHDP as drawn upby the BKCC indicates an investment requirement fRs 812,661 crre f which 26 per cent is t be mbilizedfrm the private sectr.

Steps have been taken by the MRH and NHAI tstreamline the land acquisitin prcess and imprve thepace f prjects under implementatin. Special LandAcquisitin Units (SLAUs) have been set up t speed up

land acquisitin at the state level fr natinal highwaysdevelpment. Out f the 192 SLAUs planned, 66 havealready been appinted. As a result f these effrts, mrethan duble the land (8,191 ha) has been acquired thisyear cmpared t the annual average (4,000 ha) f the lastthree years.

Tugh the GI has shwn a renewed impetus frpushing frward the rad develpment prgramme, thereare sme eisting and emerging issues that still need quickreslutin. NHAIs capacity t prepare a pipeline f cred-ible and bankable prjects still remains cluded. NHAIrequires significant capacity building and rganizatinalrefrms t be able t effectively shulder the respnsibility

f building 20 km f natinal highways every day. Tughthe prpsal fr restructuring f NHAI was apprved by theUnin Cabinet in July 2007, actins t this end cntinuet be delayed n accunt f the prcess f amendmentf the NHAI Act 1988. Te NHAI (Amendment) Bill2008 lapsed with the disslutin f the Furteenth LkSabhaa cnsequence f the general electins in 2009.

Anther issue is that f financing. w majr prblemscurrently cnstrain highway sectr finance. First, bank

lans t highway prjects were unsecured, and as acnsequence subject t higher prvisining and capitaladequacy nrms. Secnd, highway prjects need substan-tial lng-term financing as they are typically capital-intensive, lng-gestatin prjects. Currently, cmmercialbanks find it diffi cult t lend lng-term due t apprehen-sins abut asset-liability mismatch.

address the first prblem, fllwing BKCC recm-mendatins, the RBI allwed annuities and tll cllectinrights as tangible security fr the purpse f secured banklans. address the secnd, the gvernment recentlyapprved nrms fr takeut financing fr the India Infra-structure Finance Cmpany Ltd. (IIFCL). Lending insti-tutins will be able t sell part f the lan t IIFCL threet fur years after the prject starts cmmercial pera-tins. Mrever, in rder t bring in investrs with alng-term hrizn such as pensin funds and insurancecmpanies, their investment guidelines need t be relaedwhile being cgnizant f their capacity t manage risk.

Finally, with the rad length and width set t increaseby an enrmus magnitude, an issue that has s far beenverlked and needs t be given imprtance is that fquality f service. Suitable Perfrmance Indicatrs withpenalty mechanisms need t be defined t measure thequality f service being prvided t rad users.

P

During the year, the GI mted a new legislatin, theMajr Prt Regulatry Authrity Act, 2009, fr the settingup f a Majr Prt Regulatry Authrity (MPRA). If thislegislatin is passed by Parliament, MPRA will replace theeisting regulatr, the ariff Authrity fr Majr Prts

(AMP), which has n pwer t enfrce its wn tariffrulings r penalize vilatin f the terms and cnditinsgverning tariffs.

MPRA will have the regulatry pwers, inter alia, tspecify and mnitr perfrmance standards fr service tbe prvided by the prt authrities and private peratrs;and levy penalty n terminal peratrs. Tis will alsremve anther key drawback assciated with AMP, which unlike ther sectral regulatrs in the cuntry

27.3 Award f Natinal Highway Prjects During 200910

No. of Length (km) Project Cost projects awarded (Rs C

20089 8 643 8,591

AprilOctber 2009 10 944

Nvember 2009March 2010 (pst-implementatinf B.K. Chaturvedi Cmmittee recmmendatins) 34 2,532 25,616

Source: IDFC Plicy Grup Research.


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such as RAI and the CERC, is nt vested with the pw-ers t set and enfrce perfrmance standards and thermeasures fr prtectin f user interests. Terefre, thecreatin f the MPRA will als g a lng way in making

prts mre effi cient. MPRA will als act as an appellateauthrity, settling disputes between prt authrities, pri-vate peratrs, and users and lking int their prblemsarising frm running r using prt services.

Te situatin in the prt sectr has therwise beensmewhat stagnant. Althugh there have been fewinstances f capacity epansin, it may be argued thatcapacity is nt a majr issue fr Indian prts. Te traf-fic handled is mre than the capacity in nly fur majrprts, that is, Visakhapatnam, Chennai, Mrmuga, andMumbai (see able 27.4). Hwever, given that the ma-jrity f prts are perating at ver 90 per cent capacityutilizatin and traffi c at majr prts is epected t reach708.09 millin tnnes in FY 201112, the issue f capac-ity additin cannt be cmpletely ignred. In fact, theissue needs greater attentin than befre in view f thefact that the capacity additin f 70 M since 20078includes capacity anchrage t the tune f 11.40 M.Tis refers t the capacity f carg handled at anchrageand nt physical additin in capacity, such as additin fberths. Further, capacity additin wuld imprve servicestandards fr end-users wh nw have t cpe with near100 per cent berth ccupancy in these prts. In fact,service levels reflected thrugh perfrmance metrics suchas average turnarund time, average pre-berthing time,

average utput per ship-berth-day, and dwell time fcarg/cntainers remain unsatisfactry by internatinalcmparisn. Te average turnarund time fr the majrprts increased frm 3.85 days in 20089 t 4.54 daysin 200910 (up t December 2009). Further, there aresignificant inter-prt variatins in perfrmance (see able27.5). As against this, the average turnarund time at theHng Kng prt is estimated at 10 hurs.Tis in turnundermines the cmpetiveness f the Indian prts.

Besides factrs specific t prts such as nn-availabilityf handling equipments and labur at prts, ne f themajr reasns fr the high dwell time at prts is theinadequate inland cnnectivity fr prts. In case f majr

prts, the capacity and quality f the eisting rail and radcnnectivity requires imprvement. Te Cmptrller and Auditr General f India, in its perfrmance audit ffunctining f majr Prts rusts, has bserved that prtsat Chennai, Cchin, Ga, Haldia, Klkata, uticrin, andVishakapatnam cntinue t have single-line cnnectivity,resulting in slwer mvement and ineffi cient cargdispersal. At Cchin, the rail cnnectivity frm the prtarea t the main rail line netwrk is in a pr state while

in Kandla, nly three f the 11 tracks have duble lines.Further, utside the prt areas, passenger and freightsystems share the same railway netwrks.

Further, many f the large minr prts that have startedperatins are cnnected/being cnnected thrugh rail

and rad, have pr quality f inland cnnectivity, whichis a majr stumbling blck in the seamless mvement fcarg. Besides pr rail cnnectivity, inadequate numbersf wagns als hinder realizing the grwth ptential incarg traffi c and custmers.

Managements in several prts have, hwever, wkenup t the need fr better services thrugh prt develp-ment as well as better technlgies. Sme f the Prtrusts are tying up with freign prt cmpanies n thesevery aspects. Te Mundra Prt has signed an MU withAntwerp Prt Authrity t absrb sme f the interna-tinal prt management practices. Te Mumbai Prt rusthas entered int a sister prt agreement with the Prt f

Marseille-Fs f France t fster eperience sharing in theareas f engineering, management, security, and sustain-able develpment while the Chennai Prt rust signed anagreement with the Prt f Halifa, Canada, t cperaten prt develpment.

A

Despite the civil aviatin sectr being pened up t theprivate sectr in 1997 under the GIs Airprt Infra-

able 27.4 Capacity vis--vis the raffi c Handled inMajr Prts in India

(In million tonnes)

Port Capacity as on Traffi c During

31 March 2009 20089

Klkata 15.76 12.43

Haldia 46.70 41.79

Paradip 71.00 46.41

Vishakapatnam 62.23 63.91

Ennre 16.00 11.50

Chennai 55.75 57.49

uticrin 22.81 22.01

Cchin 28.37 15.23

New Mangalre 44.20 36.69

Mrmuga 33.05 41.68

Mumbai 43.70 51.88 Jawaharlal Nehru 57.96 57.29

Kandla 77.24 72.22

tal 574.77 530.53

Source: Press India Bureau.


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structure Plicy, clarity and certainty t investrs n thecmmercial ptential f specific airprt peratins cn-tinued t elude the sectr. In recent times, the absence fa clear set f guidelines fr airprt peratrs is respnsiblefr their revenue mdels remaining a subject matter f

natinal debate and cntrversy. Terefre, AERA becm-ing functinal in August 2009 is a welcme develpmentfr the sectr, even if it fructified si years after first recm-mended1 and mre than three years after the GI prpsedt establish an aviatin regulatr. AERA is empweredt set aernautical charges, determine develpment fees,and mnitr service and quality standards fr the 12 air-prts in the cuntry with traffi c f mre than 1.5 millinpassengers per annum.

Te first issue taken up by AERA, almst within amnth f its establishment, was the review f the develp-ment fee (DF) levied at the airprt at New Delhi. TeGI had in February 2009 allwed the Delhi Interna-

tinal Airprt Ltd. (DIAL), the private sectr cnsrtium with GMR in the lead perating this airprt, t levyRs 200 per departing dmestic passenger and Rs 1,300per departing internatinal passenger as DF fr a peridf 36 mnths w.e.f 1 March 2010. DIAL had sught

interventin f the GI t fund the gap f Rs 1964 crreaffecting the bankability f the airprt prject that arsedue t the pr respnse and cnsequently, shrtfall indepsits received frm cmmercial prperty develp-ment f the airprt due t the ecnmic crisis f 20089.

AERA has cnducted stakehlder cnsultatins n thesubject and has sught infrmatin n the prject cstf the Delhi airprt as well as the bidding prcess inrespect f cmmercial prperty develpment t determinethe DF.

AERA has als initiated steps twards establishing thedegree and nature f ecnmic regulatin f aernauticalservices under five categries, that is (i) Airprt Opera-trs prviding varius attendant aernautical services; (ii) Air Navigatin Service-prvider facilitating navigatin,surveillance, and supprtive cmmunicatin theret frair traffi c management; (iii) Carg Facility Operatrs; (iv)Grund Handling Operatrs; and (v) Fuel Access Prvid-

ers. Sme f the key issues being deliberated by AERA areapprpriate frms f regulatin, that is, price cap regula-tin, rate f return regulatin r light-handed regulatin;apprach t traffi c frecasting; service parameters t bemeasured fr majr airprts; and accunting fr under-

able 27.5 Inter-prt Perfrmance Variatins at Indian Prts

Name of Port Average pre-berthing Average turnaround timetime under port a/c (in hours) (in days)

20078 20089 200910* 20078 20089 200910*

Klkata 0.24 1.27 4.36 4.87 4.60 5.34

Haldia Dck 33.44 24.45 37.35 4.26 4.21 5.20

Mumbai 5.07 7.37 7.69 4.44 4.95 4.42

Jawaharlal Nehru 10.20 9.50 6.48 1.85 1.97 1.9

Chennai 1.00 0.90 0.98 4.60 4.20 4.12

Cchin 1.21 1.31 3.08 1.99 2.08 2.14

Vishakapatnam 5.10 4.35 23.89 3.91 3.93 5.17

Kandla 32.64 28.08 26.88 5.13 5.20 5.16

Mrmuga 18.35 11.48 22.16 4.03 3.61 5.62

Paradip 1.48 1.30 1.50 5.54 4.78 9.84

New Mangalre 1.92 0.90 0.72 3.21 3.00 3.22

uticrin 4.32 3.36 11.52 3.80 3.66 4.14

Ennre 0.75 0.74 0.52 2.08 2.35 2.24

All Majr Prts 11.40 9.55 13.44 3.93 3.87 4.54

Note: * Up t December 2009.Sources: Ministry f Finance (2010) and Department f Shipping (2010).

1 Te establishment f an independent aviatin ecnmic regulatry authrity was first recmmended by the Naresh Chandra Cmmitteein its reprt t the GI n the rad map fr the civil aviatin sectr in India.


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perfrmance vis--vis specified benchmarks n quality fservice thrugh tariffs. B 27.3 prvides a summary fpsitins that AERA is cnsidering n select issues relatedt airprt peratrs.

Te GI has als established an Appellate ribunalt adjudicate disputes between tw r mre service-prviders and between a service-prvider and a grupf cnsumers. Service-prviders refer t any entity thatprvides aernautical services and is eligible t levy andcharge user develpment fees frm the embarking passen-gers at any airprt and includes the airprt peratr.

Anther psitive develpment in this sectr is imprve-ment in QS at the airprts in the cuntry. Te HyderabadInternatinal Airprt has been ranked amngst the wrldstp five in the annual Airprt Service Quality (ASQ)passenger survey cnducted by the Airprts Cuncil In-ternatinal. It als ranks first in the categry f airprtshandling traffi c f 515 millin passengers. Tis airprtis managed by a public-private jint venture cnsistingf the GMR Grup, Malaysia Airprts Hldings Berhad,the state gvernment f Andhra Pradesh, and the AirprtsAuthrity f India (AAI). At the same time, the airprt atNew Delhi wn the award fr the best imprvement inthe Asia-Pacific regin. Such enhanced custmer service

and imprved facilities at the airprts is nt restrictednly t the airprts managed by the private sectr. Withupgradatin and mdernizatin wrks being cmpletedat the varius nn-metr airprts, these airprts t ffer

a better eperience t passengers.

Ry

Te Indian Railways (IR) released its ambitius Visin2020 in December 2009 which recgnizes the need frIR t reinvent itself t pursue grwth in market share aswell as revenue. Te rute netwrk f IR has epandedvery slwly in the past, with nly 10,000 km f railnetwrk added between 1947 and 2009. Fund shrtageand pr prject eecutin due t rganizatinal andmanagerial issues have been the main reasns fr this. Teperating rati f IR, which was 76 per cent in 20078,is prjected at 92.3 per cent, implying that IR has nlyRs 7.5 ut f every Rs 100 fr develpmental wrks. Temarket share in India f rail transprt fr freight traffi chas reduced drastically frm 89 per cent in 195051 t 30per cent in 200708 and IR faces heightened cmpetitinfrm rads with majr investments in highways. Inter-cuntry cmparisns indicate that IR lags behind severalther cuntries n key parameters (see able 27.6).

Box 27.3AERAs Prpsed Regulatry Philsphy and Apprach fr Ecnmic Regulatin f Airprt Operatrs

Form of regulation:Price Cap Regulatin r Incentive Based Regulatin Form of price control and tariff structure:A yield per passenger t be determined initially under the tariff determinatin prcess

and subsequently detailed tariff prpsals frm airprts peratrs (pertaining t apprved yield per passenger) t be reviewedand apprved.

Fair rate of return: be estimated by using a weighted average cst f capital apprach t estimate the nminal pst-ta cstf capital.

Cst f equity determined by using the Capital Asset Pricing Mdel.

Cst f debt estimated by eamining the actual cst f debt faced by airprt peratrs, subject t reasnableness f such cstsbased n review f the surces, prcedure, and methd thrugh which the debt was raised.

Airprts actual gearing t be used fr the time being.

Capital investment: Airprt develpment plans and investments prpsed fr inclusin in the Regulatry Asset Base t be takenup after user cnsultatins.

Traffi c forecasting: Airprts t prvide traffi c frecasts after cnsultatin with users at each price review. AERA may review frecastassumptins, methdlgies, and prcesses, and determine the final frecast t be used fr tariff determinatin. AERA mayintrduce a frecast crrectin mechanism if the actual traffi c falls utside the prescribed bands.

Operating expenditure: Assessment f perating csts will cver (i) baseline perating csts taking cgnizance f variance ver thepreceding year, including treatment f ne-time csts; (ii) perating cst prjectin taking int accunt effi ciency imprvementfr cntrllable csts; and (iii) cst-pass thrugh allwance fr uncntrllable mandated csts.

Quality of Service: A mechanism that specifies reduced tariff fr under-perfrmance vis--vis specified benchmarks n quality fservice s as t adequately prtect the interest f the users. Under such a mechanism, the calculated level f rebate fr a year willbe passed n t users f airprt services in the frm f reduced airprt (aernautical) tariff in the subsequent years.

Source: Airprts Ecnmic Regulatry Authrity f India (2010).


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able 27.6 Internatinal Cmparisn f Rail Netwrks

Million traffi c units Route kms per Route kms perper employee million population square km area

USA 15.3 747.4 23.6

China 1.6 45.5 6.4

Germany 0.7 410.9 94.9

France 2.1 466.5 54.2

Russia 2.6 598.1 4.9

India 0.9 55.2 19.3

Japan 2.2 157.5 53

Source: Indian Railways Visin 2020.

Tus, Visin 2020 aims t undertake a cmpleteverhaul f rail infrastructure and transfrm train travel(see B 27.4), and target a revenue f Rs 2,70,000 crre2

frm abut Rs 90,000 crre at present. Te visin alsprpses several measures t reduce the carbn ftprintf IR (see B 27.5). Mre imprtantly, the visin pr-pses rganizatinal restructuring f IR, which wuldinvlve separatin f infrastructure frm peratins andrerganizatin f IR n business lines that is passenger,freight, and parcel and ther auiliary services s thateach service culd be managed and measured n a prfit-centre basis.

Te key t achieving the visin and its specific gals is amassive investment prgrammeRs 14 lakh crre in verten years. Out f this, just ver 60 per cent f these funds

are meant t be generated internally, including the use fPPP initiatives. PPP is prpsed fr the develpment fwrld-class statins, setting up f rlling stck manufac-turing units, lgistics hubs, high-speed crridrs, epan-

sin and management f the etensive netwrk f OpticalFibre Cables and infrastructure prjects like new linesand Dedicated Freight Crridrs (DFC). Te remainingfunds are prpsed t cme frm the GI thrugh anAccelerated Rail Develpment Fund (ARDF). An amuntf Rs 1 lakh crre wuld be set aside frm the ARDF tclear the pending backlg f scially desirable, new lineand gauge cnversin prjects as a ne-time grant fr theGI. While the investment prpsed under the visinmay seem enrmus in view f the past trends fr IR, itcmes acrss as paltry when cmpared with China, whichis currently undertaking ne f the mst ambitius railepansins. China has earmarked $ 300 billin (Rs 14lakh crre apprimately) fr investment ver the netthree years.

As mentined abve, the visin envisages develpingand implementing new business mdels in the railwaysthrugh PPP. Hwever, the intent f prmting PPPwithin the railways needs t be backed by credible actinby the GI. Te Annual Plan fr FY 201011 envisages asmall cntributin frm PPP (nt eceeding 2.5 per centf the ttal utlay) in meeting the planned ependiture.Further, there is n cmprehensive PPP plicy fr IR.Plicies fr private sectr participatin are issued as andwhen need arises and mst f these are skewed heavily

2 Prjected by IR by assuming an elasticity f transprt t GDP f 1.25.

Box 27.4argets Set by Indian Railways Under Visin 2020

Epand rute netwrk at the rate f 2,500 km per annum t add 25,000 km f new lines by 2020. Almst the entire netwrk (barring the hill and heritage railways) t be in brad gauge. Mre than 30,000 km f netwrk t be duble/multiple lines. Mre than 6,000 km f netwrk t be quadrupled lines with segregatin f passenger and freight services int separate duble-

line crridrs. Prductin f passenger caches t g up frm the present level f 2,500 per annum t at least 5,000 per annum within the net

three years and t 10,000 per annum by 2020. arget t achieve zer accidents and zer failures in equipments. Availability n demand fr rail service.

Raise speeds f passenger trains frm 130 kmph t 160200 kmph n segregated rutes and speed f freight trains frm6070 kmph t 100 kmph.

Cmplete fur high-speed crridrs cvering 2,000 kms t prvide bullet train services at 250350 kmph and plan develpmentf eight thers.

Develp 50 wrld class Statins which cmpare with the best, internatinally.



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in favur f IR r its PSUs. Te lack f capacity building

with regard t PPP within IR and the absence f aninstitutinal framewrk fr PPP add t these prblems.Unless the GI addresses these issues and takes uprganizatinal restructuring f IR, thereby prviding abetter level playing field t private players, private sectrinvestment in railways wuld remain minimal.

Besides the implementatin f PPPs, cncerns regard-ing realizing the visin arise because the railway budget201011 des nt give a rad map fr achieving thetargets set in the visin. On the ther hand, it givesdisprprtinate imprtance t setting up f hspitals,schls, cultural centres, and drinking water plants tprvide cheap bttled water in trains and statins. Tat

the railways shuld invest in such nn-cre activities, evenif in a PPP, is irratinal; particularly at a time when itepects the GI t prvide Rs 5 lakh crre in the frmf budgetary cmmitment t the ARDF. It makes greatersense t cmpletely utsurce these activities t theprivate sectr.

Te budget als turns a blind eye twards the impera-tive f ratinalizing the prices f services rendered by IR. A White Paper presented by IR t the Parliament in

December 2009 ntes that while passenger services cn-

sume nearly 60 per cent f IRs netwrk capacity, theirshare in the traffi c earnings amunts t nly 33 per cent.Further, in the past few years, fares fr an verwhelmingmajrity f passengers rse very minimally r declined.Higher passenger earnings (see able 27.7) in these pastyears have resulted due t increase in passenger capacityin the frm f new and lnger trains, running f specialtrains t capture seasnal requirements, enhanced reserva-tin fees, and realizatin frm atkal charges. Unless, pas-senger fares are ratinalized, running a financially healthyrailway system in the lng run wuld becme diffi cult.

able 27.7 Ecnmics f Passenger Services f Indian Railways

Earnings per Cost of hauling Net earnings ontrain passenger a passenger working a passenger

km (Rs) train km (Rs) train km (Rs)

200506 322.02 454.50 132.48

200607 368.07 509.06 140.99

200708 412.22 550.97 138.75

Source: White Paper n Indian Railways; GI, Ministry f Railways(Railway Bard); December, 2009.

Box 27.5Prmting Lw Carbn Grwth: Te Indian Railways Visin

Under the Visin 2020, IR has set targets t make railway peratins envirnmentally friendly. It has claimed that infrastructure

creatin and peratin wuld nt make any draft n the envirnmental resurces. It has in fact cmmitted t ver-cmpensate theenvirnmental damage caused by transprt activities by adpting green technlgies. It prpses t review every facet f railwayperatins and infrastructure frm this angle. Te visin states that IR has already taken several measures t reduce its carbnftprint. Sme f these measures are as fllws:

New suburban trains intrduced in Mumbai with regenerative braking features saving up t 3540 per cent f the energy. Replacement f incandescent lamps with energy-saving Cmpact Flurescent Lamps (CFLs) in railway quarters thrugh free

distributin f 26 millin CFLs (fur per family) t railway emplyees, thereby reducing abut 0.14 millin tnnes f CO2

emissins per annum. Tis prject is entirely financed with the carbn credits earned under the CDM framewrk. Inductin f light-weight stainless steel caches with enhanced passenger carrying capacity and new designs f freight stck with

higher paylad t tare rati. Increased prductin f high-hrse pwer, fuel-effi cient diesel lcmtives with plans t switch ver cmpletely t the manufacture

f these lcmtives at Diesel Lcmtive Wrks.

Ging frward, the visin prpses t:

Save up t 15 per cent f energy thrugh imprved energy effi ciency in tractin, which accunts fr 87 per cent f energycnsumed by IR as well as nn-tractin use.

Induce new-generatin lcmtives and rlling stck, that use less energy and less material. Cnduct energy audits t imprve energy effi ciency in statins and ffi ces. Adpt LED lighting and the Energy Cnservatin Building Cde (ECBC). Surce at least 10 per cent f energy used frm renewable surces such as slar pwer and bimass. Prcure nly three-star r higher-rated prducts fr achieving energy effi ciency. Undertake a massive plantatin drive alng the railway tracks and in railway clnies and use grass-turfing as prtective anti-

ersin measure n the slpes f the banks alng the track.



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Urban InfrastructureUrban infrastructure did nt see any significant develp-ments. Tis was the fifth year f the JNNURM, aimed atspearheading gvernance and fiscal refrms at the lcal

gvernment level and bsting investment in urban infra-structure. But prgress has been slw. Only 16 JNNURMcities ut f 65 achieved mre than 85 per cent effectivecverage f prperties thrugh prperty ta and nlysi were able t cllect 100 per cent f the O&M csts in-curred in prviding services such as water supply thrughuser charges. Half f the cities included under this mis-sin were yet t adpt accrual-based duble accuntingsystem. Since the disbursement f funds frm the centrefr prjects prpsed by urban lcal bdies (ULBs) iscnditinal n states and ULBs achieving certain refrmtargets, the pr status f refrms has meant that nly 55

per cent f the allcated central utlay fr JNNURM fr200910 was utilized.One f the primary bjectives f JNNURM is t

attract PSP wherever pssible. Hwever, the private sectrhas been cautius in participating in urban infrastructuredevelpment. Tugh recent develpments are encurag-ing, with 68 prjects taking the PPP rute having beingapprved under JNNURM till December 2009, thequantum f private investment remains minimal. Tereare several reasns fr this. Demand-side issues such asdevelping and structuring bankable prjects cntinue tremain a challenge. Further, the peratinal and financialprfile f ULBs is pr, and regulatry and legal frame-

wrks t facilitate PPP are missing.A psitive develpment in the sectr, hwever, has been

the preparatin f service level benchmarks fr urbantransprt fr the JNNURM missin cities by the Minis-try f Urban Develpment (MUD). Tese benchmarksfcus n the etent f availability and cverage f publictransprt; quality and financial sustainability f publictransprt; pedestrian/nn-mtrized transprt (NM)safety and infrastructure facilities; Intelligent rans-prt System (IS) facilities in a city; land-use transprtintegratin; and parking systems and pllutin levels ina city.

PowerTe highlight f the year in the pwer sectr was therenewed plicy and regulatry thrust n renewable energy(RE). Te GI annunced the Natinal Slar Missin,

which aims t scale-up slar capacity t 20GW by 2022(see able 27.8) and has issued several guidelines twardsits implementatin. Te missin aims t indigenuslydevelp and demnstrate a range f slar technlgiesacrss different scales and create a leadership psitinin manufacturing f slar pwer-related cmpnents.Since slar pwer technlgy is nt yet cst-effectiveand at present is unlikely t find willing buyers, themissin creates a demand fr slar pwer by stating thatthe Natinal ariff Plicy, 2006 wuld be mdified tmandate that state electricity regulatrs fi a share fr slarpwer under the eisting Renewable Purchase Obligatin

(RPO) fr distributin utilities (DISCOMs). Tis RPOmay start with 0.25 per cent f the ttal pwer purchasein the first phase f the missin and culd g up t3 per cent by 2022.

One f the main features f this missin is a bundlingscheme where the 1000 MW f slar capacity additinplanned till 2013 will be bundled with equivalent pwerfrm the cheaper unallcated quta f NPC cal-basedstatins (that is pwer nt cmmitted t any state andavailable fr allcatin thrugh GIs discretin) andselling the bundled pwer t DISCOMs at rates fied bythe CERC. NPC Vidyut Vyapar Nigam (NVVN) hasbeen appinted as the ndal agency fr purchasing this

pwer frm slar pwer develpers (SPDs) and selling itt the DISCOMs. Te missin als prvides generatin-based incentives (GBI) t rf-tp and small slar pwerplants cnnected t distributin netwrks belw 33 kV.Te GBI shall be equal t the difference between the tariffdetermined by the CERC and the base rate, which will beRs 5.50 per kWh in the first fiscal year f cmmissiningt be escalated by 3 per cent every year.

Hwever, this ambitius missin has many deficien-cies. Fr instance, the allcatin f lw-cst NPCpwer t prmte slar, des nt reduce the high cst fslar pwer, as argued by the missin. It nly creates a

able 27.8 argets fr Slar Pwer Capacity Additin Under Te Natinal Slar Missin

Phases Target for grid solar power including roof-top Target for off-grid solar applications

Phase I (201013) 1,0002,000 MW 200 MW

Phase II (201317) 4,000 MW (10,000 MW based n enhanced 1,000 MWinternatinal finance and technlgy transfer)

Phase III (201722) 20,000 MW 2,000 MW

Source: Jawaharlal Nehru Natinal Slar Missin.


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bankable single buyer fr slar prjects at tariffs deter-mined by CERC. Further, since the payment t be madet SPDs by NVVN hinges entirely n the payment madeby DISCOMs, unless SPDs have assurance f payment

security in terms f NVVN bearing payment risks, inves-trs may nt be cmfrtable f lending mney t theseprjects. Several ther issues can be pinted ut in theguidelines prpsed by the GI fr giving effect t thismissin. But the key challenge t the achievement fthe targets laid dwn in the missin is the absence f astrategy t prmte the develpment f slar pwerbeynd 2013.

Besides slar pwer, the GI has taken steps twardsharnessing the s far untapped wind energy ptential(estimated at 37636 MW) and increasing the generatinf wind energy. In December 2009, it annunced GBIfr grid-cnnected wind prjects (cmmissined after theannuncement f this scheme but n r befre 31 March2012) at Rs 0.50 per unit f wind energy fed int the gridfr a perid nt less than fur years and a maimum peridf 10 years. Develpers can avail either GBI r accelerateddepreciatin (AD) f up t 80 per cent f prject cst inthe first year under the Incme a Act. Te GBI will beapplicable t a maimum capacity f 4000 MW duringthe remaining perid f the Eleventh Plan.

Te abve initiatives f the GI were backed byseveral cncessins t slar and wind pwer prjects inthe budget fr FY 201011 alng with ther incentivest encurage the uptake f clean technlgies (see B

27.6). Te Natinal Clean Energy Fund (NCEF), createdby a clean energy cess at Rs 50 per tnne n dmesticand imprted cal fr funding research and innvativeprjects in clean energy technlgies, has the ptentialt make a significant impact n the develpment f

clean technlgy. aking the FY 20089 level f calprductin and imprt (551.95 M), the cess will gener-ate a minimum f Rs 2,760 crre every year. Since thecal cnsumptin is epected t rise at the rate f 7 t 8

per cent annually, at the least, the annual amunt in thisfund is likely t grw. Hwever, apprpriate utilizatin fthis fund thrugh well-defined areas f investment, eligi-bility criteria fr seeking supprt, targets, and deliverableswuld be necessary t achieve its bjectives.

Te abve plicy-related initiatives have been well-supprted by the regulatry framewrk. Te CERC hasntified tariff regulatins fr electricity generated frmRE surces (see B 27.7). Based n these regulatins,it has issued generic tariff fr varius RE surces fr200910 and 201011. It has als laid dwn a framewrkfr trading in Renewable Energy Certificates (RECs). Tismechanism intrducing paper purchase f RE wuldhelp DISCOMs t meet their RPO withut physicalpurchase f RE, wuld help vercme the prblem fmismatched demand and supply f RE in sme states.

On the capacity additin frnt, the shrtage f genera-tin capacity did nt ease. Te capacity additin target fr200910 is 14507 MW. Against this, nly 7510 MW hasbeen cmmissined up t February 2010. Te peak andenergy deficit f pwer was 12.6 per cent and 9.9 per cent,respectively till January 2010. Te CEA has assessed thatagainst planned capacity additin f 78,700 MW fr theEleventh Plan, a capacity f 18235 MW has been cm-missined till 21 Octber 2009 and a capacity aggregating

t 44139 MW is likely t be cmmissined with a highlevel f certainty during the remaining Plan perid. Tusa ttal capacity f 62,374 MW is likely with high levelf certainty. In additin a capacity f 12590 MW maymaterialize n a best-effrt basis during this Plan perid.

Box 27.6Prmting Lw Carbn Grwth: Te Incentives fr Clean Pwer Generatin

Establishment f a Natinal Clean Energy Fund fr funding research and innvative prjects in clean energy technlgies.Crpus f the fund t be built thugh a cess f Rs 50 per tnne n dmestic and imprted cal.

Cncessinal custms duty f 5 per cent t machinery, instruments, equipment and appliances etc. required fr the initial settingup f phtvltaic and slar thermal pwer generating units.

Eemptin frm ecise duty fr slar phtvltaic and slar thermal generating units. Eemptin frm basic custms duty and special additinal duty fr grund surce heat pumps used t tap ge-thermal energy. Eisting eemptin frm ecise duty n specified inputs required fr the manufacture f rtr blades fr wind energy generatrs

t be etended t cver mre inputs. Ecise duty n LED lights reduced frm 8 per cent t 4 per cent at par with Cmpact Flurescent Lamps. Cncessinal ecise duty f 4 per cent fr sleckshaw (slar-electric rickshaw), a prduct develped by CSIR t replace manually

perated rickshaws. Eemptin frm ecise duty fr key parts and cmpnents f this rickshaw. Eemptin frm basic custms duty fr imprt f cmpstable plymer.

Source:Unin Budget FY 201011.


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Te GI mdified the mega pwer plicy which etendsvarius fiscal benefits t large pwer prjects (fr thermalprjects abve 1000 MW, ecept in Jammu and Kashmirand the Nrth-Eastern states where it is abve 700 MW).Sme prvisins f this plicy were becming diffi cultt fulfill in view f the changes in the sectr in recentyears. Fr eample, many private sectr prjects culd nt

meet the earlier mandatry cnditin f sale f pwer tmre than ne state fr getting mega pwer status, sinceDISCOMs are mandated t prcure lng-term pwerfrm private prjects nly thrugh tariff-based cmpeti-tive prcurement (effective frm 2005).Tis cnditin hasnw been remved. Other imprtant changes t the pli-cy include the lwering f the threshld capacity fr hydrpwer plants lcated in Sikkim and the Nrth-Easternstates frm 500 MW t 350 MW. Tis will facilitate hydrbased capacity additin in these states where hydr-pwerprjects f 57085 MW have been alltted fr implementa-tin but are yet t be taken up fr cnstructin.

On the fuel supply side, supply cnstraints fr dmestic

cal availability remains cnstrained and the situatin isunlikely t imprve ging frward. Cnsequently, publicand private sectr entities have embarked upn surcingimprted cal as a means t bridge the deficit. Againstthis backdrp, the GIs apprval fr the frmatin f aSPV, namely Internatinal Cal Ventures Ltd. (ICVL) frsecuring metallurgical cal and thermal cal assets verseasby PSUs, including Cal India Ltd. is a psitive mve andwuld help ease the shrtage f cal fr pwer prjects as

well. Aspects like the functining f ICVL and strength fpersnnel are still being finalized.

speed up prductin frm captive cal blcksand attract serius develpers, the GI has prpsed tintrduce a cmpetitive bidding prcess fr allcatingsuch blcks in future. Despite the large number f captivecal blcks alltted t the private sectr ver the past 10

years, nly a few cal blcks have cmmenced prduc-tin. It is estimated that the captive cal blcks allcatedfr pwer prjects have cal reserves f 27 billin tnnes,abut 25 per cent f the ttal prven cal reserves. Cm-petitive bidding is als epected t minimize the cst fprductin and supply f cal. It is, thus, necessary thatthe bidding criteria shuld be linked t the least cst fpwer generated frm the blck and nt the highest bidvalue ffered fr the blck. Hwever, till suffi cient datan the quantity and quality f cal are available fr theblcks, the maimum prpsed prductin r prduc-tin sharing frmula may be adpted fr auctining as asecnd-best apprach.

Te GI has als annunced the creatin f a regulatrfr the cal sectr. With an increasing number f privateplayers participating in the cal mining business, the needfr an independent regulatr has lng been felt necessaryfr creating a level playing field in the sectr. It will alsfacilitate reslutin f issues like ecnmic pricing f cal.Hwever, the functinal effectiveness f the regulatryauthrity will critically depend n what kind f jurisdic-tin it is given.

Box 27.7erms and Cnditins fr ariff Determinatin fr Electricity Generatin frm Renewable Energy Surces

Te CERC has ntified tariff regulatins fr electricity generated frm RE surces. Te salient features f these regulatins are

as under: Cntrl Perid f three years, ecept fr slar prjects fr which capital cst shall be reviewed every year in view f technlgical

advancement. ariff Perid is 13 years fr RE technlgies; ecluding small hydr belw 5 MW (35 years), Slar Phtvltaic (PV) and Slar

Termal (25 years) as these technlgies need handhlding supprt fr a lnger time. Tirteen Years ariff Perid cvers the debt repayment bligatin; beynd the tariff perid, RE prject is t cmpete. RE plants, ecept fr bimass pwer plants with installed capacity f 10 MW and abve, and nn-fssil fuel based c-generatin

plants t be treated as must run pwer plants and nt t be subjected t merit rder despatch principles. Prvisin fr single part tariff cnsisting f the fied cst cmpnents f return n equity, interest n lan capital, depreciatin,

interest n wrking capital, and peratin and maintenance epenses. Prvisin fr generic levellized tariff based n su mtu petitin fr RE surces such as wind energy, small hydr pwer, bimass

pwer, nn-fssil fuel c-generatin, and slar PV and slar thermal. Prvisin fr prject-specific tariff fr municipal slid waste prjects, slar PV and slar thermal pwer prjects (if the develper

s pts), hybrid slar thermal pwer plants, and bimass prjects ther than thse based n rankine cycle technlgy applicatin

with water-cled cndenser.Source: Economic Survey of India (200910) and Central Electricity Regulatry Cmmissin (erms and Cnditins fr ariffDeterminatin frm Renewable Energy Surces) Regulatins (2009).


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In the case f natural gas, the shrtage cntinued despitean increase f 40 per cent in dmestic gas prductinduring the year, due primarily t the cmmencement f gasprductin frm the D6 blck at the KrishnaGdavari

(KG) basin, prmted by Reliance Industries Ltd. (RIL).Hwever, availability f gas suffers frm the lack f clarityn the lng-term plicy fr gas allcatin. Under thecurrent plicy, fuel supply agreements are fr a maimumf five years.

ConclusionTe investment climate in the varius infrastructure sec-trs in India have undubtedly imprved. Te challenges

in implementing prjects in each sectr are immense, butare gradually being tackled. While sectrs such as natinalhighways and pwer cntinue t get the desired attentin,it is time that urban infrastructure gets undivided atten-

tin. Te high degree f urbanizatin accmplished in ashrt time has epsed the cnstraints f cities and twnsin cping with related service prvisin. Unless the gv-ernance and prvisin f urban services is imprved dras-tically, cities will nt be able t sustain ecnmic grwth.Terefre, ging frward, infrastructure develpment hast fcus n the urban sectr t eliminate infrastructure asa bttleneck t ecnmic grwth.

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