Robust infra needed for budding industries
In order to create a ten trillion-dollar economy by 2032 India needs a robust and resilient infrastructure, says the Economic Survey 2018-19, tabled in parliament on 4 July 2019 by a Finance and Corporate Affairs Minister Nirmala Sitharaman.
While India needs to build a robust industry with a buoyant and resilient infrastructure, public investment cannot fund the entire infrastructure investment requirements of the country.
Therefore, the real challenge lies in bringing adequate private investment across the country with the collaboration of public sector.
The Survey goes on to observe that a robust and resilient infrastructure is fundamental and essential for budding industries.
While India has invested in its infrastructure over the years, the challenge is to mobilize adequate investment in infrastructure sector which runs into several trillions of dollars.
The investment gaps in the infrastructure would have to be addressed through various innovative approaches with the collaboration of both public and private sector. Private investment in infrastructure has come mainly in the form of PPPs.
One of the challenges facing this sector is to devise a comprehensive resolution and settlement option for projects which are either stuck-up mid-way or wherein the arbitral disputes and claims have not been settled. The need is to establish an institutional mechanism to deal with time-bound resolution of disputes in infrastructure sectors.
The survey highlights:
Subdued manufacturing activities in Q3 and Q4 due to various reasons like liquidity crunch, slower credit flow etc has moderated the industrial growth rate in terms of Index of Industrial Production (IIP) during 2018-19 to 3.6% as compared to 4.4% 2017-18, noted the survey tabled on 4 July 2019.
Nevertheless, the eight-core infrastructure supportive industries have achieved the overall growth rate of 4.3% during 2018-19 similar to 2017-18.
The Survey further observes that the Government has initiated a number of measures such as Start-up India, Ease of doing Business, Make in India, Foreign Direct Investment Policy reforms in crucial sectors to accelerate higher manufacturing growth.
India has considerably improved its ranking to 77th position from the previous 100th among 190 countries, in the World Bank Ease of Doing Business Report in 2018.
The Government is playing a proactive role in investment promotion through a liberal FDI policy.
During 2018-19, total FDI equity inflows were US$44.36 billion, off from US$44.85 billion during 2017-18.
Building sustainable and resilient infrastructure has also been given due importance with the formulation of sector specific flagship programmes such as SAUBHAGYA, PMAY etc.
The Survey states that there is great scope for improvement in performance of Central Public Sector Enterprises (CPSEs) which play a significant role in Indian economy. Out of 257 operational CPSEs, 174 are making profits and two are at no profit and no loss.
The Survey further notes that the rate of growth of Gross Capital Formation in industry has registered a sharp rise from (-) 0.7% in 2016-17 to 7.6% in 2017-18, showing upward momentum of investment in industry.
Also, according to RBI, the growth in Gross Bank Credit Flow to the industrial sector has increased by 6.9% in March 2019 compared to increase of 0.7% in March 2018.
The Government has taken several industry specific reform initiatives since 2014 that have significantly improved the overall business environment.
In order to promote innovation and entrepreneurship among enterprising youth, 16,578 new start-ups were recognized as on March 2019 across 499 districts. Steps have been taken for easing regulations such as exemption from Income Tax on investments raised by Start-ups etc.
The Government is playing a proactive role in investment promotion through a liberal FDI policy. With the aim of boosting investment in infrastructure, National Investment and Infrastructure Fund has been created with a capital of approximately Rs.400 billion to provide investment opportunities to commercially viable projects.
The Government has made various key announcement for faster growth of MSME sector and for promoting ease of doing business that included ‘in-principle approval’ for loans up to Rs.1 crore within 59 minutes through online portal.
Interest subvention of 2% for all GST register MSMEs on incremental credit up to Rs.1 crore is also being provided and will be in operation for a period of two financial years 2018-19 and 2019-20 with an allocation of Rs.975 crore.
The Government has undertaken a number of schemes and programmes like the Prime Minister’s Credit Guarantee Trust Fund for Micro and Small Enterprises, Credit Linked Capital Subsidy Scheme for Technology Up-gradation, Scheme of Fund for Regeneration of Traditional Industries and Micro and Small Enterprises Cluster Development Programme for the establishment of new enterprises and development of existing ones.
The Survey notes that highways construction in the country touched a new high of 30-km per day in 2018-19 as to about 12-km per day in 2014-15.
This was achieved through proactive policies that include process streamlining, better inter-ministerial coordination, steps to address languishing projects, innovative project financing leveraging both private and public funds, streamlining land acquisition processes etc. The investments in the sector rose from Rs 51914 Crore in 2014-15 to Rs158839 cores in 2018-19.
Some of the major outcomes in the road sector during the period 2014-15 to 2018-19 include construction of Eastern and Western Peripheral Expressways around Delhi, Delhi Meerut Expressway, Chenani-Nashri tunnel in Kashmir, Dhola–Sadiya Bridge over Brahmaputra in Assam.
The Survey observes that India’s scheduled domestic air transport for passenger and goods rose by 14% and 12%, respectively, in 2018-19. Domestic passenger traffic in Revenue Passenger KM (RPK) recorded the fastest growth in the world at about 20% for over 50 consecutive months up to December 2018.
New Greenfield airports are being developed very fast. At the end of 2018-19, 107 airports were providing scheduled airlines operation.
Under the UDAN (Ude Desh Ka Aam Nagrik) Scheme for regional air connectivity, a total of 719 routes have been awarded, 182 of which are operational. The scheme has provided connectivity to 23 unserved airports against the aim to operationalize 100 airports by 2026-27.
Domestic air cargo grew by 12.1% in 2018-19, with cargo handled reaching 3.6 MMT.
The first National Air Cargo Policy, released in January 2019, aims to take cargo handling to 10 MMT by 2026-27. High airport tariffs, royalty, shortage of skilled manpower, recourse to overseas suppliers of Maintanance, Repair and Overhaul (MRO) facilities, high and unpredictable change in global crude oil prices and high taxes on aviation turbine fuel are some of the challenges faced by the sector, points out the Survey.
As on 31 January 2019, India has a fleet of 1,405 ships with Dead Weight Tonnage (DWT) of 19.22 million (12.74 million GT). Ports handle 90% of EXIM cargo by volume and 70% by value.
Port capacity expansion is accorded highest priority under projects like Sagarmala, Project Unnati etc.
The Shipping Ministry has taken many steps towards facilitating Ease of Doing Business. These include steps for reducing dwell time and transaction cost at major ports.
Inland waterways are being promoted as cheaper and more environment friendly modes of transport. Efforts are on to develop a waterways route to the North Eastern states through the Indo Bangla Protocol Route.
The Survey notes that total telephone connections in India rose to 118.34 crore in 2018-19 from just 93.3 crore in 2013-14, registering a growth of 26.84%, of which 51.42 crore connections are in the rural areas.
Wireless telephone constitutes 98.17% of all subscriptions.
The overall tele-density in India stands at 90.10%, the rural tele-density being 57.50% and urban tele-density being 159.66% at the end of March 2019.
The mobile industry in India has witnessed exponential growth over the last few years. As per a GSMA report, the Mobile industry supports about 6.5% of India’s GDP, and is expected to reach 8.2% by 2020.
In 2018, mobile technologies and services generated 4.6% of GDP globally, a contribution that amounted to US$4.8 trillion (4.8% of GDP) and also supported a total of 32 million jobs (directly and indirectly)
Further ahead, 5G technologies are expected to contribute US$2.2 trillion to the global economy over the next 15 years, with key sectors such as manufacturing, utilities and professional/financial services benefiting the most from the new technology.
The 5G has been conceived as a foundation for expanding the potential of the Networked Society. The Government has constituted High Level 5G India 2020 Forum to articulate the Vision of 5G in India and submitted its report on “Making India 5G Ready” in August 2018.
The transformational impact of M2M/IoT for the common people will be realized through transformation of the way services are designed and how they utilize information to meet the needs of citizens more efficiently and effectively.
During 2018-19, FDI flow to telecom sector touched US$2.67 billion, more than double of US$1.3 billion in 2015-16.
Petroleum and Natural Gas
The Survey has observed that Government aims to “Reform, Perform and Transform” the energy sector of the country by achieving self-sufficiency.
Petroleum & Natural Gas Ministry has undertaken a series of reforms and new initiatives. Some of these include Hydrocarbon Exploration Licensing Policy (HELP)/ Open Acreage Licensing Policy (OALP), Discovered Small Field (DSF) Policy, Policy to Promote and Incentivize Enhanced Recovery Methods for Oil and Gas etc.
The Government has taken several decisions this year with the view to promote exploration, early monetization, incentivize production, streamline procedure and promote ease of doing business.
Pradhan Mantri Ujjwala Yojana was launched with the objective of providing LPG connections to five crore women belonging to the ‘Below Poverty Line’ families. More than 7.189 crore LPG connections have been released under this scheme as of 31 march, 2019.
Commendable progress has been made in generation and transmission of electricity. The installed capacity has increased from 3,44,002 MW in 2018 to 3,56,100.19 MW in 2019. Total generation of energy during 2018-19 was 1376 BU (including imports and renewable sources of energy).
As on March 2019, 2.62 crore households have been electrified since the launch of SAUBHAGYA scheme (Pradhan Mantri Sahaj Bijli Har Ghar Yojna).
The Real Estate Regulation and Development Act, 2016 (RERA) was brought in to ensure regulation and promote reals estate sector in an efficient and transparent manner and to protect the interest of home buyers.
Pradhan Mantri Awas Yojana (Urban) was launched on 25 June 2015 with the objective of providing housing facilities to all the eligible families/beneficiaries by 2022. So far 4,427 cities/towns have been included under PMAY (U).
Smart Cities Mission was launched in June 2015 for a 5-Year period with the objective of promoting cities that provide core infrastructure and give a decent quality life to its citizens. Under the SCM, all 100 cities have incorporated Special Purpose Vehicles, City Level Advisory Forums and appointed Project Management Consultants.
The first framework on ‘Ease of Living’ Index for cities was launched in June 2017 with the objective of framing an index to enable a shift to data driven approach in urban planning and management and promote healthy competition among cities. The Ease of Living Index 2019 was introduced with more focus on outcomes. fiinews.com