Thursday, February 25, 2010

Core industries and infrastrucutre Services show signs of recovery with step up in overall industrial growth

LEGISLATIVE, ADMINISTRATIVE AND EXECUTIVE EFFORTS INITIATED TO REDUCE INFRASTRUCTURE DEFICIT AND FASTER PROJECTS IMPLEMENTATION

  


Economic Survey 2009-10




Core industries and infrastructure services, led by the robust growth momentum of telecom services and spread across power, coal and other infrastructure like ports, civil aviation and roads have shown signs of recovery with the pick-up in overall industrial growth, and easing of supply bottlenecks in certain sectors along with recovery of demand in others. The Economic Survey 2009-10 tabled in Parliament today mentions that core industries like power, coal and other infrastructure like ports and roads are also reviving. Available evidence points to a steady revival of flow of investible resources. The Survey emphasised the need to develop infrastructure to compliment and sustained the economic growth momentum. The legislative, administrative and executive efforts are on to minimize the infrastructure deficit, ameliorate bottlenecks in completion of projects and nurture core industrial intermediates and infrastructure services, the Economic Survey adds. In line with, the stimulus measures announced by the National Authorities Worldwide to combat the economic slowdown, the Union Budget for 2009-10 substantially increased allocation for many infrastructure sectors over the Budget estimates for the previous years especially for National Highways Development Programme (NHDP), Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Accelerated Power Development and Reform Programmes (APDRP).



In the Power Sector, the Survey states that the growth of power generation during April-December 2009 was about 6% as compared to about 2.7% in the corresponding period in 2008. Overall, electricity generation by power utilities during 2009-10 has been targeted to go up by 9.1% to 789.5 billion KWh. The Survey further adds that despite modest growth in electricity generation, the peak deficit came down significantly in 2008-09 on account of slowdown in growth of peak demand. During April-December 2009, the peak and total energy deficit came down considerably to 12.6% and 9.8% respectively from 13.8% and 10.9% during the corresponding period in the previous year. The projects under execution for capacity addition during Eleventh Five Year Plan have made steady progress. On account of revision in the definition of commissioning of thermal projects, the capacity addition target for the year 2008-09 was revised as 7,530 MW, against which a capacity 3,454 MW was added up to March 31, 2009. The Survey states that the main reasons for under achievement of capacity addition targets during 2007-08 and 2008-09 were delayed and non-sequential supply of material by suppliers, shortage of skill man-power for construction and commissioning of projects and contractual disputes between project authorities, contractors and their sub-vendors. With a view to speed up the projects for capacity addition, the Ministry of Power has adopted a monitoring system of capacity addition at different levels. Under the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), 69,963 villages have been electrified and connections have been released to 88.8 lakh BPL households up to 15th January this year.



The Survey states that with 15 new oil and gas discoveries during the current financial year, domestic availability of oil and natural gas is expected to improve. During 2009-10, the projected production of crude oil is 36.7 millions metric tonnes (MMT), which is about 11% higher than the actual crude oil production of 33.5 MMT in 2008-09. The Survey mentions that this is primarily due to increase in crude oil production from Rajasthan and the Krishna Godavari (KG) deep water. The projected production of natural gas including coal bed methane for 2009-10 is 50.2 billion cubic metric tonnes (BCM), which is 52.8% higher than the actual production of 32.8 BCM in 2008-09. The domestic supply of crude oil remained 34 MMT and the natural gas at about 32 BCM during the past 5 years, the Survey adds.



Regarding the Coal Sector, the Survey mentions that the growth rate in the production of raw coal increased from 6% during 2003-04 to 2007-08 to 8.4% in 2008-09,due to enhanced production by all the stakeholders especially captive blocks and large PSUs like Coal India Ltd. (CIL) and Singareni Collieries Company Ltd. (SCCL). Raw Coal production during April-November 2009 was 325.87 million tones as against 289.69 million tonnes in the same period of the previous year, registering a growth of 12.5%. Coking coal production for the period was 25.60 million tonnes against 18.85 million tonnes of the same period in the previous year. The Government has approved formation of a Special Purpose Vehicle (SPV), namely International Coal Ventures Limited for securing metallurgical coal and thermal coal assets overseas by PSUs including CIL, the Survey adds.



In the Road Sector, the Survey states that in 2009-10 as against the stipulated target of developing about a 3,165 km of national highways under various phases of the National Highway Development Project (NHDP), the achievement up to end November 2009 has been about 1,490 km. Similarly, as against the 2009-10 target of about 9,800 km for awarding projects under various phases of the NHDP, projects totaling a length of about 1,285 km have been awarded up to end November 2009. With a view to expedite the progress of the NHDP, the Ministry of Road Transport and Highways has revised the strategy for implementation of the programme. Under this, the Ministry has set a target of completion of 20 km of National Highways per day, which translates to 35,000 km at the rate of 7,000 km per year during 2009-14.



The opening of the Telecom Sector has not only led to rapid growth in subscriber base, but has also significantly helped in maximization of consumer benefits, particularly in terms of price discovery, following the forbearance approach in tariffs. From only 54.6 million telephone subscribers in 2003, the number increased to 429.7 million at the end of March 2009 and further to 562 million as of October 31, 2009 showing an addition of 96 million subscribers during the period from March to December 2009. With 525.1 million wireless connections, Indian telecom has become the second largest wireless network in the world. Approximately, 85% of the Eleventh Five Year Plan target of 600 million connections has already been achieved at the halfway point. However, the Survey adds, wire line connections declined in the recent year. The Ministry of Telecommunications has identified new thrust areas for growth of telecom sector like introducing of 3 G telecom services, mobile number portability, value added services and indigenous manufacturing of telecom equipments.



Regarding improvement in Urban infrastructure including basic civic services, the Survey states that two more cities, namely, Tirupati and Porbandar were included as Mission Cities during 2009, taking the total number of selected cities to 65, under Mission mode approach of JNNURM. The Mission has achieved significant progress integrating reforms in the urban sector. So far, 38% of state level reforms, 55% of urban local bodies reforms and 54% of optional level reforms have been achieved. The Mission cities have agreed to include promotion of PPP through appropriate policies and projects. Under JNNURM, a National Mission Mode Project under the National e-Governance Plan is being implemented in 35 Mission cities with more than one million population across 15 states on a pilot basis.



Enlisting the challenges for raising capacity creation in some critical infrastructure sectors to the desired level, the Economic Survey 2009-10 states that initiatives required are multifaceted and includes those promoting flow of domestic and global resources, facilitating formulation, approval, financial closure and awards of projects and easing implementation hurdles. It says “the need of the hour is to expedite, synergize and consolidate these efforts-legislative, administrative and executive, so as to sufficiently and promptly meet the demands of increasing population and urban migration and faster economic growth”.

No comments: