UNIT 13 INFRASTRUCTURE

Structure
13.0 Objectives
13.1 Introduction
13.2 Concept and Meaning of Infrastructure
13.3 Characteristics of Economic Infrastructure
13.4 Role of Infrastructure in the Economy
13.5 Policies and Performance of the Economic Infrastructure
13.5.1 Transport Infrastructure
[Link] Roadways
[Link] Railways
[Link] Seaports and Airports
13.5.2 Energy Infrastructure
13.5.3 Communications
13.5.4 Banking Infrastructure
13.6 Growth Rates of the Economic Infrastructure
13.7 Inter-State Disparities in Infrastructure Stocks
13.8 Components of Social Infrastructure in India
13.8.1 Health
13.8.2 Education
13.8.3 Other Areas
13.9 Assessment of Social Infrastructure Performance
13.10 Policies for Social Infrastructure Development
13.11 Implementation Issues
13.12 Let Us Sum Up
13.13 Exercises
13.14 Key Words
13.15 Some Useful Books
13.16 Answers or Hints to Check Your Progress Exercises

13.0 OBJECTIVES
After going through this unit, you will be able to:

• explain the meaning, concept and characteristics of infrastructure;

• establish the linkage between economic and social infrastructure and
development;
• assess the performance of various constituents of infrastructure in the
wake of economic reforms;
• evaluate the inter-state disparities in economic infrastructure; and
• identify the issues and problems faced in the implementation of
infrastructure projects.

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Sectoral Performance-II
13.1 INTRODUCTION
Infrastructure plays an important role in the development of an economy. The
adequacy or lack of it determines an economy’s success or failure in
increasing production, expanding trade, reducing poverty and improving
environmental conditions. Infrastructure is of two types: economic and social.
In this unit, we shall discuss the performance of various components of
economic and social infrastructure, their growth and trend, inter-state
disparities and implementation related issues. Let us begin with stating the
concept and meaning of infrastructure.

13.2 CONCEPT AND MEANING OF

INFRASTRUCTURE
Infrastructure sectors are the backbone of a national economy. It has been
commonly opined that infrastructure development is closely related to
economic growth and poverty reduction. Therefore, development plans of all
countries, particularly those of the less-developed countries, are aimed at the
development of infrastructure sectors through sector specific policies, which,
in turn, generate sustained economic growth.

The word “infrastructure” is defined in dictionary as “the underlying

foundation or basic framework” (See Webster’s Ninth Collegiate Dictionary,
1985, p. 621). By this definition, infrastructure is the basis for development.
In other words, infrastructure is taken as the foundation on which the factors
of production interact in order to produce output. Infrastructure, in the general
sense, is taken to refer to large-scale public systems, services, and facilities
that are necessary for economic activity. Broadly, infrastructure includes all
public services from law and order through education and public health to
transportation, communications, power and water supply, as well as irrigation
and drainage systems.

Infrastructure can be classified as ‘economic infrastructure’ and ‘social

infrastructure’. Economic infrastructure comprises of sectors that have capital
investments on hardware as a significant component. On the other hand, social
infrastructure sectors like health, education etc. have less significant capital
investments. Transport sector (Roads, Railways, Airports, Seaports), Energy
facilities (Power, POL infrastructure, terminals, pipelines), Communication
facilities (Telecom, Posts), and Banks are the important constituents of
economic infrastructure.

13.3 CHARACTERISTICS OF ECONOMIC

INFRASTRUCTURE
There are five important characteristics of infrastructure services. They:

a) are generally natural monopolies;

b) have large upfront costs and long payback periods;
c) involve lumpiness or indivisibility of investments;
d) are marked by presence of externalities, and
e) sunk costs.
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Natural monopoly is the situation where the provision of a good or a service Infrastructure
has economies of scale, which are realised most when a single firm produces
the entire output. If a private firm provides these services, it charges high
prices and makes huge profits. Hence, Government intervention is required
either to regulate the private firm or to replace it. Large upfront costs and long
payback periods associated with infrastructure provision make it difficult to
finance and manage. Investment in infrastructure is characterised by
lumpiness or indivisibility, which implies that large amounts are required at a
time. Externalities occur if the benefits or costs of producing or consuming a
good affects person other than the individuals involved in a transaction. In
fact, this reveals the “public good” nature of infrastructure. Public good
possesses two characteristics viz., ‘non-rival’ and ‘non-exclusive’. Non-
rivalry implies that infrastructure can be enjoyed by an extra person without
reducing the enjoyment it gives others. Non-exclusiveness implies that people
cannot be excluded from consuming the good. Sunk costs are the costs that
have already been incurred and which cannot be recovered to any significant
degree. Sunk costs can be taken as the opposites of incremental costs.
Incremental costs are the costs that will change due to the proposed course of
action. Only incremental costs are relevant to a decision. Thus, large volumes,
sunk costs, long periods of amortisation, and prolonged project development
makes the infrastructure sector investment highly risky. In addition to these
main characteristics, infrastructure services have low elasticity of demand. It
implies that the demand for these services is not much affected by the prices.

13.4 ROLE OF INFRASTRUCTURE IN THE

ECONOMY
Economic Infrastructure produces services that directly facilitate and are basic
to the carrying out of a wide variety of economic activities. Infrastructure
contributes to development both directly and indirectly. The output or the final
products of different segments of infrastructure is the direct effect.
Infrastructure’s indirect contribution is as an intermediate input that enhances
the productivity of all inputs of different sectors. For example, the quality of
labour is enhanced by human capital improvements. Similarly, productivity of
physical capital is improved by power and transportation etc.

The linkages between economic infrastructure and development are as

follows:

• Infrastructure lowers the cost of producing a given level of output or,

alternatively, can increase the amount of output produced by all other
inputs for a given cost.
• Infrastructure enables markets to work better. Transactions are made less
costly and this increases the benefits of trade. For example, advances in
transport and communications have considerably lowered storage costs by
permitting producers to respond rapidly to changing consumer demands
even in international trade. (this is referred to as “modern logistics
management”).
• Unit costs tend to rise due to unreliable or inaccessible public
infrastructure. Both small and big firms spend a significant portion of their
expenditure on buying infrastructure services and suffer when these are
not available. Electricity shortage has been a notorious constraint faced by
expanding business units.
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Sectoral Performance-II
13.5 POLICIES AND PERFORMANCE OF THE
ECONOMIC INFRASTRUCTURE
13.5.1 Transport Infrastructure
The development of transport infrastructure plays an important role in the
growth process through increasing mobility of resources and increasing factor
productivity. Transport infrastructure saves time and decreases the cost of
transportation, and, thereby, helps both the rich and the poor. Transport
development in rural areas strengthens linkages between towns and the
countryside. Along with irrigation, it helps adoption of new technology by
reducing the cost of inputs and marketing of outputs. It helps the rural poor by
increasing their accessibility to schools and health centres and enables them to
obtain non-farm employment in far-away places. In India, the share of the
transport sector in Gross Domestic Product in 2003-04 was 5.55 per cent
(calculated at 1993-94 prices). Roads, Railways, Airports, and Seaports are
the infrastructure constituents of Transport Sector.

Each of these constituents of Transport Infrastructure is highlighted in the

following paragraphs.

[Link] Roadways

Road transportation carries 85 per cent of the passenger and 70 per cent of the
freight traffic. Roads are divided into five categories for administrative
purposes. They are National highways, State highways, major district roads,
other district roads and village roads. Highways, both national and state,
perform main mobility function while the other roads provide accessibility to
meet social needs besides the means to transport rural produce to the markets.
Highways constitute only 2 per cent of total road length in the country but
account for 40 per cent of traffic. The Central Government is responsible for
the maintenance of National highways, and State Government looks after
other roads.
Main features of road transportation in the country are:
a) Till recently, there has not been much improvement in the national
highways development as much of the development is taking place in
building rural access roads, which provide connectivity to villages.

b) Poor quality of main roads: Highways have not been keeping pace with
the traffic growth. Poor quality of roads has become a main factor for
deteriorated riding quality, congestion and slow average speeds.

Thus, poor quality and inadequate growth of highways, has been causing
transportation costs and economic losses which, in turn, are resulting in
erosion of international competitiveness of Indian firms. Road congestion,
existence of number of railway level crossings, and octroi posts are the other
factors contributing to the economic losses that occur due to bad conditions of
roads.

After the introduction of the liberalisation policies in 1991, a number of policy

measures have been brought into effect. The National Highways Act was
amended in 1995 to allow private sector participation. The NHAI (National
Highways Authority of India) has been mandated to implement the National
Highways Development Project comprising strengthening and upgrading to a
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four-lane status of about 13,000 km of high-density corridors. Norms for Infrastructure
foreign investment in the road sector have been liberalised. Funds have been
made available to the NHAI for its capital base through a tax on motor spirit
and cess on diesel. Plans for further improvements in Highway development,
including provision of Expressways linking the busiest corridors are being
drawn up.

[Link] Railways

Indian Railways (IR) has been playing a key role in integrating the country
from the economic perspective, railway services are intermediate inputs to
production; any reduction in these input costs raises the profitability of
production. For domestic firms to be competitive in the world, the cost of
infrastructure – among them prominently, the cost of transport services – also
has to be competitive with that in other countries. Railways provide energy
efficient form of transportation compared to roads. By the end of year 2004,
the network of Indian Railways was spread over 63,221 route kms. Out of this
network, 46,807 route kms are Broad-gage, 13,290 route kms are Metergauge
and 3,124 route kms. are Narrow-gauge. Traditionally, railways are seen as
part of essential public service implying that the usage of railways should not
be denied to even those who are unable to pay fully. Cross subsidisation of
services is practised: freight charges and upper class passengers charges are
set high and used to subsidise lower class passenger costs. Passenger traffic
currently contributes around 30 per cent of total revenues and the rest (70 per
cent) comes from freight traffic.

IR is facing problems from two sides, drop in resources required for

development and increased competitive pressures from other modes of
transport. Railways have been steadily losing its market share of freight to
road largely because it has not been able to compete on prices. The proportion
of the total production of bulk commodities that is transported by rail has been
going down in almost all commodities. Road transport dominance is
increasing with the measures the Government has already set in motion for the
road sector like the four-laning of the “Golden quadrilateral” and the
development of new expressway stretches. The increasing use of pipelines for
the transportation of petroleum products is also contributing to the fall in
demand for rail services. Moreover, in recent times, coal and cement have
started moving in significant volumes through coastal shipping.

To address the issue of inadequate finance, IR has identified areas for private
participation. Gauge conversion, doubling of existing single lanes,
electrification projects, supply of rolling stock such as wagons and passenger
coaches are opened for private participation.

Check Your Progress 1

Note: i) Space is given below each question for your answer.
ii) Check your answer(s) with those given at the end of the unit.
1) Explain with example what is natural monopoly.
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Sectoral Performance-II 2) Do you think that productivity of physical capital is improved by
transportation?
……………………………………………………………………………
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3) Identify the two major problems faced by Indian Railways.
……………………………………………………………………………
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4) What is the underlying meaning of ‘Infrastructure’?
i) Underlying Foundation
ii) Factors of Production
iii) Private Sector
iv) Public Sector

[Link] Seaports and Airports

Seaports
India has 12 major ports and about 185 minor ports over its coastline spread
over 7,000 kms. Major ports are managed by the Central Government and
account for over 75 per cent of total cargo. Minor ports are managed by the
State governments and account for the residual 25 per cent of cargo
transportation. After the 1991 economic liberalisation, on an average, the
sector realised a growth rate of 6.22 per cent.

A number of changes are taking place in the ports sector. After economic
liberalisation, private investment is encouraged in this sector. This typically
takes the form of private parties setting up terminals at existing ports. Such
terminals have come up at Marmugao (JLNPT) and at Tuticorin and a new
one is coming up at Kochi. Foreign collaborators have shown interest in
setting up these terminals and the Australian P&O and the Port Authority of
Singapore are among the investors already present.

Growth rate of traffic handled by major ports has accelerated in recent years,
partly because of booming exports and partly owing to the new investments
and consequent better efficiencies. Despite this, the volumes of cargo handled
by India’s biggest ports are small in comparison with international ports like
Singapore, Hong Kong and Rotterdam.

Ports require good inland connectivity. The efficiency of the roads and
railways, which provide the connectivity, is, thus, an important factor in
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efficient port operations. Good connectivity and automated handling of cargo Infrastructure
and factors that reduce the ship turnaround time and, thus, facilitate larger
volumes of traffic. Government is investing in improving the road
connectivity to major ports through the NHDP.

With private players coming in, it was necessary to provide for independent
regulation so that a level playing field is provided to all operators.
Accordingly, the Tariff Authority for Major Ports (TAMP) has been set up.

Better internal management can also provide for increased port revenues.
Several foreign ports are organised as ‘landlord’ ports where the handling of
cargo proper is awarded to private parties. In India, all major Ports are run by
Port Trusts constituted by the Central Government, and the concept of
‘landlord’ ports has not yet been attempted. They function mainly as ‘service’
ports.

In the ‘minor’ ports segment also, new developments are taking place,
especially on the initiatives of State governments of Andhra Pradesh and
Gujarat. A wholly private owned port of Pipavav has come up in Gujarat and
Railways, in collaboration with the port and the State Government have
provided improved rail linkage to this port which is fully operational.
Connected to the new oil refinery set up by the Reliance Group at Jamnagar,
the port of Sika also in Gujarat now accounts for the largest cargo handling
among all ports in the country. Table 13.1 contains the information.
Table 13.1: Traffic Handled at Major and Minor Ports
('000 Tons)
Major Ports Minor Ports
Year POL Non-POL Total Container Bulk
1980-81 33578 46692 80270 1880 6730
1990-91 64004 87661 151665 7695 12780
1995-96 90923 124285 215208 18503 25710
2000-01 107423 173708 281131 32326 87210

POL stands for Petroleum Oil and Lubricants.

Airports
Mumbai and Delhi account for the largest share of all air traffic (domestic
plus international) in India.

Airports are under the management of Airports Authority of India. Private

investments are to be drafted for the upgradation of the four major airports
(Delhi – Mumbai – Kolkata and Chennai).

New ‘greenfield’ airports under private ownership are coming up at Bangalore

and Hyderabad.

A new airport promoted by Kerala State Government has come up in Kochi

with private investor participation.

There is large scope for expanding airport traffic, especially on the cargo side.
This requires modern handling facilities and adequate infrastructure.
Passenger traffic is also increasing rapidly with recent changes in policies
relating to ‘Inland travel tax’ and duties and taxes levied on aviation fuel. A
new policy framework that permits private airlines to operate international
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Sectoral Performance-II routes (quotas for which are set through bilateral agreements between the two
countries) is expected to contribute to increased competition and lower fares
and consequently larger passenger volumes. Table 13.2 contains performance
statistics of airports.
Table 13.2: Traffic Handled at Airports

Domestic Airports International Airports

Year Aircraft Total No. of Freight Mail Aircraft Total No. of Freight Mail
Movement Passengers (Tons) (Tons) Movement Passengers (Tons) (Tons)
1980-81 235117 3619752 26077 6957 112116 9505749 195588 32460
1990-91 NA NA NA NA 142040 17177888 387775 25946
1995-96 158905 9783518 57453 10790 233630 24836478 561582 30885
2000-01 230754 13042073 140639 11027 262758 27917096 708614 35539
2001-02 246717 12727123 146008 11069 277275 26404360 700218 36564
2002-03 147939 6661302 40743 4618 418039 36649040 940897 43265

Roads and Railways along with Airports and Seaport infrastructure are treated
as components of Multi-modal Transportation infrastructure. An integrated
framework for the development of each of these components of logistics chain
in conjunction is required in order to optimise the role of transport
infrastructure in the development of the country.

13.5.2 Energy Infrastructure

Electricity is one of the main determinants of the quality of life. In India, the
power sector has not kept pace with the growth in demand resulting in serious
energy shortages. About 70 per cent of the rural households are yet to get
electricity connections and power-based economic activities in the electrified
villages are minimal. Out of the estimated 80,000 villages yet to be electrified,
the Tenth Plan proposes to electrify 62,000 villages through grid supply. The
balance 18,000 remote villages are proposed to be electrified by 2011-12
through the use of decentralised non-conventional sources of energy.

Uneconomic tariffs charged from the priority sectors, lower slabs of domestic
consumption, high transmission and distribution losses (T&D losses), which
often disguise large-scale theft, and low billing and collection efficiency are
the important problems affecting the performance of electricity sector in India.
Among all these problems, T&D loss is the major one, which is directly
related to the functioning of the sector. The reported all-India average T&D
loss increased from 19.8 per cent in 1992-93 to 26.45 per cent in 1998-99 and
is estimated to have increased to 27.8 per cent by 2002. The high T&D losses
are attributed to:
a) Weak and inadequate sub-transmission and distribution systems that are
built to meet the haphazard growth of demand and to fulfill the short-term
objective of extension of power supply to new areas;
b) Long transmission and distribution lines and inappropriate size of
conductors;
c) Improper load management, resulting in overloading of systems;
d) Pilferage and theft of energy and un-metered supply; and
e) Financial constraints to undertake systems improvement schemes.
Power sector reforms were initiated in 1991 but given momentum in the
present decade with the setting up of an independent and transparent
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regulatory regime. Private sector participation has also been set in motion with Infrastructure
the enactment of the Electricity Laws (Amendment) Act in 1998. Further,
major reforms aimed at promoting competition in generation, transmission
and distribution of electricity have been enacted through the Central
Electricity Act, 2003.

13.5.3 Communications
Noting the importance of improved communications in increasing
productivity and welfare, the New Telecom Policy (NTP) was introduced in
1999. NTP 99 was aimed at accelerating further development in the provision
of telecom services with increased private participation. The key objectives of
the policy are:
• Availability of telecommunications at affordable price for achieving socio-
economic goals of the country.
• Providing universal service to all uncovered areas including rural areas
and remote, hilly and tribal areas.
• Providing greater competitive environment in both urban and rural areas.
• Providing equal opportunities and level playing field for all players.
Provision of universal access to Basic Telecommunication Services at
affordable prices and a greater role for the private capital is the motive of the
NTP 99. Realising that universal service obligations cannot be fulfilled under
normal commercial environment, the NTP (1999) for this purpose envisages
raising of resources through imposition of a universal access levy, which is a
percentage of the revenue earned by the operators under various licenses. The
universal access levy, which supports the provision of village public
telephones and rural direct exchange lines would cover both capital and
recurring expenses to run the services.

Universal service is taken to mean nation-wide coverage, non-discriminatory

access and widespread affordability of telecommunication services.
Availability implies provision of telephone services in all areas, even if they
are uneconomic, rural and remote. Accessibility implies uniformity, non-
discriminatory in terms of price service and quality regardless of geographical
location. Affordability principle holds that price should be affordable. In
uneconomic areas, this may mean tariff such as rentals below cost.
The strategies envisaged in the NTP-99 have resulted in remarkable gains in
spreading the telephones in the country. Table 13.3 presents the basic numbers
reflecting the growth in telephone ownership since NTP 99.
Table 13.3: Performance Indicators of the Indian Telecom Services Industry

Indicators FE 2000 FE 2005

1) Subscriber Base (in millions)
i) Fixed 26.65 45.9
ii) Mobile 1.90 52.17
Gross Total 28.55 98.08
2) Teledensity (percentage)
i) Fixed 2.62 4.25
ii) Mobile 0.19 4.83
Gross Total 2.81 9.08
Note: FE, QE stand for financial year.
Source: TRAI, The Indian Telecom Services Performance Indicators.
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Sectoral Performance-II In statistical terms, overall teledensity tripled in less than five years and
reached 9.08 by the end of March 2005 by which point mobile telephone
subscription had surged past conventional fixed lines. But because of
duplication of ownership of telephones (same subscriber owning fixed and
mobile) the statistical increase exaggerates the ground reality. Also, in terms
of urban vs. rural, the subscriber growth is heavily skewed, as mobile
technology is largely restricted to the urban areas. It is estimated that average
teledensity in urban areas is now over 20 per hundred while it is only around 2
in the rural India.

A few key factors account for the increasing popularity of cellular

technologies and the urban bias to its rapid growth. High costs of access loops
of traditional wireline technologies paved the way for the use of mobile and
limited mobile technologies. Because of the concentration of population,
urban areas hold out potential for much larger subscriber numbers per unit of
investment. Higher average incomes also ensure higher usage levels by
individual subscribers. By comparison, usage levels in rural areas are
unremunerative. Besides this, the flexible form of the communication also
contributed to the popularity of mobile technology.

The USO policy meant for spreading telephones in rural areas has been
operational for close to three years now. Over this period, it could complete
the task of providing public communication facilities: the backlog of over
2,00,000 ‘unconnected’ villages (as of June 2002) has been almost wiped out
and faulty technologies are being replaced. The major USO service that can
result in growth in rural teledensity is the subsidising of private phones
(DELs) in identified un-remunerative areas. The USO Fund Administration
has just finalised the bids for implementing this part of the overall scheme.
The implementation of this service would contribute towards an increase in
rural teledensity. But to achieve the target of NTP 99, other policy supports
that would harness mobile technology towards this purpose seem to be
necessary.

In order to address these issues, the USO Fund has mooted a strategy of
providing the backbone infrastructure in the rural areas having low
teledensity. This strategy coupled with the subsidising of Rural Household
DELs (private telephones) provided in identified high cost service areas
(where revenues are not adequate to cover costs) and the introduction of Rural
Service Providers or Niche Operators – an idea held out by TRAI – could
bring about a breakthrough in growth of rural teledensity. The details of the
three concepts – one of which has been operationalised – are as follows:

i) Subsidising the Rural Household DELs

The USO Fund invited tenders for installation, operation and maintenance of
rural household DELs (RDELs) in 1685 ‘Short Distance Charging Areas’
(SDCAs, the basic Service area unit, generally approximating to a ‘taluka’)
identified as net cost positive out of total of 2,648 SDCAs in the country. The
participation of 7 Service Providers in the tendering process led to keen
competition amongst the bidders for all Service Areas barring those in J&K,
North East and Assam. It is a measure of the success of this strategy that the
private operators M/s RIL won the bids for 205 SDCAs and M/s Tata
Teleservices Ltd, for 213 SDCAs. This would mark the first major entry of
private players into the rural segment.

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ii) Creating Mobile Telephone Infrastructure Infrastructure

The second concept of subsidising the telecom infrastructure required for

providing services in rural and remote areas is designed to facilitate the more
suited mobile services in this segment. For this purpose, ‘purely passive
items’ like towers and land, which are shareable between the operators, are
considered for subsidy entitlement. These are to be provided exclusively in
areas where there is no coverage of the cellular signal at present. The operator
who provides the infrastructure will have exclusivity rights for one year after
which the facilities would be shared with other operators by charging nominal
rent in order to meet the maintenance costs of the towers.

Experience in other developing countries (Bangladesh, some African

countries) points to successful adaptation of mobile technology for rural use.
In Bangladesh, for example, mobile telephones have proved highly
remunerative in rural areas by devising ways for shared usage. The concept
mooted by the USO Fund is an attempt at finding solutions suited to Indian
needs. Its implementation will require a suitable amendment to the Indian
Telegraph Act for enabling provision of Cellular Mobile Services under USO
Fund. Also the legal and technical issues involved in sharing the infrastructure
need to be addressed.

iii) Niche Operators

It is assessed by TRAI that despite the USO support, existing big service
providers would not be interested to serve about 50 per cent of the villages. To
address this issue, TRAI in its Unified Licensing recommendations envisaged
that the Short Distance Charging Areas with teledensity less than 1 per cent be
notified as telecom-wise-backward areas. In these areas, niche operators,
defined as ‘the telecom service providers whose services are restricted to these
backward areas only’ will be inducted. These operators are entitled for
concessions of zero entry fees, lower license fees and eligibility for USO
support. The scheme is aimed to promote local entrepreneurs who have the
technical competence to provide communication solutions but cannot compete
on equal footing with large operators.

About the role of private capital in accelerating the rural teledensity growth,
the financial and operational problems that inhibit private operators’ entry into
rural areas need to be overcome. The recent policy change to raise the FDI
limit in telecom is of limited value in this context because additional capital
will again target the remunerative urban areas. Thus, despite its suitability, the
spread of mobile telephones in rural areas so far has been very limited.

13.5.4 Banking Infrastructure

An efficient financial system can influence the long-term growth through
three important channels, namely: 1) increase in the proportion of saving
transferred to investment spending, 2) augmenting private saving rate, and 3)
improvement in the social marginal productivity. The financial intermediaries
stimulate economic growth in two ways: (i) by channeling the individual
saving into productive areas of development and (ii) by allowing the
individuals to reduce risk associated with their liquidity needs.

The creation of specialised financial institutions assumes significance in this

regard because supply of credit to the poor involves high risk and carries
exorbitant interest rates. The task of the special financial institutions would be
15
Sectoral Performance-II to identify impediments to enhancing the productivity of existing assets and to
find ways and means to overcome these and simultaneously to promote viable
economic activities for the rural poor.

13.6 GROWTH RATES OF THE ECONOMIC

INFRASTRUCTURE
Table 13.4 provides growth rates registered by different economic
infrastructure since 2000. With regard to the electricity sector, electricity
generation through hydel projects experienced negative growth rate in the first
three years. Similarly crude oil production in 2002-03, and all components of
civil aviation sector saving export cargo experienced negative growth in 2002-
03, showing the impact of wide spread recession in the country in that year.
Among all the economic infrastructure sectors, telecommunications registered
stable and higher growth over these five years revealing the success of
reforms undertaken in this sector.
Table 13.4: Trends in Growth Rates of Economic Infrastructure Sectors (in percent)

Items Unit 2000-01 2001-02 2002-03 2003-04 2004-05

I. Energy
1. Electricity Generated Bn. Kwh 3.9 3.1 3.2 5.0 6.5
(Utilities Only)
a. Hydel " -7.6 -0.7 -13.7 15.6 17.6
b. Thermal (Incl. Nuclear) " 7.4 2.5 6.2 3.5 4.7
2. Petroleum
a. Crude Oil Production Mn Tons. 1.5 -1.2 3.2 1.0 2.9
b. Refinery Throughout " 20.3 3.7 4.9 8.2 6.7
II. Transport and Communications
1. Railways Revenue Earning " 3.7 4.0 5.3 7.5 7.7
Good Traffic
2. Cargo Handled at Major " 3.4 2.3 9.0 9.9 11.1
Ports
3. Telecommunitions- ‘000Nos 27.2 23.9 21.5 40.1 21.4
New Telephone Connections
Provided (Direct Exchange
Lines)
4. Civil Aviation
a. Export Cargo Handled ‘000 tons. 5.1 4.1 13.3 1.0 11.8
b. Import Cargo Handled " 3.6 -1.0 18.6 13.8 30.1
c. Passengers Handled at Million 4.6 -5.0 4.8 6.5 15.7
International Terminals
d. Passengers Handled at " 7.7 -5.7 9.6 13.1 25.9
Domestic Terminals
Source: Annual Reports of Different Ministries, Government of India.

13.7 INTER-STATE DISPARITIES IN

INFRASTRUCTURE STOCKS
In India, considerable inter-state disparities of infrastructure stocks are
present. These are presented in Table 13.5.
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As can be seen from Table 13.5, as for the electricity access, the 2001 Census Infrastructure
found that in Bihar only 10 per cent of households have access to electricity.
In the states of Jharkhand, Orissa, Assam, Uttar Pradesh and West Bengal
states, power is accessible only to about one third or less number of total
households. Punjab, Delhi, Himachal Pradesh and Goa states are better placed
in terms of electricity accessibility. As for the number of households having
telephone connections, Bihar, Jharkhand, and Chhattisgarh are placed much
below the national average, while Delhi, Chandigarh, Goa and Union territory
of Lakshyadweep figure much above the national average. Similarly, large
gaps exist in households availing banking facilities. The states of Goa,
Himachal Pradesh, Chandigarh, and Uttaranchal have more number of
households that are availing banking facilities; the opposite holds for North
Eastern states and Bihar.
Table 13.5: Inter-State Disparities of Economic Infrastructure

Percentage of Percentage of Percentage of

State Households Having Households Households Availing
Access to Electricity Having Telephones Banking Services
Andaman & Nicobar 76.8 21.0 64.0
Andhra Pradesh 67.2 8.6 31.0
Arunachal Pradesh 54.7 9.2 37.3
Assam 24.9 4.3 20.5
Bihar 10.3 2.2 21.3
Chandigarh 96.8 32.1 64.9
Chhattisgarh 53.1 3.8 24.1
Dadra & Nagar Haveli 86.0 7.3 30.6
Daman & Diu 97.8 15.7 47.6
Delhi 92.9 34.7 51.0
Goa 93.6 29.1 72.8
Gujarat 80.4 12.5 37.8
Haryana 82.9 12.7 45.2
Himachal Pradesh 94.8 16.5 59.5
Jammu & Kashmir 80.6 6.8 36.5
Jharkhand 24.3 3.3 30.1
Karnataka 78.5 12.8 40.0
Kerala 70.2 19.1 51.1
Lakshyadweep 99.7 60.6 51.7
Madhya Pradesh 70.0 6.2 27.9
Maharashtra 77.5 14.1 48.1
Manipur 60.0 5.3 8.7
Meghalaya 42.7 6.0 20.8
Mizoram 69.6 14.1 31.8
Nagaland 63.6 5.2 15.9
Orissa 26.9 3.9 24.2
Pondicherry 87.8 19.1 31.7
Punjab 91.9 18.9 48.5
Rajasthan 54.7 8.0 28.9
Sikkim 77.8 13.2 29.7
Tamil Nadu 78.2 11.2 22.8
Tripura 41.8 5.2 26.5
Uttar Pradesh 31.9 5.6 44.1
Uttaranchal 60.3 9.9 59.8
West Bengal 37.5 6.7 36.8
All India 55.8 9.1 35.5
Source: Census of India 2001.
17
Sectoral Performance-II Considerable variations across states can be noticed from Table 13.5 with
regard to infrastructure development. These differences are not only persisting
but also widening despite the objective of balanced regional development of
the Country. Factors that are responsible for the existence of such wide
variation across States in India are as follows.

In India, State governments play a major role in developing infrastructure

needed for accelerating growth. Many of the critical development subjects are
allocated to the States, by the Constitution. National plans are prepared for the
country as a whole and do not specify state specific growth targets. National
plans expected that inter-state differences would narrow if resources are
allocated based on the balanced regional development objective. The
increasing share of revenue expenditure is curtailing State plan expenditure
and states are resorting to larger volumes of borrowing to finance plan
expenditure, which, in turn, is resulting in growing interest payment
obligations. After meeting the revenue expenditure and interest obligations
very limited funds are available for investment. Besides this, only some States
are better focused on infrastructure development and able to create a policy
environment, which is conducive for developing infrastructure by using
private investments.

In this context, some are of the view that the objective of balanced regional
development should not be overstressed if it seeks to achieve equality through
a process of ‘levelling down’ by preventing states from reaching their full
growth potential. On the contrary, well-managed states must be encouraged to
reach their full growth potential and the lessons learnt from their superior
performance could then be used as a model for other state to emulate.

Check Your Progress 2

Note: i) Space is given below each question for your answer.
ii) Check your answer(s) with those given at the end of the unit.
1) What is multi-model transportation infrastructure?
……………………………………………………………………………
……………………………………………………………………………
……………………………………………………………………………
……………………………………………………………………………
……………………………………………………………………………
2) Identify the key factors that account for increasing popularity of cellular
technology.
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……………………………………………………………………………
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18
3) Name the states which have accessibility to electricity above the national Infrastructure
average.
……………………………………………………………………………
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13.8 COMPONENTS OF SOCIAL

INFRASTRUCTURE IN INDIA
We can identify three distinct components of social infrastructure, viz.,
Health, Education and Other Areas, which facilitate the other components of
the social sector to be used effectively for the benefit of the society. Special
emphasis is given to health and education as these components directly help to
build up human capital and enhance human capabilities to enjoy a higher
standard of living. Let us now discuss these components in details.

13.8.1 Health
Health is one of the two key determinants of the Human Development Index
(HDI) in addition to income and knowledge. The capability to lead a long and
healthy life is considered as one of the three essential elements of enlargement
of people’s choices at all levels of economic development. The required
infrastructure for health care created in terms of hospitals, dispensaries and
health centers etc., and formation of human capital in the form of doctors,
nurses and others are observed from the Table 13.6 below.
Table 13.6: Health Care Infrastructure Development Since 1951

1951 2002
Sub Centres/Primary Health Centers etc. 725 1,63,196
Hospitals and Dispensaries 9,209 38,031
Beds (Private and Public) 1,17,198 9,14,543
Doctors (Modern System) 61,800 6,25,131*
Nursing Personnel 18,054 8,36,000*
* Pertains to 2004.
With this, we can also add the infrastructure of Indian medicine system
consisting of ayurveda, unani, siddha and homeopathy. In 2001, under this
category, there were a total of 3,841 hospitals, 65,753 beds, 23,597
dispensaries, 6,88,802 registered practitioners and 9,832 licensed pharmacies
with 88 PG and 412 UG colleges with admission capacity.

It may be mentioned that the social sector programmes in general and health
care in particular fall largely under the jurisdiction of the State governments.
The Central Government, however, supplements the States’ efforts by making
additional resources available for specific programmes through Centrally
Sponsored Schemes, Additional Central Assistance and Special Central
Assistance. Currently the Common Minimum Programme (CMP) of the
Central Government envisages raising public spending on health to at least
2-3 per cent of GDP with focus on primary health care. Special attention will
19
Sectoral Performance-II be paid to poorer sections in the matter of health care. The basic objective of
achieving an acceptable standard of good health amongst the general
population of the country as set out in the National Health Policy 2002 and
reiterated in the CMP continues to be the focus. Improvement in the general
levels of health through larger allocations and more effective implementation
of communicable and non-communicable disease programmes, changes in the
pattern of assistance and implementation, and greater focus on tertiary health
care have received special emphasis.

The Plan outlay for the Central Health Sector Schemes during 2004-05 was
pegged at Rs. 2,208 crores. The Budget estimate for Central Government
expenditure (plan and non-plan) on health and family welfare was Rs. 7,680
crores. The combined expenditure of Centre and the States on health in the
same year was 40,352 crores. This amount was 4.4 per cent of the total
expenditure and 23 per cent of the expenditure on social services. Special
stress is given on the control/elimination of diseases like malaria, T.B., filaria,
leprosy and HIV/AIDS.

The focus of the health sector programmes so far has been largely on control
of communicable diseases. Some programmes for non-communicable diseases
such as blindness, iodine deficiency, and cancer are also under
implementation. There is a new initiative called National Mental Health
Programme during the 10th Plan with an outlay of Rs. 130 crores. Since
November 2004, there is another new scheme called Integrated Disease
Surveillance Project with a proposed outlay of Rs. 88 crores for 2005-06.
Emphasis is placed in the 10th Plan to utilise effectively the traditional Indian
medicine system consisting of ayurveda, yoga, unani and siddha. These
combined with homeopathy is named as AYUSH and the Plan allocation for
its development is Rs. 775 crores.

One important component of the health sector is the family welfare

programme with a long-term objective to achieve population stabilisation by
2045. India accounts for one-sixth of humanity with the risk of achieving the
dubious distinction of becoming the most populous country in the world by
about 2050. The population (2001) of 1,027 million needs to be controlled
effectively. However, the last two decades have witnessed improvement in all
the important health indicators. The 10th Plan targeted a reduction in the
decadal growth rate of the population to 16.2 per cent. The Plan outlay for the
family welfare has been Rs. 27,125 crores. The expenditure in the health
sector is proposed to increase from 0.9 per cent of the GDP to 2-3 per cent in
this period. To augment health care services in the rural areas, a National
Rural Health Mission has been conceptualised. The existing schemes of
Reproductive and Child Health Programme, the Mother NGO programme and
others are also being continued. In this connection, it may be mentioned that
the 10th Plan envisages provision of safe drinking water to all rural inhabitants
in its efforts to supplement the activities of the states by providing financial
and technical support. There is also the Accelerated Urban Water Supply
Programme for providing water supply to the smaller towns. Another health
related project, the Total Sanitation Campaign has now covered 426 districts
in the country with an outlay of Rs. 4,136 crore.

13.8.2 Education
Education is the other important component of the social infrastructure where
also India has a long way to go considering the current level of various
20
educational indicators. Of course, it is true that her literacy rate has gone up Infrastructure
from only 18.33 per cent in 1951 to 64.84 per cent in 2001, yet it is also true
that this rate of growth is extremely slow and India could not achieve full
literacy even after more than 55 years of independence. This also means that
India has the dubious distinction of having the largest number of illiterates in
the world. This becomes clear when we find that India’s Adult and Youth
literacy rates are 61.3 and 73.3 respectively, while these rates for Sri Lanka
are as high as 92.1 and 97.0 respectively.

In the education sector, the most important physical infrastructure is

educational institutions. During 2002-03, the total number of recognised
educational institutions in India is as follows:

Primary/Junior Basic School---651382, Middle/Senior Basic School----245274

High Sch/HS/Inter/Jr,College--137207, Colleges for Gen. Edu.-------------9165

Professional Education------------2610, Universities/Deemed Univ.*--------385

* Includes Inst. of National Importance and Research Institutes.

However, these figures do not take into account the rapidly increasing private
sector educational institutions at all levels.

So far as the human component of educational infrastructure is concerned, the

number of teachers at the elementary level was 3.5 million in 2002-03, of
which the share of female teachers was 40 per cent. The Pupil-Teacher Ratio
in the primary and upper primary levels is 42.1 and 34.1 respectively which,
however, have remained more or less constant over the decades despite the
increase in the number of teachers in this period.

The broad policy framework for the development of education and eradication
of illiteracy contained in the National Policy of Education, 1986, has set a
goal of expenditure on education as 6 per cent of the GDP. However, the
combined total expenditure on education by Central and State governments
was only 3.74 per cent of GDP in 2003-03 (BE). A high priority has been
accorded to this sector in the 10th Plan, with an allocation of Rs. 43,825 crore
as against Rs. 24,908 crore in the 9th Plan, representing an increase of 76 per
cent. The Central Government expenditure on education, sports and youth
affairs in 2004-05 (BE) is Rs. 12,091 crore, while the combined expenditure
of all Governments in the same year on education is Rs. 85,358 crore. This
amount is 9.4 per cent of the total expenditure and 48.8 per cent of
expenditure on social services.

Among the current on-going and new programmes, mention may be made
about the Sarva Shiksha Abhiyan, which is being implemented in partnership
with the states. It addresses the needs of 192 million children in 11 lakh
habitations. 8.5 lakh existing primary and upper primary schools and 33 lakh
existing teachers are covered under this scheme and an allocation of Rs. 3,057
crore has been made in 2004-05 (BE). A new scheme ‘National Programme
for Education of Girls at Elementary Level’ is implemented in educationally
backward blocks where the level of female literacy is below and the gender
gap is above, the national average and in some other select areas. A new
scheme called Kasturba Gandhi Balika Vidyalaya has been approved in 2004-
05 for girl students belonging to the weaker sections living in difficult areas.
In the same year, an educational cess of 2 per cent on all central taxes has
21
Sectoral Performance-II been imposed to create a separate fund for the schemes of basic education and
the mid-day meal scheme. The growth in the area of higher education
continued with a student enrolment of 9.51 million in 2003-04. There has also
been a significant increase in the enrolment under open and distance education
system.

13.8.3 Other Areas

Among the other areas where social infrastructure is important, mention may
be made about the matters which are not included in the construction of the
Human Development Index, and the related issues, though their importance in
the provision of social infrastructure cannot be denied and neglected. These
include measures to improve women’s empowerment, social harmony and
peace, removal of social vices like untouchability, communalism, child
marriage and dowry, adulteration of food and malnutrition etc. Besides, there
are also the problems of empowerment of the socially disadvantaged (which
includes persons belonging to the scheduled castes, religious and social
minorities, socially and educationally backward classes), welfare of persons
with disabilities and programmes of social defence relating to the victims of
alcoholism, drug addiction, juvenile social maladjustment, welfare of
prisoners, children in need of care and protection, welfare of aged and matters
relating to the administration of Wakf. The Ministry of Social Justice and
Empowerment deals with these matters. However, though many legal
provisions exist in India to fulfill these objectives, yet their successful
implementation largely depends on the social awareness of the people at large.

13.9 ASSESSMENT OF SOCIAL

INFRASTRUCTURE PERFORMANCE
In terms of the HDI, India currently belongs to the category of medium human
development group of countries. Health and education, the two most
important components of the HDI, though have experienced considerable
progress since independence, yet the very slow rate of growth in these areas
could not reduce the gap between India and other high income industrialised
economies. While from the beginning of the planning period, the Government
has adopted various measures to build up the social infrastructure in the
economy and followed a strategy to proceed towards a socialistic pattern of
society, in terms of performance, it was well below the people’s aspirations.
One of the reasons of this unsatisfactory performance is the prevalence of
leakages in the implementation process due to widespread corruption at all
levels. Besides, the social sector in India has always received a low official
priority. In case of any financial stringency, the first casualty has always been
the allocation for the social sector. This is also reflected in the relative lack of
adequate data for the different components of it. Moreover, the official
strategies adopted for the development of social infrastructure have followed
largely a top-down approach, thus, bypassing the voluntary participation and
opinion of the common people. After the initiation of economic reforms in
1991, though the participation of the private sector in the provision of social
infrastructure has gone up, yet in many cases they could not fulfill the needs
of the people as they are guided by purely profit motives. In fact, in the
opinion of Prof. Amartya Sen, specially in the areas of health, education and
social security, state participation and intervention are necessary.
Coming to component-wise performance of social infrastructure, it may be
noted that the allocation of fund in education has always fallen short of the
22
norm fixed by the authorities themselves. Even when the finance is not a Infrastructure
problem, the question of quality is not emphasised. As a consequence, our
human capital could not acquire the required skill and resulted in low
productivity compared to many developed countries. The pattern of education
in India has always been elitist in nature leading to neglect of primary
education. In case of higher education also, standard of education widely
varied among institutions and most of the students passing out from
institutions like IIT or IIM are catering to the markets of the western countries
instead of serving their land. This skewed pattern of higher education has been
accentuated under the new economic policy since 1990s.

Almost similar observations may be made for the performance of the other
component of social infrastructure, viz., health. While it is an achievement to
lower the high death rate through the provision of an expanding infrastructure
for health care, it is also true that India’s performance in reducing the infant
mortality rate is not satisfactory. At the same time, her inability to reduce the
high birth rate has created a situation when population appears to be a
problem though she has been the pioneer in the adoption of family planning
measures. The quality of service at the public hospitals/health centres has
deteriorated over time and the private health care services are beyond the
reach of the common people. Though it was believed that malaria has been
eradicated from India, but now this menace has returned again. Gradually,
diseases like TB and AIDS are assuming dangerous proportions. Inability to
control adulteration of food items and prevalence of mass poverty have led to
malnutrition which ultimately weakens the basis of the human capital leading
to low productivity and low income. It is apprehended by many that after the
passing of the new Patent Act under the WTO regime, the prices of medicines
in general will rise sharply, leading to further deterioration of the health
situation.

Among other areas of the social infrastructure mentioned above, it may be

said that while financial allocations have been made and progress has
definitely taken place in different areas, but these maladies still persist in
different parts of the country in varying degrees. Real happiness and
prosperity of any society actually depends on successful achievements in these
fronts.

13.10 POLICIES FOR SOCIAL

INFRASTRUCTURE DEVELOPMENT
The origin of official policies for social infrastructure development is the
National Policy of Education, 1986 for the development of education and
eradication of illiteracy and the National Health Policy, 2002 for achieving an
acceptable standard of good health among the general population of the
country. Currently, the present Government is formulating their strategies on
the basis of the CMP or Common Minimum Programme, which has
emphasised the social sector development. Expenditure on the various
components of these sectors have also increased substantially in recent years.
It has been mentioned in the Economic Survey 2004-05 that higher levels of
expenditure on the social sectors could be sustained through reprioritisation of
expenditure both by the States and the Centre. It has been further admitted that
availability of resources alone cannot guarantee social sector development and
the efficacy of a large number of official programmes would have to be vastly
improved through various measures. An efficient management and improved
23
Sectoral Performance-II delivery system for these programmes are essential to effectively implement
the social sector programmes through the decentralised system of Panchayati
Raj Institutions with full and voluntary participation of the people. This would
also ensure transparency in implementation, which would effectively check
leakages in these programmes.

13.11 IMPLEMENTATION ISSUES

Infrastructure sector, especially economic infrastructure, projects are facing a
variety of problems, which are to be addressed in order to realise the full
advantage of infrastructure investments in the country. These are:

a) Cost and Time Overruns: Cost and time overruns of infrastructure

projects in general and projects managed by public sector enterprises in
particular, still remain at very high levels. These arise due to the delays in
obtaining clearances like environmental clearances from the concerned
Government bodies, land acquisition problems, financing problems and
problems arising due to the poor management practices of the agencies
involved.

b) Huge Inter-State Variations: Considerable inter-state variations of

infrastructure development exist in the country. This is owing to the
situation of State governments having major role in developing economic
infrastructure. Many of the critical development subjects are added to the
‘State’ list. In India, National Plans are prepared for the country as whole
and do not specify state specific growth targets. Some states, owing to
their increasing revenue expenditure and inefficient economic
management are not able to develop the requisite infrastructure.

c) Cross Subsidisation: Cross subsidisation practices followed in different

infrastructure segments like railways, telephones, and electricity, though
they have been reduced drastically in sectors where agencies are in
position, still call for major tariff rebalancing exercise.

d) Regulatory Mechanism: In the liberlised policy environment, designing

suitable regulatory environment, which prohibits the exploitation of
natural monopoly nature of infrastructure services by the private operators
is necessary. Designing, an efficient regulatory system, specifying their
scope, roles and responsibilities, has become a major problem associated
with the development of infrastructure sectors.

e) Huge Project Risks: Private investments are not forthcoming as the

private operators are deterred by the huge risks and low returns in the
initial years associated with infrastructure projects. Availability of long
tenor loans and risk insurance policies need to be designed.

f) Policy on Private Participation: Suitable sector specific policies for

private investments in the identified aspects need to be put in place.

Check Your Progress 3

Note: i) Space is given below each question for your answer.
ii) Check your answer(s) with those given at the end of the unit.

24
1) What are the major components of the social infrastructure? Discuss the Infrastructure
importance of health in this context to form human capital in India?
……………………………………………………………………………
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2) Why education is important for human development?
……………………………………………………………………………
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13.12 LET US SUM UP

Infrastructure refers to the physical framework of facilities through which
goods and services are provided to the public. It is of two types: economic
infrastructure and social infrastructure. Economic infrastructure comprises of
sectors that have capital investments on hardware as a significant component.
Social infrastructure mainly refers to infrastructure in the form of health and
education facilities. Economic development is meaningful only when it leads
to educational and health upliftment of the people. For this purpose, it is
necessary to strengthen the human capital base of the economy.

During the last five years, electricity generation has witnessed negative
growth rate in the first three years. Crude oil production and all components of
civil aviation have also experienced negative growth in 2002-03. However,
telecommunications have illustrated stable and higher growth over the five
years.

Two major components of human capital formation are education and health.
India though belongs to the category of middle human development countries,
yet her progress in terms of these two indicators is quite slow. A number of
official strategies have been implemented in India to build up social
infrastructure in these two crucial areas, but due to leakages and lack of
people’s participation, their performance have been far from satisfactory. The
situation has become more vulnerable since the initiation of economic reforms
in the 1990s, as the state is gradually withdrawing itself from social services
and the private sector is expanding but working with profit motive only cannot
do justice to the objectives of the social infrastructure.

Considerable inter-state variations are noticed in the infrastructural

development in the country. Cost and time over-runs, huge inter-state
variations, cross subsidisation, huge project risks, inefficient regulatory
mechanism are the various issues and concerns encountered in the execution
of infrastructure related projects.

25
Sectoral Performance-II
13.13 EXERCISES
1) What do you mean by infrastructure? Examine the importance of
economic infrastructure in the process of growth.
2) Evaluate the growth of economic infrastructure in India. Has it been
adequate to meet the growth requirements of the economy?
3) Account for the regional disparities in the growth of infrastructure stocks
in the economy. How has it adversely affected the growth process?
4) Examine the different implementation issues involved in the development
of the infrastructure sector in the Indian economy.
5) What do you mean by social infrastructure? What are its important
components? Make an assessment of the growth of social infrastructure
sector in the Indian economy.
6) Evaluate the policy towards development of social infrastructure sector in
India.

13.14 KEY WORDS

Economies of Scale: A firm is said to experience economies of scale if its
cost of producing a unit of output falls as it increases its output. There are
internal economies, which result mainly from factors internal to the firm like
optimal usage of fixed assets. Similarly, there are external economies of scale,
which arise due to factors not specific to the firm but to the industry as a
whole.

Amortisation: It is the provision for the repayment of debt by means of

accumulating a reserve through regular payments equal to the estimated
depreciation of the asset.

Cross-subsidisation: Financing a loss-making business activity with profits

made in a profit making activity. In the case of economic infrastructure, in
order to meet the policy targets of the Government, rural infrastructure
services are provided at subsidised prices and the resultant losses are covered
by the profits generated from urban infrastructure services.

Greenfield Investment: Entering a foreign market by setting up an entirely

new business establishment by the foreign investor is called ‘Greenfield
Investment’. On the other hand, entering foreign market by acquiring an
existing firm is called ‘brown field investment’.

Universal Service Obligations: Making some identified service(s) available

to customers on a widespread basis even though they are not commercially
viable. Providing subsidies for creating and maintaining infrastructure
facilities like telecommunications in rural and remote areas has been
undertaken in order to fulfilling ‘Universal Service Obligations’ in India.

Social Infrastructure: Refers to infrastructure mainly in the form of health

facilities like hospitals, dispensaries, health centers, etc., and educational
facilities such as schools, colleges and universities, etc.

HDI: Human Development Index. A measure lying between 0 and 1

indicating the level of human development enjoyed and constructed on the
26
basis of three indicators coveted by human beings, viz., healthy life, Infrastructure
knowledge and a decent standard of living.

Infant Mortality Rate: Number of infants dying under one year of age in a
year per 1000 live births in the same year.

Literacy Ratio: Number of literate persons, i.e., those with formal or non-
formal education who, in the least, are able to ‘read and write with
understanding in any language’, as a percentage of total population.

AYUSH: Includes Ayurveda, Yoga, Unani, Siddha, Homeopathy and

Naturopathy, which may be loosely termed as the Indian Medicine System.

13.15 SOME USEFUL BOOKS

CMIE (2003); Infrastructure, Center for Monitoring Indian Economy,
Mumbai.

Dutt, R. and Sundaram, K.P.M. (2004); Indian Economy, 50th Edition, S.

Chand & Co, New Delhi.

Economic Survey (2004-05); Government of India, New Delhi.

Jimenez, E. (1995); Human and Physical Infrastructure: Investment and

Pricing Policies, in Behrman, J. and Srinivasan, T.N. (eds.), Handbook of
Development Economics, Chapter-43, Vol-3B, North-Holland.

Ministry of Finance (1996); The India Infrastructure Reports: Policy

Imperatives for Growth and Welfare, Government of India.

Sen, Raj Kumar (ed) (2005); Social Sector Development in India, Deep &
Deep Publications Pvt. Ltd, New Delhi.

Statistical Outline of India (2004-05); TATA Services Limited, Mumbai.

UNDP (2004); Human Development Report, Oxford University Press,

New Delhi.

13.16 ANSWERS OR HINTS TO CHECK YOUR

PROGRESS EXERCISES
Check Your Progress 1

1) Natural monopoly refers to a situation when a single firm produces the

entire output enjoying economies of scale in process of producing good
or a service. Indian Railway enjoys natural monopoly.

2) Yes.

3) Drop in its resources needed for development purposes, increased

competitiveness from other modes of transportation.

4) i)

27
Sectoral Performance-II Check Your Progress 2

1) See Sub-section [Link] under sub head ‘Airports’.

2) High cost of traditional wireline technology.

3) Punjab, Delhi, Himachal Pradesh, Goa.

Check Your Progress 3

1) Study Sub-Sub-section 13.8.1 and attempt yourself. Also add inputs from
Sections 13.9 and 13.10 to discuss official strategies and assessment.

2) Study Sub-Sub-section 13.8.2 and attempt yourself. Also add inputs from
Sections 13.9 and 13.10 for elaborating official strategies and assessment.

28