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17 Infrastructure
Introduction/Definition

Infrastructure implies the basic systems and services that a nation or organization requires in order to function
appropriately.

Infrastructure is the lifeline of an economy. Whatever the primary driving force of an economy is, whether it is
primary, secondary, or tertiary, a suitable level of infrastructure is needed for growth and development.

In a labor rich country like India, the infrastructure itself is a huge employment provider.

The infrastructure supports the key areas of manufacturing and agricultural activity, as well as domestic and
international trade and commerce.
These services consist of roads, railways, ports, airports, dams, power plants, oil and gas pipelines,
telecommunication facilities, the country’s educational system, which includes schools and colleges, health system,
which includes hospitals, and sanitary system, which includes clean drinking water facilities, and monetary system,
which includes banks, insurance, and other financial institutions.
There are three sectors which are considered as the infrastructure, universally around the world namely power,
transportation, and communication.

Types of Infrastructure
At times, the infrastructure is divided into two categories: economic and social.

Economic: Infrastructure associated with energy, transportation and communication are included in this category.
Economic Infrastructure is directly linked with the economic development of a country or an organization. it
includes the basic amenities and services that directly influence and benefit the production process economy
distribution.

Social: Those related to education, health and housing are included in this. Indirectly, social infrastructure aids the
country’s economic growth. For example, the education sector does not directly contribute to a country’s economic
development. However, it helps indirectly by providing students with high-quality education, resulting in the
development of physicians, scientists, engineers, and technologists.

Relationship between Infrastructure and Economic Development

Increase in investment
Investors always invest in the country where the infrastructure is good i.e. good transport, good supply of power
and a good business environment and for this the countries should invest in their infrastructure as good
infrastructure would attract more investors and increase the investment in the country. This would help in
economic development.

Industrial development
For the development of an industry it is necessary that it is situated in a place from where it has an uninterrupted
and low cost supply of raw materials and an easy transportation of finished products to the market. So a country
with good transport infrastructure leads to industrial development.
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Employment generation
A country where there are infrastructure projects leads to employment generation and when a good infrastructure is
created it generates new opportunities for business which also lead to employment generation.

Trade and commerce

Trade is defined as selling and buying goods for money between two or more parties involved in it and commerce
is the entire process of delivering products from manufacturers to consumers. It includes things like transportation,
banking and insurance, warehousing etc which requires good investment in infrastructure and good infrastructure
would lead to economic development.

Fig. 17.1: Infrastructure

Importance/Relevance of Infrastructure
Infrastructure is the supporting framework that enables a new industrial economy to operate efficiently.
Modern agriculture relies heavily on it for the efficient and large-scale transportation of seeds, pesticides,
fertilizers, and produce through modern highways, railways, and shipping facilities.
Agriculture has become increasingly reliant on insurance and banking services in recent years as a result of the
need to operate on a large scale.
It should be stressed that good infrastructure is crucial not just for faster economic growth but also for inclusive
growth. When we talk about sustainable development, we mean that the benefits of growth are shared by the
majority of a country’s people. As a result of inclusive development, poverty will be alleviated, and income
inequality will be reduced in the country.
Micro, small, and medium enterprises (MSME) are distributed across the economy, and their development and
growth necessitate access to high-quality, dependable infrastructure facilities in order to compete effectively with
large-scale enterprises, which can also develop some of their own infrastructure, such as small power plants or
generators. Furthermore, large-scale companies may position themselves near ports and transportation hubs where
the requisite infrastructure is available.
On the other hand, small businesses are distributed across the economy and must rely on the availability of general
infrastructure facilities. As a result, constructing general infrastructure facilities aids small businesses in competing
efficiently with large-scale firms, and being labor-intensive, creates a large number of job prospects for employees.
This will aid in the reduction of poverty in developed countries.
In addition to the obvious correlation between water and sanitation and health, the quality of transportation and
communication systems will affect access to health care. Improvements in water supply and sanitation have a
significant impact by reducing morbidity (meaning the likelihood of being ill) from major waterborne diseases and
reducing the incidence of disease when it occurs. Air pollution and transportation-related safety hazards have an
effect on morbidity, particularly in densely populated areas.

Fig. 17.2 Growth drivers for Infrastructure

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The State Of Infrastructure In India

Energy
There are both industrial and non-commercial energy sources. Coal, petroleum, and energy are industrial sources
since they can be purchased and sold. Firewood, farm waste, and dried dung are also non-commercial energy
sources. Since they are found in nature/forests, they are non-commercial.
Solar energy, wind energy, and tidal power are some examples of non-conventional energy sources. Since India is a
tropical country, it has virtually unlimited capacity for generating all three forms of energy if appropriate cost-
effective technologies are used.

Fig. 17.3 Consumption of Electricity by Sectors inIndia (2017-18)

Present status:
According to Ministry of Power, Coal dominates India’s energy mix, accounting for 51.1 % of total energy
consumption, followed by Wind, Solar and other RE (27.5%) and Hydro (11.7%). India is the world’s third-largest
user of energy. In 2017, however, its per capita energy consumption was about 625.6 kilograms of oil equivalent
(kgoe), compared to 1860 kgoe globally. In 2015, per capita energy consumption in the United States and China
was 6800 kgoe and 2170 kgoe, respectively. (kgoe - kilograms of oil equivalent).

According to Power Ministry, as on 31st March, 2022 in the power sector, India’s total installed capacity is about
399.4 GW with 163.3 GW of renewable energy (including Hydro). Energy-related sub-sectors continue to face
difficulties.
According to PPAC India imported 212.2 million tonnes of crude oil in 2021-22, which implies that we imported
85.5 % of our crude oil requirements. In 2020-21 we imported 33 bcm of LNG (PPAC).
There is still approximately 16000 km of gas pipeline networks in use today.
In the coal industry, the government only recently approved commercial mining in 2018. Furthermore, power
companies, especially state government utilities, continue to face financial difficulties.
Some Of The Important Objectives/Targets Of Government

The government’s new energy policies seek to “provide affordable, secure, renewable, and modern energy to all.”
It also expects to pass through the following checkpoints along the way:

By 2022, produce 175 GW(gigawatt) of renewable energy potential.

By 2022-23, cut oil and gas imports by ten per cent.

Continue to reduce GDP-based emission intensity in a way that will assist India in achieving its 2030
INDC(Intended Nationally Determined Contribution) target.
Constraints

The constraints on achieving the milestones set for 2022-23 can be divided into two broad categories: overall
energy sector and sub-sector specific.

Overall energy subsidies and taxes:

Various subsidies and taxes distort the energy market and encourage the use of inefficient fuels over efficient fuels,
as well as, making Indian exports and domestic output uncompetitive since energy taxes are not covered by the

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GST, and therefore no input credit is provided.

Solution/way forward:
Oil, natural gas, electricity, and coal should be subjected to GST to allow for the input tax credit.

To ensure a level playing field, all sources of energy should have the same GST rate.
End-consumers should be given all types of subsidies as practical subsidies, allowing them to select the most
appropriate and cost-effective energy source for them.
ENERGY

Break up total installed capacity

Energy Break up total installed capacity as on 31.03.2022

CATEGORY INSTALLED GENERATION CAPACITY(MW) % of SHARE IN Total

Fossil Fuel

Coal 2,04,080 51.1%

Lignite 6,620 1.7%

Gas 24,900 6.3%

Diesel 510 0.1%

Total Fossil Fuel 2,36,109 59.1%

Non-Fossil Fuel

RES (Incl. Hydro) 1,56,608 39.2%

Hydro 46,723 11.7%

Wind, Solar & Other RE 1,09,885 27.5%

Wind 40,358 10.1%

Solar 53,997 13.5%

BM Power/Cogen 10,206 2.6%

Waste to Energy 477 0.1%

Small Hydro Power 4849 1.2%

Nuclear 6780 1.7%

Total Non-Fossil Fuel 1,63,388 40.9%

Total Installed Capacity 3,99,497 100%

(Fossil Fuel & Non-Fossil Fuel)

Table 17.1: Energy Break up Total Installed Capacity

Projected Energy Demand

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It is projected that India’s energy demand will double by 2040.

Oil consumption is projected to rise from 5 million barrels a day to 8 million barrels a day by 2040.

India would be third in energy demand in the world by 2030 after China and the United States.

Liquefied natural gas (LNG) demand is expected to increase 4 times to 124 billion cubic metres.

Energy Efficiency
Energy efficiency means using minimum energy to perform the task, i.e, eliminating energy waste.
Benefits:

reduce the greenhouse gas emissions

reduce the demand for energy imports

lower our costs on a household and economy-wide level.

Energy Efficiency Mission

It is the national mission under National Action Plan on Climate Change (NAPCC)

Its aim is to strengthen the market for energy efficiency by applying innovative business models in the energy
efficiency sector.

India Energy Security Scenario 2047

The India Energy Security Scenarios 2047 is an open-source web-based tool launched by NITI Aayog.
Aim: To explore a range of potential future energy scenarios for India, for different energy requirements and
supply sectors leading up to 2047.
It searches India’s possible energy scenarios all over the energy supply areas like solar, wind, biofuels, oil, gas,
coal and nuclear and energy demand areas like transport, industry, agriculture, cooking and lighting appliances.
This allows users to actively make choices for energy and search for a range of ways for the country to reduce
carbon footprint and import dependence and efficient land use.

It offers basics to policymakers to create an energy pathway which is secure and addresses the needs of the people
and climate.

It would help India in future energy planning.

It would be a step for the Government toward achieving the goal of power for all.

Energy Pricing

Pricing of Petroleum Products

There are mainly four factors that influence the rise in prices:
Processing charges of Crude oil and freight charges to the dealer

The central government charges excise duty.

Dealer payment to the gas station.

The state government takes Value Added Tax.

82% of the crude oil needed by India is imported.

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As OPEC countries, (Iraq, Iran, Kuwait, Saudi Arabia and Venezuela) provide crude oil to India that is why the
benchmark for oil prices in India is Brent.

At 6 am every day the price for petrol and diesel is revised and the price of crude oil in the international market
directly affects the price of fuel in India.
34% as Excise Duty is central government charges and the state government charges their own percent.

2. Coal prices:
The Ministry of Coal has started an auction of coal mines on a revenue share basis. In order to reach a revenue
share based on market prices of coal, NCI was proposed

The NCI is a price index that reflects the change in the price level of coal in a particular month with respect to the
fixed base year. Presently the NIC FY 2017-18 is the base year.
The Index includes all transactions of raw coal in the Indian market.

Indian Statistical Institute, Kolkata has made Index and the Representative Prices.

The NCI is released every month.

3. Electricity prices:
The Electricity Bill is an important part of the household budget and knowing the pricing is necessary to reduce the
bill.

Energy bill:

One comes across basically two units while calculating Energy Bill in kW called connected/sanction load and
another consumption of energy in kWh (or also called unit).
It should be known that if the actual demand passes the sanctioned demand then the fixed charge/kW would
increase depending on the state.

Some other charges on the bill are Electricity Duty, Fuel Surcharge, Power Purchase adjustment cost, surcharge etc

Power:

Inefficient plants are still working, whereas more modern plants are underutilized.
Distribution Companies (DISCOMs) use load shedding to mitigate losses as the difference between the average
cost of supply (ACS) and average revenue realized (ARR) remains due to high aggregate technical and commercial
(AT&C) losses.

Although legally independent, Regulatory Commissions are unable to fully regulate DISCOMs and fix rational
tariffs.
Unmetered power supply to farming provides no incentive to farmers to use electricity efficiently.

There is a lot of hidden demand because of unreliable supply and load shedding.

Owing to their poor financial health, state power utilities are unable to invest in system upgrades, and the
industrial/business tariff and cross-subsidy regime have harmed the productivity of the industrial and commercial
sectors.
Way forward

Promote smart grid and smart meters.

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All PPAs, including those with state-owned power companies (GENCOs), should be competitively bid. To promote
the flexible capacity for peak demand and intermittency, a capacity market should be created.

AT&C losses may be minimized by privatizing state delivery utilities and/or using a franchisee model.

Discoms in rural areas which use a franchisee model for their retail business and set minimum performance
requirements, such as the use of decentralized generation and storage systems for local reliability and resilience.
Regulatory bodies must be strengthened even further and made fully autonomous.

Instead of offering separate subsidies for fertilizers, energy, crop insurance, and other products, an upfront subsidy
per acre of land through Direct Benefit Transfer (DBT) could be considered for agriculture.

Encourage the use of solar pumps for agricultural purposes. The farmer’s surplus power should be purchased by
local utilities.
DISCOMs may be fined for load shedding.

Ensure effective enforcement of a cap on cross-subsidy and open access. It is also essential to remove high open
access charges.

Actively encourage cross-border electricity exchange in order to maximize the use of current and future generation
assets.
Introducing performance-based rewards into the tariff system is a good idea.

To control power demand, 100 per cent metering, net metering, smart meters, and metering of electricity supplied
to agriculture must be enforced.

Important Developments in Power Sector

Amendments in Tariff Policy

Amendments to Electricity Act 2003 are with the following objectives –

Ensure consumer centricity

Promote Ease of Doing Business

Enhance sustainability of the power sector

Promote green power

Amendment Is:
The Selection Committee after the amendment had that the committee will be headed by a sitting Judge of the
Supreme Court.
The amendment will allow the state government to pay the subsidy 3 to 4 months later also.

Cost reflective tariffs would be applied.

Adequate payment security mechanisms are to be established.

Amendment will lead to the establishment of an Electricity Contract enforcement Authority.

It will promote the generation of electricity from a renewable source.

Amendment also had a minimum percentage of purchase of electricity from hydro sources of energy to be
specified by the Commissions.

It will strengthen the Appellate Tribunal (APTEL).

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It will facilitate trade in electricity with other countries.

It will also have sub-license provisions for distribution.

Oil & Gas

There is no nondiscriminatory access to the gas pipeline network for private and public sector firms, and the lack
of market-driven gas prices for old fields discourages further development.

The gas pipeline infrastructure is also inadequate.

Way forward
Ensure a single carrier and unrestricted access to gas pipelines.

Land can be leased by the government to oil marketing companies (OMCs) for energy crops, similar to how ‘solar
parks’ can be extended to biofuels.
Separate the Petroleum and Natural Gas Regulatory Board (PNGRB) developmental and legislative roles.

Ensure that the National Gas Grid is up and running as soon as possible.

Promote city gas delivery so that natural gas can be piped in (PNG).

Review contract terms and provide the necessary flexibility to render stranded oil and gas assets operational.
Enhance production from ONGC and OIL’s existing fields with cutting-edge technology within a system of
production enhancement contracts.

Take into account consumer rates for blocks that are not viable due to low gas prices.

Provide shared infrastructure for evacuation of oil and gas from small and scattered onshore and offshore fields.

2G bio-ethanol ventures should be designated as a “priority area.”

The government should provide 2G ethanol project developers/technology partners with feasibility gap
funding/financial assistance.

Declare regasified liquified natural gas (R-LNG) as a transportation fuel and encourage compressed natural gas
(PNG) in rural areas.

Create strategic reserves through various policy options.

Hydrocarbon Exploration and Licensing Policy(HELP)

The Hydrocarbon Exploration and Licensing Policy (HELP) is the production and exploration policy of the
Government of India in the hydrocarbon sector, adopted in 2016.

Objective: To boost the production of oil & gas in the Indian sedimentary basin.
Features of HELP:

The single license that would cover exploration and production.

It gives a Revenue Sharing Model.

Reduced and categorised the duty.

Full marketing and pricing freedom.

Extension of period for exploration and production for shallow water to 8 years and 10 years for deep water and
frontier areas.

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Pre-determined Liquidated Damages (LDs) for any shortage in the agreed work program.

Coal

Land for coal mining is becoming scarce, and there is a move toward expanding opencast mining while
discouraging underground operations, including for higher-quality coal reserves. This exacerbates the land scarcity
problem.

There is no demand for coal that is competitive.

Mineral Laws (Amendment) Ordinance/Act 2020

This act has been passed to amend:

Mines & Mineral (Development and Regulation) Act 1957.

The Coal Mines (Special Provisions) Act, 2015.

Mineral Concession Rule 1960.

The guidelines for preparation, processing and approval of the Mining Plan.

Aim:
Improve efficiency.

Increase domestic production of coal to decrease dependence on imports of coal.

Features of the Act:

Composite Prospecting License-cum-Mining Lease (“PL-cum-ML”) for giving of coal blocks is provided which
will increase the information about the coal blocks for auction.
Guidelines for the selection of companies in the auction which do not have an experience in this area in India are
given in the act.

The policy for allowing 100% FDI by automatic route in mining, processing and sales of coal is provided in the
act.

The requirement of precious approval in cases in which the central Government did the allocation of coal blocks.
Control over the use of coal mined by the company that has been allotted the mine has been given in the act.

This act required CMSP Rules and CBA Rules were also amended.

Coal Selling

SHAKTI Coal Policy (2017)

SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) coal policy was introduced in
May 2017 by the Government to replace the Letter of Assurance and Fuel Supply Agreement (FSA)-based regime.
The aim of the policy is to increase transparency, accountability and competition in coal allocation.

Features:

All the power plants besides captive power plants are eligible to bid in the auction for short-term linkage provided
they have at least 50%united capacity i.e. generation capacity without Power Purchase Agreements.

Only for a period of three months, the power plants will be provided with coal linkage for consumption of coal.

Auctions for the coal Linkages would be held quarterly and an annual calendar for this purpose would be released.

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Competitive bidding would be held among the companies and the bid would include a premium above the notified
price of coal.

The sales of the power produced by the coal linkages would be sold in the day-ahead market by power exchanges
and short term with transparency in the bidding process by making use of DEEP Portal.
DEEP Portal

DEEP Portal stands for Discovery of Efficient Energy Price Portal.

It is an e-bidding and e-reverse auction portal for acquiring a short term supply of power by distribution
companies.

National Coal Index

As the ministry of coal started auctioning coal mines on a revenue share basis. In order to get the revenue share
based on the market price of coal National Coal Index (NCI) was introduced.

The NIC is a price index which shows the changes in the price levels of coal for a particular month related to the
fixed base year. The base year for the NIC is 2017-2018.

The NCI combines the prices of coal from all the sales channels-Notified Prices, Auction Prices and Import Prices.
The amount of revenue share per ton of coal produced from auctioned blocks would be arrived at by using the NCI
by means of a definite formula.

The Index is meant to encompass all transactions of raw coal in the Indian market. This includes coking and non-
coking of various grades transacted in the regulated (power and fertilizer) and non-regulated sectors. Washed coal
and coal products are not included.
NCI has a set of five sub-indices of which two for Coking Coal and three for Non-Coking Coal. The three sub-
indices for Non-Coking Coal are used to get at the Index for Non-Coking Coal and the two sub-indices for Coking
Coal are used to get at the Index for Coking Coal.

It was developed by the Indian Statistical Institute, Kolkata.

The NCI is released every month.

Coal Energy: Economic Survey Suggestions / Observations “Carbon Imperialism Coal-Based Electricity Is
A Necessary Evil”

Some of the suggestions/observations of the Economic Survey are as follows:

As the demand for power is increasing in India, the use of coal will continue in spite of taking big steps toward
renewable sources.
It suggested the government review its decision to open the sector for commercial mining with keeping in mind the
adverse impact on the country’s net-zero goals.

The survey suggested that the public sector coal and lignite producers are taking several initiatives to mitigate their
carbon footprint.

The survey observed that India would need about 1.5 billion tonnes of coal annually by 2030 which would account
for 55% of the country’s energy sources and 70% of the electricity transferred to the grid.

The Survey suggested that the decision of the government to open coal mining for the private sector is a big step in
the coal sector. It would bring efficiency and competition in production, attract investments and the best technology
and help in creating more jobs in the sector.

The survey gave the steps initiated by the public sector producers are as follow:
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In the period of 2020-21, the PSUs brought 56,000 hectares of land under green cover to create a carbon sink of
about 5 lakh tonnes of CO2 equivalent per year.

It envisaged bringing about 30,000 hectares of extra land (in and around coal mines) under green cover by planting
around 75 million trees by 2030.
By March 2021 the PSUs had installed a renewable energy capacity of 1,496 MW and during the next 5 years
planned to install an additional 5,60 MW of renewable capacity with substantial carbon offset potential.

Way Forward
Full comprehensive exploration as quickly as possible using exploration-cum-mining leases based on a
production/revenue sharing model.
Make it the duty of concerned state governments to provide the land required for mining.

Commercial coal mining should be operationalized as soon as possible.

Electricity

Ministry of Power
National Electricity Distribution Company

It was formed by a Memorandum of Understanding(MoU) signed between National Thermal Power Corporation
Limited (NTPC) and Power Grid Corporation of India Limited.
The National Electricity Distribution Company Limited(PGCIL) was a joint venture on a 50:50 equity basis.

Its main function was to distribute electricity and do other jobs related to it.

One Nation-One Grid

About National Grid

It is a high-voltage network of electricity in the main part of India which interconnects the stations and substations
so that electricity generated in one place can be used in some other place.

It is managed by the state-owned Power Grid Corporation of India.

Development of National Grid

The concept of Grid management on a regional basis started in the sixties with state grids inter-connected in five
regions namely Northern, Eastern, Western, North Eastern and Southern regions.

The Northeastern and Eastern grids were interconnected in October 1991. They were connected to the western grid
in march 2003 and north in august 2006 so the four regions were connected.

On the 31st December 2013 southern grid was also connected in a parallel manner by commissioning of 765kV
Raichur-Sholapur Transmission line to form ONE NATION-ONE GRID.

Benefits:
It will help in the efficient transfer of electricity from a region where it is abundant to a region where demand is
high.

One standard frequency would be there throughout the nation.

It could help in tackling backouts.

It would help in the establishment of a vibrant Electricity Market for its trading across the regions.

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Grid → Green Energy Corridor Project:

The aim of the Green Energy Corridor Project is to interconnect renewable sources of electricity like solar and
wind with conventional power stations in the grid.

Purpose of the Green Energy Corridor in India:

The grid would help in reducing the country’s dependence on fossil fuels i.e. it would increase the share of
electricity from renewable sources to 40% by 2030.
The target of 450 GW installation renewable capacity by 2030 could be achieved by this scheme.

It will reduce the carbon footprint.

It would generate direct and indirect jobs.

It would help India to achieve commitments made by India at the COP-26 summit in Glasgow.

It has been implemented in two phases:

Phase I:

Initially, it was implemented in 2015-16 by eight renewable source rich states namely Rajasthan, Karnataka, Tamil
Nadu, Gujarat, Maharashtra, Andhra Pradesh, Madhya Pradesh and Himachal Pradesh.

The target was to lay down the 9,700 km of transmission lines and 22,600 MegaVolt-Amperes(MVA)
transformation capacity of substations by 2022.

The funds for the projects have been obtained from a 20% state equity, 40% Government of India Grant and a 40%
loan from KfW Bank of Germany.

Phase II:

It has been implemented in seven states namely Uttar Pradesh, Tamil Nadu, Rajasthan, Kerala, Karnataka,
Himachal Pradesh and Gujarat.

The target of this is to lay down 10,750 km of transmission lines and 27,500 MegaVolt-Amperes (MVA)
transformation capacity of substations by 2025-26.

The 33% of the cost of the project would be given by the Centre.

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Previous Year Question (PYQ)

(2013, Mains)

Q. Write a note on India’s green energy corridor to alleviate the problems of conventional energy. (200
Words, 10 Marks)

Decoding the Question:

In the Introduction try to write about the Green Energy Corridor.

In Body,
Discuss problems in India’s conventional energy.

Discuss how green energy corridors alleviate problems of conventional energy.

Try to conclude by writing about Indian renewable energy targets.

Answer:

For the acceleration of the flow of renewable energy into the national grid, the Government of India plans to
initiate the Green Energy Corridor project worth INR 43,000 crore (US$ 6.9 billion). The purpose of the
project is synchronizing electricity produced from renewable sources (such as solar and wind) with
conventional power plants in the grid. For developmental and technical assistance, Germany has committed
€ 1 billion (US$ 1.33 billion) for the project. The project is expected to reinforce the power distribution
network in India. The Green Energy Corridor project can be expected to lead to the development of an
integrated grid across the country by making its grid compatible with renewable energy distribution.

Problems in India’s conventional energy:

Climate change: Conventional energy sources such as oil, gas and coal, are generally called fossil fuels.
These fossil fuels raise concerns about climate change and pose challenges to India’s Paris climate
commitment under Intended Nationally Determined Contributions (INDCs).

Import bill: The use of conventional energy, increases import dependence that further leads to increased
forex burden. According to preliminary data from the Petroleum Planning and Analysis Cell (PPAC), India’s
oil import bill fell to $101.4 billion in FY20 from $111.9 billion in the previous fiscal year.

Rising prize: OPEC countries charging extra rupees from Asian oil-importing countries by charging an extra
“Asian premium”. These additional costs add pressure to the country’s import bill.
Indoor Pollution: In most Indian villages, wood, cow dung and other traditional forms of energy sources are
still used to heat and lighten up their home. This has led to increased indoor pollution, which is a serious
health problem.

Green Corridor Resolves Conventional Energy Problems:

Different voltage: Different voltages: Currently, the National Grid is facing problems in connecting
sustainable energy sources due to different voltages and power supply. The goal is to make the transmission
system dynamic to deal with voltage changes. Germany’s technological assistance would be crucial in this
project as it has strong networks that can integrate sustainable energy sources into its national matrix.

Future proof: India has an expected installed renewable energy capacity of 28,000 MW. Bringing this into
the national grid needs overhauling of the overall national grid. The National Green Corridor will help in the
smooth transmission of power in this grid system.
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Connecting roof-top: Rooftop solar power generation has been supported by government policies. This
growing rooftop solar generation needs to be connected to the state or national grid and the Green Energy
Corridor will help reduce this problem.

Help to achieve targets: The government has set targets of 175 GW of renewable energy, with solar and
wind accounting for a significant portion. Connecting them to the national grid is essential and this NGC will
help in achieving the goals.
Reserving coal deposits: NGC will help reduce dependence on coal for thermal power generation, therefore
India can potentially retain coal reserves for future generations.

Thus, it is said that India’s Green Energy Corridor will not only help connect green energy from different
parts of the country but will also have a multi-fold impact on India’s green energy production and
distribution in different parts of the country.

Prepaid Smart Meters for Electricity

In Prepaid Smart Meters customers pay first for the amount of electricity they want to use.

The reason for using Prepaid Smart Meters are as follow:

It will help in making state utilities more efficient and reduce their loss.

It will help in energy conservation.

Make DISCOMs financially strong.

Make bill payment easier.

UDAY(2015)
UDAY stands for Ujwal DISCOM Assurance Yojana.

It was launched in November 2015 by the central government under the Ministry of Power.

It is a Centrally Sponsored Scheme.

To reduce overall technical and commercial loss from 22% to 15% by removing the gap between the supply of
revenue side and supply of cost side by 2018-19.

Increase the operational efficiency by using smart metering, up-gradation of transformers, meters etc and using
energy-efficient measures like LED Bulbs.

To restructure the loans on DISCOMs of states was optional for the states.

Benefits are given to states who participate in the scheme:

Decrease in the cost of power by centres support.

Increase in supply of coal.

Coal linkages allotment at notified prices.

Rationalization of coal price.

Supply of washed and crushed coal.

Interstate Transmission lines were laid down at a faster rate.

Transparent bidding for power purchase.

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Electricity reforms

DRAFT Electricity (Amendment) Bill 2020

It has been proposed for the amendments in the Electricity Act 2003.

Some of the amendments proposed in the bill are as follows:

Direct Benefit Transfer: Tariffs were determined by the state commission without taking into account the subsidy
and the government could directly transfer the subsidy to consumers’ accounts.

Cost reflective Tariff: The commissions would determine tariffs that are reflective of the cost for the DISCOMs to
recover their investment.

Formation of Electricity Contract Enforcement Authority: It has proposed to establish an authority with the
powers of a civil court to enforce the contracts related to purchasing or sale or transmission of power between
generating, distribution or transmission companies. It would be headed by a retired Judge of the High Court.

Formation of adequate Payment Security Mechanism for scheduling of electricity: Its purpose was to give
power to Load Dispatch Centres to monitor the payment security mechanism before scheduling the dispatch of
electricity as per contracts.

The Appellate Tribunal (APTEL) strength would increase: For quick disposal of cases, the strength of the tribunal
would increase to seven along with a chairman so that multiple benches could be set up.

Removal of multiple Selection Committees.

It proposed to develop the National Renewable Energy Policy.

Cross Border trade in Electricity: It had provisions to facilitate the development of trade in electricity among the
countries.

By sub-licensing & franchisees to attract private investment in DISCOMs.

7. Deendayal Gram Jyoti Yojana(2015)

It was launched in 2015 by the Ministry of Power.

Aim:

Electrifying the villages.

Upgrade the Sub-transmission and distribution network to improve the quality and reliability of the supply.

Components of the scheme:

Separate feeder for agriculture and Non-agriculture consumers in rural areas

Upgradation of the transmission and distribution infrastructure in rural areas.

Salient Features:

It replaced Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY).

Under this scheme, all the DISCOMs are eligible for financial assistance.

For the implementation of the scheme, the nodal agency would be Rural Electrification Corporation Limited
(REC).
Benefits of the scheme:

Electrification of village households.

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Agriculture production would increase.

The development of small household businesses increases employment opportunities.

Banking (ATM) services, Education, and health system upgradation.

Availability of radio, telephone, television, internet, and mobile.

Improvement in social security due to the supply of electricity.

Availability of electricity to panchayats, schools, hospitals, and police stations.

Implementation period
The projects under this would be completed within a period of 2 years from the date of issue of the Letter of
Awards by the utility.

Funding System
The central government would give a grant of 60%of the cost of the scheme to normal states and 85% of the cost
of the scheme to the special category states.

8. PM SAHAJ BIJLI HAR GHAR YOJANA (SAUBHAGYA)

It was launched in September 2017. Under the Ministry of Power.

Rural Electrification Corporation was the Nodal Agency for the operationalization of the scheme.

Aim:

Providing the electricity connection to the last mile in rural areas.

Providing last-mile connectivity to poor unelectrified sections.

For areas where grid systems are not feasible, implementation of Solar Photovoltaic (SPV) based standalone
systems.

Features:
Provided metered connection for economically poor households for free and a charge of Rs. 500 for other
households.

Making camps in villages for spot registration for connection.

Identification of beneficiaries by using a Mobile App.

Monitoring the implementation of the scheme in real-time through the web.

Setting up SPV based standalone systems for areas where grid systems are not feasible.

Communication plans for making awareness about the scheme and its benefits.

Funding
Under the scheme Rs. 14,109 crore has been sanctioned by the Ministry of Power to 26 States/Union Territories.

9. Revamped Distribution Sector Scheme (2021-June)

It was launched in July 2021.

The scheme would be available till the year 2025-26.

Nodal agencies are Rural Electrification Corporation Limited and Power Finance Corporation Limited.

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Aim
Reduce the AT&C losses to pan-India levels of 12-15% by 2024-25.
Eliminate the ACS-ARR gap by 2024-25.

Getting Institutional Capabilities for Modern DISCOMs.

Enhance the reliability, quality and affordability of power supply to consumers by financial sustainability.

Features
The Scheme provided for the annual increment of the DISCOM efficiency against predefined and agreed upon
performance trajectories including ACS-ARRgaps, AT&C losses, infrastructure upgrade performance, hours of
supply, consumer services, corporate governance etc.

To get the funding under the scheme in that year DISCOMs have to score at least 60% of marks and clear a
minimum bar with respect to certain parameters.

The main focus of the scheme was to improve the electricity supply for the farmers and for providing daytime
electricity to them through the solarization of agricultural feeders.

The separation of 10,000 agricultural feeders was taken under the scheme.

The scheme would empower the consumer by the way of prepaid Smart metering to be applied in PPP mode.

It proposed the installation of around 10 crore prepaid Smart Meters in the first phase by December 2023.

Renewable Energy
High energy prices cause old power purchases to agreements (PPAs) to be reneged on, eroding their sanctity. This
creates confusion about power use, putting future investments at risk.

Generating flexibility and balance criteria for renewable energy integration are emerging as major issues.

In the production of biomass power, there are supply chain problems.

KUSUM (Solar for farmer) 2019

Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan is a government scheme under which
the Ministry of New and Renewable Energy (MNRE) aims at securing the required energy power as needed by
the farmers of the country with the help of solar energy.

It is the first farm-based solar system scheme which was launched in the year 2019 and it is divided into 3
components-

Component A: To install 10,000 GW of the ground-mounted grid system.

Component B: To install 17.5 lakh solar-powered agriculture pumps.

Component C: The solarisation of 10 lakh grid-connected agriculture pumps.

Jawaharlal Nehru National Solar Mission

Jawaharlal Nehru National Solar Mission- Building Solar India is a government scheme that comes under the
Ministry of New and Renewable Energy. This scheme was launched in the year 2010 and its main objectives are-

To make India stand among the global leaders in energy production.

To set up an environment in the country that is favourable to solar energy technology.

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The pioneering target of this mission is to produce 20,000 MW of energy grid connected to solar power by the year
2022 which was revised to 1,00,000 MW by the year 2022 in June 2015.

World’s largest Hybrid renewable energy park- Khavda

On December 15, 2021 Prime Minister Narendra Modi laid the foundation stone of the world’s largest hybrid
renewable energy park which lies in Khavda village of Kutch district Gujrat. This project lies close to the Indo-Pak
border with a capacity of producing 30,000 MW (megawatt) of hybrid renewable energy. The word hybrid in the
project is used because there will be two sources of energy. First, from Solar energy and secondly from wind
energy.

The government’s renewable energy target is-

175 GW by 2022

450 GW by 2030

The Government of Gujarat has identified 1,00,000 hectares of wasteland near the Indo-Pak border in the Kutch
district out of which in April 2020 the Ministry of Defence has approved the use of 72,600 hectares of land for the
development of a renewable energy park.

The renewable energy park will be divided into two zones-

Hybrid park: It spreads in 49,600 hectares of land occupying power both from solar as well as wind energy.

Exclusive wind park: It spreads in 23,000 hectares of land deriving power exclusively from wind energy.

Way forward

Provide a method for balancing the power grid at a low cost (gas-based, hydro or storage).

Renewable purchase obligations (RPOs) should be strictly followed, and interstate renewable energy purchases
should be made simpler.

The costs of balancing interstate transmission systems (ISTS) linked power plants should be socialized over the
entire grid, on the lines of the point of connection (PoC) or a similar mechanism, by central level agencies like the
Central Electricity Regulatory Commission or the National Load Dispatch Centre.
In rural areas, decentralized renewable energy combined with the DISCOMMS grid will provide reliability.

Solar PV + biomass hybrid renewable energy systems should be investigated. Subsidies for consumers are required
to encourage commercial biogas.

Energy Efficiency

Restricted technological capacities, high initial capital investment, and industry and policy concerns have all
hindered energy conservation efforts.

Energy efficiency investments are unattractive for investors due to high transaction costs (which include appointing
suitable consultants and vendors for execution) in relation to project size, particularly in the micro, small-scale, and
medium-scale enterprise (MSME) market.

Way forward
State designated agencies (SDAs) should be more empowered and equipped with sufficient resources to enforce
EE related programmes. The Bureau of Energy Efficiency (BEE) should release a white paper on its 5-year plan on
energy efficiency in different sectors and define energy consumption norms.

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It is necessary to ensure greater participation of energy service companies (ESCOs) through the use of appropriate
financing models with a risk-sharing mechanism, especially by public sector banks.

States should incorporate the second edition of the Energy Conservation Building Code (ECBC) into their building
codes and ensure that it is implemented more quickly.

Encourage the use of LED lighting in government buildings and the replacement of old appliances with five-star
appliances. Lower-income households and small businesses should be the priority of the UJALA (Unnat Jyoti by
Accessible LEDs for All) programme. It is suggested that the number of appliances protected by the Standards and
Labelling (S&L) programme is increased.

Expand and deepen the Perform, Achieve, and Trade (PAT) programme; make Energy Saving Certificate trading
under the PAT scheme more successful by enforcing stringent penalties against defaulters.

BEE should develop cluster-specific programmes for energy-intensive industries in the MSME sector to implement
energy-efficient technologies.

For new power plants, the Forum of Regulators and State Electricity Regulatory Commissions (SERCs) should set
lower heat rate standards. Plants that consume more than the threshold amount of energy should be phased out over
time.
Encourage people to use public transportation. Electric public transportation networks may be transformed in a
timed manner. Expand the corporate average fuel efficiency requirements (CAFE) to include other vehicle
segments besides passenger cars.

UDAY scheme
Without improving the performance of the electricity distribution companies (DISCOMs) the state government’s
efforts toward 100 per cent village electrification, 24x7 power supply and clean energy cannot bear fruit. For the
financial and operational turnaround of DISCOMs and to ensure a sustainable permanent solution to the problem,
the UDAY (Ujwal DISCOM Assurance Yojana) was launched by the GoI, in November 2015.
The salient features of the scheme are as given below:
States shall take over 75 per cent of the DISCOM debt—50 per cent in 2015–16 and 25 per cent in 2016–17. This
will reduce the interest cost to 8–9 per cent, from as high as 14–15 per cent.
GoI will not include the debt taken over by the states in the calculation of the fiscal deficit of the States in the
financial years 2015–16 and 2016–17.
States will issue non-SLR including SDL (State Development Loan) bonds in the market or directly to the
respective banks and Financial Institutions (FIs).
DISCOM debt not taken over by the State shall be converted by the Banks and FIs into loans or bonds with
interest rates not more than the bank’s base rate plus 0.1 per cent. Alternatively, this debt may be fully or partly
issued by the DISCOM as State guaranteed DISCOM bonds at the prevailing market rates which shall be equal to
or less than the bank base rate plus 0.1 per cent.
States to take over the future losses of DISCOMs in a graded manner.
States accepting UDAY and performing as per operational milestones will be given additional/priority funding
through Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY), Integrated Power Development Scheme (IPDS),
Power Sector Development Fund (PSDF) or other such schemes of the Ministry of Power and Ministry of New
and
Renewable Energy. States not meeting operational milestones will be liable to forfeit their claim on IPDS and
DDUGJY grants.

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Such States shall also be supported with additional coal at notified prices and, in case of availability through
higher capacity utilisation, low-cost power from NTPC and other Central PSUs.
UDAY is optional for all States. However, States are encouraged to take the benefit at the earliest as benefits are
dependent on the performance. [By March 2017, most of the states/UTs had joined the scheme.]

Roadways/Surface Transport
India has the world’s second-largest road network, with around 52.32 lakh kilometres of National Highways, State
Highways, and other roads. The country’s NHS cover a total distance of 1,00,475 km and carries about 40% of all
traffic.

Present Situation
In India, the road transport sector accounts for the bulk of passenger and freight movement.

According to the Ministry of Road Transport, the total number of registered vehicles in India increased from 58.9
million in 2001-02 to 295.8 million in 2019, Access to and the efficiency of public transit, on the other hand, must
continue to improve.

Increased use of personal vehicular transportation in urban areas causes traffic congestion, longer travel times, and
higher levels of air and noise pollution.

Expansion of the public transport fleets has been hampered by the short supply of vehicles. The total demand for
buses was approximately 3.40 lakh in FY 2017, while the availability/supply was only about 1 lakh.

Some of the government objectives: Enhancing connectivity and internal and external trade needs to improve the
coverage and efficiency of roads and highways. We should reach the following targets by 2022-23.

Expand the road network to improve connectivity:

Complete 24,800 km of Bharatmala Phase-I roads by 2021-22, including 2,000 km of coastal and port connectivity
roads.

Finish Phase I of the Pradhan Mantri Gram Sadak Yojana (PMGSY), with quality assurance at each point.

Raise the length of national highways (NHs) from 1.22 lakh km to 2 lakh km by 2022-23.
Increase the width of single/intermediate lane (SL/IL) highways and reduce the length of SL/IL highways to less
than 10% of total length by 2022-23, down from 26.46 per cent now.

Improve the regulatory framework for roads to achieve better compliance, seamless connectivity, road safety and
quality.

As a signatory to the Brasilia Declaration, reduce the number of road accidents and fatalities by 50 per cent by
2020.

Constraints

The capacity of existing highways: According to MoRTH, the existing length of the NH network is 1.32 lakh km,
which is 2.2 per cent of the country’s entire road network of 58.98 lakh km. The existing NH length with 4-lane
and above NH standards is 31,067 km, and that with single/intermediate lane (SL/IL) width is 36,310 km and the
remaining 65,123 km (50.95 per cent) is of 2-lane NH standard. Further, national and state highways are already
overstrained, carrying more than 65 per cent of the road traffic. National highways carry 40 per cent of India’s total
road traffic.

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Inadequate funds for maintenance of existing infrastructure: The annual outlay earmarked for maintenance and
repair of national highway stretch is only about 40 per cent of the funds required. This is one of the main reasons
for the inability to take up timely maintenance interventions.

Accidents and safety concerns: Road safety is a major issue in the country with nearly 400 road-related deaths
being recorded daily. According to NCRB, in 2020, India had an accident death rate of 27.7 for every 100,000
people, higher than other South Asian countries such as Bangladesh (11.6), Mauritius (12.2) and Sri Lanka (13.7).9
At least a part of the fatalities is because of the poor quality of roads.

Cost escalation for roads: Delays in acquiring land can affect project costs as the average cost of land has
escalated from Rs. 0.80 crore per hectare during 2012-13 to Rs. 3.20 crore per hectare during 2017-18.

ROAD→TYPES

Roads are the major nervous system of any country on which the major traffic moves, depending upon the location,
need and function roads can be classified into many different types. These are-

National Highways: These are the most important roads of any country which run throughout the country,
connecting different capital cities of different states and metropolitan cities.

National Highways are of a minimum of two lanes.

State Highways: These are the most important roads of the state, which connect the major cities within the state.
State highways ultimately join the National Highways in the end.

District Roads: These roads connect the major marketplaces, offices and factories lying in the city to the state and
national highways. District roads are of two types Major district roads and Minor district roads-

Major District Roads: These roads connect the major administrative buildings and headquarters of one district
with another.

Minor District Roads: These are the minor roads within the district.

Rural District Roads or Village Roads: These roads are used to connect the nearby towns and villages with each
other. The material used in constructing these roads is of usually less quality because the amount of traffic with
which they deal is usually low.
Types of Roads depending upon the amount of traffic which it carries:

Light Traffic Roads: The type of roads that carry on an average of up to 400 vehicles daily are termed light traffic
roads.

Medium Traffic Roads:The roads dealing with an average of around 400-1000 vehicles on a daily basis are
termed as medium traffic roads.

Heavy Traffic Roads: The roads on which more than 1000 vehicles move on a daily basis are termed heavy traffic
roads.

NHAI: National Highway Authority of India

The National Highway Authority of India was established with the help of the act of parliament and the NHAI Act
of 1988. The authority has been operational since February 1995. It works under the guidance of the Ministry of
Road Transport & Highways (MoRTH).

NHAI was constituted basically for maintaining and building the National Highways; besides this, they also
undertake other minor projects under the administrative control of MoRTH as deemed necessary.

Composition of NHAI-

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The Authority consists of five full-time members presided by a chairman and four part-time members. The Central
government appoints four part-time members these are-
1. Secretary (Expenditure)
2. The Secretary (RT&H)
3. Secretary (Planning) and
4. DG (RD) & SS

Besides this, the National Authority of India also has different departments or wings namely technical,
administrative, finance and vigilance to assist the working of NHAI.

At present 1,32,499 km of the national highway have been laid including expressways and highways.

Vision of NHAI

“To meet the Nation’s need for provision and maintenance of National Highways network to global standards and
to meet the user’s expectations in the most time-bound and cost-effective manner, within the strategic policy
framework set by the Government of India and thus promote economic well-being and quality of life of the
people.”

NHDP-National Highways Development Project

The first attempt at road maintenance and building in India was done by the Britishers in Nagpur in 1943. But it
failed due to a lack of proper negotiation between the princely states and the ruling British government. Later, in
independent India, the first attempt to look after the development and maintenance of roads was done in 1960. It
was basically a 20 years road development plan, to look after maintenance development and betterment of existing
roads. Later in 1995, The NHAI which looks after the development of National Highways and Expressways started
a project named the National Highway Development Project under which the development of roads and
highways in different parts of the country would take place.

The process of construction and development of roads under NHDP is to be completed in 7 phases-

PHASE-1: Under phase 1 four major cities of India i.e Delhi, Kolkata, Mumbai and Chennai are connected by the
four-lane highway. This road is termed a golden quadrilateral which is 5846 km long

PHASE-2: Under this phase two corridors are being built, one extending from north to south and the other from
east to west. The north-south corridor extends from Srinagar in the north to Kanyakumari in the south whereas the
east to west corridor extends from Silchar in the east to Porbandar in the west. The total length of both corridors is
7142 kilometres.

PHASE-3: This phase deals with the expansion of 12,109 kilometres of national highways on the BOT basis i.e
Build Operate and Transfer. The 12,109 kilometres of road are identified on the basis of roads which are dealing
with heavy traffic and lack connectivity to state capitals.

PHASE-4: Under this phase 20.000 kilometres of the road which are left uncovered in phases 1,2 and 3 are to be
covered. These single-lane roads will be converted into double lane highways with paved shoulders.

PHASE-5: In this phase around 5,000 kilometres of four-lane highways will be expanded into six-lane highways.

PHASE-6: This phase deals with the construction of expressways of 1000 kilometres in length which would
connect major industrial and commercial hubs with each other.

PHASE-7: In this the major emphasis is given to the construction of the city roads by providing ring roads and
bypasses that would connect to major highways.

PRADHAN MANTRI GRAM SADAK YOJANA(2000)

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This scheme was implemented by the Central Government on 25 December 2000. Pradhan Mantri Gram Sadak
Yojana is related to rural road construction. This scheme has been started by Prime Minister Atal Bihari
Vajpayee. At present phase 2 of this scheme has been completed. The third phase has come into effect on 18
December 2019. The second phase of the Pradhan Mantri Gram Sadak Yojana was implemented in 2013. The first
phase of Pradhan Mantri Gram Sadak Yojana was started on 25 December 2000

The third phase of the scheme was started by the Union Minister for Rural Development, Agriculture and
Farmers Welfare and Panchayati Raj Narendra Singh Tomar on 10 December 2019 in New Delhi. The objective
of Pradhan Mantri Gram Sadak Yojana 3 is to increase the connectivity of villages with hospitals, schools and
agricultural markets.

Target of Pradhan Mantri Gram Sadak Yojana: Phase 3

Integration of 1 lakh 25 thousand km of road is to be done through various routes and major rural link routes i.e. 1
lakh 25 thousand km long connectivity is to be built. It aims to connect rural agricultural markets, higher secondary
schools and hospitals with settlements. Under this scheme, the roads constructed in the first phase of Pradhan
Mantri Gram Sadak Yojna are also to be maintained i.e. safe or improved roads are to be constituted.

Cost in Pradhan Mantri Gram Sadak Yojana 3:

The estimated cost for 2019-20 to 2004-05 is Rs 80,250 crore. The Central Government’s share in this scheme is
55.800 crore rupees and the states’ share is rupees 26,460 crores. The funding ratio between the centre and the state
will be in the ratio of 40 to 60. The funding ratio for the North Eastern and Himalayan states will be 90 to 10.

Implementation of Pradhan Mantri Gram Sadak Yojana 3:

Under the Pradhan Mantri Gram Sadak Yojana, the period of the third phase has been fixed from the year 2019-20
to 2024-25. The road is selected on the basis of the sum of the total marks obtained on human beings, service
market, educational and medical facilities etc. of the population.

Bharatmala Pariyojana (2017):

The Bharatmala project was sanctioned by the central government on October 25th 2017 which is the second-
largest road construction project after NHDP.

Under the first phase of Bharatmala Pariyojna, India has to develop around 24,500 kilometers of road and around
10,000 kilometers of road has to be revamped under the national highways development project.

This project aims at the quicker movement of cargo and freight connectivity between the regions in economic
corridors and border areas. It is expected that during the road construction process under the Bharatmala Pariyojna
project 100 million man-day jobs and subsequently 22 million job opportunities will be created across the
country.

Thus under phase 1 of the project, a total of 34,500 kilometres long project will be constructed. The Bharatmala
project has a budget of 5.5 lakh crore rupees out of which 3.5 lakh crore rupees are already endowed. In the
Bharatmala Project, International trade is a key aspect and a special focus is given to the North-Eastern states.

This is an integrated scheme under which roads are built in different parts of the county with improved quality. The
Bharatmala project passes through 13 different Indian states starting from Gujrat and passing through Rajasthan,
Punjab, Himachal Pradesh, Jammu and Kashmir, and Uttrakhand. Uttar Pradesh, West Bengal, Sikkim, Assam,
Arunachal Pradesh, Mizoram and Manipal.

E-toll collection via FASTag (2017)

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There are basically two types of toll collection systems in India one is an existing system and the other is
a proposed system.

In the existing system when the car reaches the toll they have to stop at the toll, pay their toll tax in cash and then
they can proceed on their further journey.

The major drawback of this existing system is that a large amount of traffic gets accumulated near the toll plaza,
which causes too much wastage of time. Therefore to tackle this problem the proposed system, i.e system of toll
collection via fast-tag is brought into usage for the collection of tolls.

Besides this automatic toll collection also helps in the detection of theft vehicles with the help of a unique
RFID(Radio Frequency Identification) tag.
ETCS or electronic toll collection system is a system that helps users in making payments of tolls on national and
state highways automatically. In this system, the vehicle gets identified with the help of RFID tags or also known
as fast-tags which are installed at the front windshield of the vehicle and are nothing but a unique identification tag
for each vehicle.

When the vehicle passes through the toll plaza, the reader which is installed at the toll plaza intercepts these RFID
tags with the help of radio waves, after that, a particular amount of toll gets deducted from the vehicle owner’s
bank account through which that RFID tag is linked.

Thus making the overall process less time consuming, on the other hand, it also solves the problem of petty cash
and is a great step for India’s cashless economy.

Besides the collection of tolls with the help of RFID tags, they also help the toll authority in determining whether
the vehicle is registered or not and if there is any type of payment violation done by the vehicle on any of the toll
plazas throughout the country then the authorities can easily detect it and can impose fines on the owner of the
RFID tag.

Fossil Fuel Use:

When the plant or any other living organism dies, they get buried under the earth either by natural or man-made
processes. Over there, they experience high temperature and pressure which cause their chemical decomposition,
which leads to their conversion into fuel.

The fuel thus formed by the decomposition of a dead and buried organism is termed fossil fuel. These fuels are
non-renewable sources of energy because they take a very long time to replenish therefore we should use them
frugally in a wise manner.

There are three types of fossil fuels widely used these are – Coal, Petroleum and Natural Gas. Fossil fuels are used
to heat our homes, run vehicles, power vehicles generate electricity etc. To solve the problem of limited available
fossil fuel, many alternatives are also found and some of these are solar power, nuclear power, wind power etc.

E20 Blending: E20 or ethanol-blended fuel is basically petrol blended with ethanol. Ethanol is an organic
compound also known as ethyl alcohol which is primarily extracted from sugarcane.

Ethanol or ethyl alcohol usually has higher octane numbers than that gasoline therefore when it is mixed with
petrol it improves the quality of the fuel-making it more feasible for the environment.

In the supply year, 2020-2021 India has accomplished the target of blending 7.2% of ethanol in petrol whereas in
the ongoing supply year India aims for blending up to 10% of ethanol in petrol.

National Hydrogen Mission:

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The National Hydrogen Mission aims at bringing down the emission of major greenhouse gases, petroleum use and
air pollution and also to contribute to enhancing diverse and efficient energy infrastructure.

This mission is basically about the usage of hydrogen fuel cells in place of fossil fuels because hydrogen fuel
cells produce no harmful emissions besides this it is less expensive and the only by-product of the fuel cells are
heat and water hence the energy derived from these fuel cells are also known as green energy.

Hydrogen being one of the most abundant element on the earth and it would be a great step towards reducing
pollution.

Electric Vehicle: The electric vehicle with an electric engine works on the principle of electromagnetism. The EVs
contain an induction motor, inverter, Lithium-ion powered battery and capacitors. The powerhouse of the EVs is an
induction motor.

It consists of a two-part stator and rotor. The stator is fed to 3 phase AC power input which creates a rotating
magnetic field(RMF). Then this RMF induces a current in the rotor ball. In an induction motor, the rotor speed is
always less than RMF speed.

The advantage of the induction motor is that its frequency is directly proportional to the frequency of the
alternating current. The speed of the motor can vary from 0 to up to 18000 rpm. Thus we can change the speed of
the car just by changing the frequency of the current. This is the basic principle on which electric vehicles work.

Bharat Stage Norms

Central Pollution Control Board (CPCB) which comes under the Ministry of Environment Forest and Climate
Change institutes the Bharat Stage Norms.

These norms regulate, implement and decide the amount of output of air pollutant which is permitted from motor
vehicles and engine equipment. Bharat Stage Norms runs parallel to the EURO norms with the lag of 5 years,
currently in India BS-VI (Bharat Stage 6) norms are being implemented for light motor vehicles.

According to BS-VI standards the emission of carbon dioxide would be brought down by 30% and Nitrogen
Oxides by 80%.

Decarbonizing Transport in India (2020-June)

The project Decarbonizing Transport aims at reducing the carbon dioxide accumulation in environment due to
vehicular emission. This project is launched by the NITI Aayog in June 2020 in collaboration with International
Transport Forum (ITF). The main objective of the DTEE (Decarbonizing transport in Emerging Economies)
project is decarbonizing the transport i.e. reducing carbon dioxide emission from transport and sub transport
sectors.

Besides India, countries like Argentina, Azerbaijan and Morocco are also participants.

Vehicle Scrappage Policy:

Different countries throughout the world have different scrappage policies. In India’s vehicle scrappage policy we
are aiming to reduce the overall pollution and increase the fuel efficiency.

Beside the environmental factor the policy also aims at increasing the turnover of automobile industry from 4.5
lakh crores to 10 lakh crores , which in on other hand will also create around 35,000 new job opportunities.

The main objectives of the vehicle scrappage policies are:

• Fuel Efficiency.
• New job opportunities.
• Reducing pollution.
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• Great boost in the automobile manufacturing industry.

• Huge profits in GST collection of around 40,000 crores.
Fitness Certificate: The basis for a vehicle to be sent in scrap depends upon the fitness of the vehicle. The fitness
of the vehicle will be examined in Automated Fitness Centres. If the vehicle is found unfit for further use then it
will be sent to scrape, the owner of the scrapped vehicle will get incentives on buying a new vehicle.

In case of failure in the fitness test vehicles will be de-registered and sent for scrapping. In general, the commercial
vehicle will be de-registered after 15 years and in the case of the private vehicle, the vehicle will be de-registered
after 20 years.

EVs In India: Steps Taken To Promote Them

The biggest problem in India when we discuss our automobile section is pollution. 6 out of 10 most polluted cities
in world are from India therefore the need of the hour is to shift our focus from normal conventional cars to electric
vehicles or EVs.

There are various steps have been taken by our government to promote EVs in India and these are-

The Indian government is giving incentives such as discounts on ex-showroom prices on buying electric vehicles.

The government is also giving incentives on electricity bills to promote the usage of EVs and charging them at
home.

The government have also launched many schemes to promote electric infrastructures and technology these are:
• National Electric Mobility Mission 2013
• Faster adoption and manufacturing of hybrid and electric vehicles in India (FAME) 2015.
• MeITY’s Phased Manufacturing Programme 2016.
• National Mission on Transformative Mobility and Battery storage 2019.
ES19: EVs in India: Charging is the biggest challenge

There are various challenges for adoption of EVs in India out of which setting up of the charging station is the
biggest problem. Till of now only around 300 charging stations have been set up by the Indian government which
is very less as compared to petrol pumps which are around 70,000 in our country. So, while driving the EVs the
owners are at high risk to run out of electric charge.

Secondly, setting up the charging stations and infrastructure requires a great amount of funds.

Thirdly, we lack fast charging technology for automobiles as well as a trained and skilled workforce.

Motor Vehicle Amendment Act 2019

On July 15 2019 the Minister of Road Transport and Highway introduced the motor vehicle amendment act
2019 in the Lok Sabha which then got passed by both the houses and got approved by the president. The Motor
Vehicle Amendment Act of 2019 amends the original Motor Vehicle Act of 1988. The recent amendments in the act
basically deal with the grant of licences, and permits and setting new standards for motor vehicles. The motor
vehicle amendment act 2019 deals with the following provisions-

Compensation for victims of road accidents: The central government has developed the scheme of cashless
treatment of the patients who are victims of road accidents in the golden hour of energy. The golden hour is the
time period of up to one hour from the time of the accident. Besides this, the government has raised the
compensation for
- Hit and Run cases from rupees 25,000 to two lakh rupees.
- In case of severe injury from rupees 12,500 to 50,000 rupees

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Mandatory insurance for vehicles: It will be mandatory for all road users to get their insurance done. These
insurance funds help in the treatment of the road accident victims and give compensations to the person who gets
grievously injured in the road accident and to the victims of the family members who died in the road accident.

Good samaritans: Good Samaritan is a person who helps the victims of the road accident by giving them medical
or non-medical assistance without any sake of favour or any kind of monetary support. Good Samaritan would not
be liable to any type of civil or criminal proceeding.

Summoning back vehicles: The central government in its new vehicle amendment act 2019 has brought a
provision of recalling back the vehicle which is found violating the pollution standard which could cause harm to
the other driver and road users of the country.

Penalties and offences- The Vehicle Amendment Bill 2019 has increased the penalties for several offences. These
are-

Driving under influence of alcohol or drugs rupees 2,000 to rupees 10,000.

Fine on motor vehicle companies for not complying with motor vehicle standards up to rupees 1 crore or
imprisonment of up to 1 year.

Contractors failing to comply with the road manufacturing standards up to rupees 1 lakh

Way forward

Increase connectivity by expanding the road network:

Improve State/UT Public Works Departments (PWDs) implementation capacity through institutional strengthening
and training.

By 2022-23, each city with a population of more than 1 million people would need a dedicated Metropolitan Urban
Transportation Authority.

Improve Road Maintenance and Safety

Implement a maintenance management framework to protect NH properties (MMS). Set aside money from the
Central Road Fund (CRF) for upkeep.

India should begin by allocating 10% of its annual budget to road and highway maintenance in order to achieve the
developed world standard of allocating 40% to 50% of the budget to road and highway maintenance.

Incorporate harsh penalties for low operations and maintenance (O&M) efficiency into contracts in all contract
modes.
Streamline land acquisition

Skill Development
Develop road construction vocational training courses in Industrial Training Institutes (ITIs).

Collaborate with original equipment manufacturers and other stakeholders to create commercial vehicle driver
training centres (DTCs).

Introduce technologically advanced approaches such as the automated driving testing system to ensure stringent
testing of driving skills before issuing driving licenses.

Increase Emphasis on Research and Development

Set aside 0.1 per cent of the Ministry of Road Transport Highways operating budget for research and development.

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Create a national transportation data centre for applied road analysis.

Enhance R&D on IT-enabled traffic management systems.

Develop new materials/techniques for construction.

Increase the Capacity and Reach of Public Transport

Improve public transportation, rural transportation, and last-mile connectivity by transforming state road transport
undertakings (SRTUs).

Additional funding for public transportation and the creation of interoperable systems will help expand the reach
and capacity of public transport.

Expand the reach of the electronic toll collection (ETC) system

Make the ‘FASTag’ charging system more effective.

Work with stakeholders and concessionaires (for PPP toll plazas) to ensure that all toll plazas are equipped with the
required ETC infrastructure.

Complete targets for rural connectivity Railways

Indian Railways (IR) constantly faced a number of challenges. For speedy capacity creation, IR recognizes the
importance of enhancing project execution capabilities. Considering the enormity of the resources required for plan
investment in rail infrastructure, and given the limitation of public resources, efforts are on by IR to generate
sufficient internal surplus, and tap innovative methods of financing, to meet these needs.

The focus is on prioritizing investments in vital areas like dedicated freight corridors, high speed rail, high capacity
rolling stock, last-mile rail linkages and port connectivity, and attracting private and FDI investments to
supplement available resources.

Rolling Stock
The word rolling stock in the railway industry is defined as a vehicle that moves along a railway track.

Dedicated Freight Corridor (DFC)

Dedicated freight corridor (DFC), as the name defines, to create a safe and efficient freight transportation system in
the country.

Importance of DFCs
It will speed up the transport of goods by rail route.

It will reduce load on traditional rail routes.

It will make space for more passenger trains in future.

Commission of Railway Safety

It is an independent body of the Ministry of Railways but controlled by the Ministry of Civil Aviation and deals
with matters related to Safety of railway and function according to the Railways Act, 1989.

The Structure of Commission

It is headed by the Chief Commissioner of Railway Safety stationed at Lucknow.

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There are 9 Commissioners of Railway Safety each administering over one or more Zonal Railways and the Metro
Railway, Kolkata and Konkan Railway Corporation Limited.

The Commission of Railway Safety’s function are as follow :

Inspection of new Railway lines prior to authorisation for passenger traffic.

Periodical inspection of open lines.

Licensing in new works and renewals that affect passenger carrying trains.

To investigations into accidents of trains,

To give general advice on matters concerning safety in train operations.

Present Situation
The Indian Railways (IR) is the fourth-largest network in the world in terms of route km (67,368 km in the
Financial year 2017).

It is also the world’s largest passenger (1,150 billion passenger-kilometres in the Financial year 2017) and fourth-
largest freight (620 billion net-tonne kilometres in the Financial year 2017) railway system. In the Financial year
2017, 13,329 passenger trains carried over 22.24 million passengers a day, almost the entire population of
Australia, and 1.1 billion tonnes of freight were transported.

Despite its extensive reach and the substantial growth in freight load, the modal share of railways in the
transportation of surface freight has declined from 86.2 per cent in 1950-51 to 33 per cent in 2015, in part due to a
shortfall in carrying capacity and lack of price competitiveness.

Because passenger and freight traffic in India share the same tracks, we have not been able to substantially increase
speed or capacity in relation to global benchmarks.

Railway spending as a percentage of total transportation spending dropped from 56 percent in 1985-90 (7th plan)
to 30 percent in 2007-12. (11th plan).

Important Government Objective

Increase the capability of the current railway infrastructure.

By 2022-23, increase infrastructure construction speed from 7 km/day to 19 km/day.

By 2022-23, achieve “100 per cent” electrification of the broad-gauge track, up from 40% in 2016-17.

Increase freight and mail/express train average speeds to 50 km/hr (from around 24 km/hr in 2016-17) and 80
km/hr (from around 60 km/hr), respectively.

Increase the capability of the current railway infrastructure.

By 2022-23, increase infrastructure construction speed from 7 km/day to 19 km/day.

By 2022-23, achieve “100 per cent” electrification of the broad-gauge track, up from 40% in 2016-17.

Increase freight and mail/express train average speeds to 50 km/hr (from around 24 km/hr in 2016-17) and 80
km/hr (from around 60 km/hr), respectively.

Concepts

Cross Subsidization

The practice of funding one product with the profits generated by another product is called Cross subsidization.

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Operating Ratio

The amount spent to earn every Rs 100 is called Operating ratio. The lower it is the better.

In the year 2019-2020 Operating ratio was 98.36 percent and 97.45 percent for 2020-21.

Modernisation

1. Personnel & Organisational Reforms

Sam Pitroda Committee (2012):

The Modernization of Indian Railways by Sam Pitroda submitted a report in Feb 2012.

It major recommendation of the committee are as follow:-

Removal of all Level crossings.
Automatic signalling should be introduced.
GSM based mobile train control system on A, B, and C routes.
Induction of new generation locos technologies.
Modernise 100 major railway stations.
Develop 34 multi-modal logistic parks.
Set Up a real-time information system.
Allow private investment by PP models.
Construction of Eastern and Western Freight Corridors.
Establish the Indian Institute of Railway Research.
Create a safety fund.

Bibek Debroy Committee(2015)

The Railway Board had constituted this Committee to mobilise the resources for major railway projects the
Railway Ministry under chairmanship Mr. Bibek Debroy.

The committee gave its report in June 2015.

The recommendations of the committee are as follows

Encouraging private participation.

Establishment of Independent Regulator.

Invest in improving Railways infrastructure.

Redesign the railway zones.

Streamline recruitment process.

Merge the railway budget with the General budget.

Reform the accountability system of Railways.

Railways Personnel Reforms & Unification of Services

Unification of services has been recommended by various committees for reforming Railways including - the
Prakash Tandon Committee (1994), Rakesh Mohan Committee (2001), Sam Pitroda Committee (2012) and Bibek
Debroy Committee (2015).

1.1 Unification of Services → Controversy

Problems with the Unification of services are as follows:

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Age and seniority-based on rank in UPSC test years back alone cannot be a fair measure of suitability for the posts.

The increasing anomalies and distortions with regard to top general management (GM) posts.

There is an issue that these top posts are being occupied by officers from certain departments.

In government, career prospects mostly depend on date of birth and rank in UPSC results.

The administration remains prone to disadvantages of age encountered by officers through the civil services
stream, against those from the engineering services examination.

The former generally join the service when they are 25-27 years old, while the latter join technical cadres at 21-24
years.

There’s a similar age anomaly in the case of Special Class Apprentices.

This affects the morale of the staff.

The organisation is the major loser, as it fails to optimally utilise its trained and experienced human capital.

1. 2. Restructuring of Railway Board

The Railway boards can no longer be organised on departmental lines and should be replaced with a leaner
structure organised on functional lines.

Features:
It would be composed of a Chairman, who would act as ‘Chief Executive Officer (CEO)’ along with 4 Members
responsible for Infrastructure, Operations & Business Development, Rolling Stock and Finance respectively.

The Chairman’s cadre shall be the controlling officer responsible for Human resources (HR) with assistance from a
DG (HR).

3 high level posts shall be taken from the Railway Board and all the remaining posts of the Railway Board shall be
open to all officers from all the services to which they belonged.

The Board would also have some independent Members (the number to be decided by competent authority from
time to time) from different fields with knowledge and experience of 30 years in fields like industry, finance,
economics and management . The Independent Members would help the Railway Board in setting a strategic
direction.

2. Private Train Operators

In July 2020, Indian Railways offered private companies to run 151 passenger trains on 109 train routes. It was
announced that the private trains would start from April 2023.

India’s first private train is Lucknow – New Delhi Tejas Express, which was inaugurated in October 2019.

Benefits
It will help to provide world-class facilities to passengers.

Modern technologies will be introduced into railways.

The gap between the supply and demand of tickets can be fulfilled by private trains.

As the Government of India said that these trains would be manufactured in India under the ‘Make in India‘
program. It would create more jobs and increase its GDP.

It will end the monopoly of Indian Railways and can make the travels more economical.

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2.1 Challenges In Allowing Private Trains

It will increase inequality among people.

With the use of modern technologies unemployment as private companies do not give as many jobs as the
government.

If coaches are not manufactured in India as promised and imported it will lead to a loss of Indian foreign reserves.

Although the private trains constitute only 5% for now, there is no guarantee that it won’t increase and if it
increases in the coming years, Indian Railways can suffer like BSNL & Air India.

3. Modernisation Attempts Before 2019

Project Uni-gauge
Project Uni-gauge was launched on 1 April 1990. It is an ongoing effort by Indian Railways to change all rail
gauges in India to 1,676 mm (5 ft 6 in) broad gauge.

Benefits of Adopting the Uni-gauge

There would be no transport hindrance as all routes will have the same tracks.
It will increase the speed of trains.

Routes of the train could be easily diverted.

There would be an improvement in the operating ratio of the railway system as a whole.

It will increase the efficiency of the tracks.

It will remove regional disparity and give balanced economic growth.

No multiple Tracking work required.

Encourage investment of private players in railways.

Project Saksham
“Project Saksham” would help to increase productivity and enhance efficiency.

Under this project, all employees in each zone will have to do a week’s training in skills and knowledge related to
their work area.

Under this project it is aimed to upgrade the skill sets of lakhs of workforce with a single drive spanning nine
months.

Mission Avataran
Avataran is an umbrella program that consists of 7 missions they are as follows:

Mission 25 Tonne : It is to increase revenue by augmenting carrying capacity.

Mission Zero Accident : It comprises two submissions such as

Elimination of unmanned level crossings on Broad Gauge in the next 3-4 years and

Equipping 100% of the High-Density Network with Train Collision Avoidance System (TCAS).

Mission PACE (Procurement and Consumption Efficiency) : It aims to improve procurement and consumption
practices to improve the quality of goods and services.

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Mission Raftaar : It targets doubling of average speeds of freights trains and increasing the average speed of
superfast mail/express trains by 25 kmph in the next 5 years. It would complement Mission 25 Tonne to increase
throughput of the railway system.

Mission Hundred : Under this mission, at least a hundred sidings would be commissioned in the next 2 years.
Siding refers to the low-speed track section / track branch distinct from a running line.

Mission beyond book-keeping – It would establish an accounting system where outcomes can be tracked to input.

Mission Capacity Utilisation – It proposes to prepare a blueprint for making full use of the huge new capacity that
would be created through two Dedicated Freight Corridors between Delhi-Mumbai and Delhi- Kolkata scheduled
to be commissioned by 2019.

Rail Drishti Portal

It is a step towards “Digital India, Digital Railways”.

Rail Drishti is an attempt to bring information from many sources into a single window for digitally viewing,
analyzing and monitoring the important aspects of Indian Railways with an aim to have transparency and
accountability.

It enables every citizen of the country to know important information about the Indian Railways openly and it also
provides a platform to take the services offered on various digital platforms of the Railways in one place.

Rail Development Authority

The Union Cabinet proposed of setting up an independent regulator Rail Development Authority (RDA) that would
recommend passenger fares for Indian railways.

The requirement of having a rail regulator has been recommended by various committees for the past many years
since 2001 including the Expert Group under the Chairmanship of Rakesh Mohan in 2001, the National Transport
Development Policy Committee (NTDPC) in 2014 and the Bibek Debroy Committee in 2015.

It will be headquartered in Delhi.

It would work within the parameters of the Railway Act, 1989.

It will only make recommendations to the Ministry on the fares.

It will improve the services offered to passengers and provide comfort to investors

It will enhance transparency and accountability.

The RDA will have a Chairman and 3 members and can engage experts from relevant areas. The Chairman and the
members would have a term of five years.

The appointment of the Chairman and members will be done by the central government from a list of names given
by the Search and Selection Committee which include Cabinet Secretary as Chairman, Railway Board Chairman,
Secretary, Department of Personnel and Training, and Chairman of any Regulatory Body of the central government
nominated by the Cabinet Secretary.

It will make recommendations regarding policies for private investment to give safety to PPP investors and to hear
disputes over future agreements.

It would propose measures for the induction of new technologies.

Green Initiatives by Railways

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The Green Initiatives by Railways are as follows:

The Railway Ministry plans to have 1000 MW of solar power by 2020-2021.

Indian Railways has established a wind energy plant of 36.5 MW, out of which, 26 MW was installed at Jaisalmer
in 2015-2016.

Use of LED lighting on electrified railway stations and service buildings.

In June 2015, the national transporter started blending 5 per cent biodiesel in High-Speed Diesel (HSD) for diesel
locomotives.

20% CNG substitution in diesel engines of 23 Diesel Power Cars of DEMU trains as well as the introduction of
solar energy-based DEMUs.

To increase greenery in railway premises, trees have been planted.

Indian Railways for better water management started water Audits at major centres of consumption and Water
Recycling Plants and Rain Water Harvesting systems were instituted at railway stations.

Installation of bio-toilets in trains.

The speed of electrification of trains has been increased in recent years by the Railway Ministry.

National Rail Plan for India–2030

Indian Railways have prepared a National Rail Plan (NRP) for India 2030.

The Plan is to create a Railway system future-ready by 2030.

Objective
To make plans based on both operational capability and commercial viability to increase the share of the Railway’s
good transport.

To have a capacity more than demand will help to facilitate the demand of 2050.
Increase the share of Railways to 45% in goods traffic and help to maintain it.

Safety
Indian Railways have taken various steps for the safety and security of passengers in trains as well as for railway
stations and a few of them are as follows:

The routes identified as prone to crimes by the trains are followed by Railway Protection Force (RPF) with
Government Railway Police of different States every day.

Railway Help Line number 139 is operational (24x7) .

Railways are in regular contact with passengers by social media platforms.

Announcements are made by the Public Address System to the passengers to take precautions against theft,
snatching, drugging etc.

An Integrated Security System (ISS) consists of surveillance of more prone stations to mishappenings through
CCTV.

Drives are done to stop the entry of unauthorised persons in trains and station areas.

Emergency Talk Back System and Closed Circuit Television Surveillance Cameras have been in new coaches.

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Railways Protection Force (RPF) initiatives-2019

Some of the initiatives of RPF are:

RPF has initiated a drive to identify children in problems at stations and in trains or in nearby
towns/villages/hospitals orphaned due to COVID-19 and help them to come out of their problems with the help of
their staff.

The introduction of ladies in large numbers in RPF to increase women’s security.

The Meri Saheli program was started by RPF from 17th Oct. 2020 across zones to help women travelling alone
for long distances by trains. In this a team of lady RPF personnel keep in contact with them throughout the journey
from boarding station till the deboarding station.

The Security of Female passengers has been enhanced by formation of Special Lady Squads like Bhairvi,
Virangna, Shakti. Keeping in contact with all ladies’ special trains in metro cities and local trains specially
deployed in late night and early morning local trains.

Railway Flood Relief Team (RFRT) : An RPF disaster relief initiative has been launched for reaching out and
providing succour to passengers stranded in trains due to flooding.

Dedicated Freight Corridor (DFC)

Dedicated freight corridor (DFC), as the name defines, to create a safe and efficient freight transportation system in
the country.

Importance of DFCs
It will speed up the transport of goods by rail route.

It will reduce the load on traditional rail routes.

It will make space for more passenger trains in future.

Metro Rail
A metro is a train that is designed to run in metropolitan cities to connect the distances within the city and its
suburbs.

Metro Rail Policy 2017

Features
The three models are given in the policy:

Public-Private Partnership with Central backing.

The Grant from the Centre here 10% of the Metro project cost would be given by the Central government as a
bailout.

50-50% Equity sharing between the Centre and state.

All three models require mandatory private participation.

The policy says that the states come up with innovative ways to raise funds.

The most important aspect of the policy is the last mile connectivity that lays down an area coverage of 5km.

The policy gives states the power to formulate rules and regulations and establish permanent fare fixation
authorities.

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Metrolite, MetroNEO = Cheaper Metros for smaller cities (2021)

MetroLite and MetroNeo are low-cost mobility solutions with reduced system requirements with the same
experience.

It is more environmentally friendly.

These systems can also act as feeder systems for incurrent metro systems.
According to Metro Rail Policy-2017,the Central Government gives financial assistance for these projects in cities
or urban populations based on feasibility of the project and availability of resources required when recommended
by related State Government/ Union Territories (UTs) as urban development matters come under state list.

Few projects under process are as follows:

Sr
State/UT City Name of Project
No

1 Delhi Delhi Rithala-Narela MetroLite Corridor in the remaining 03 corridors of Delhi

Metro Phase-IV

2 Maharashtra Nashik Nashik MetroNeo

3 Jammu and Jammu Jammu MetroLite

Kashmir

4 Jammu and Srinagar Srinagar MetroLite

Kashmir

5 Uttar Pradesh Gorakhpur Gorakhpur MetroLite

Table 17.2: Metro Rail Projects under Process

Hyperloop Using Vacuum Tube

Hyperloop is a new form of land transport currently in the development phase. In it passengers would be traveling
above 700 miles an hour in a floating pod inside giant low-pressure or vacuum tubes placed either above or below
ground.

The differences between Hyperloop and Traditional rail are as follows:

[Link]. Hyperloop Traditional rail

1. It carries passengers in a pod in a vacuum tube. It carries passengers in trains on rails.

2. It travels at a speed of around 700 miles per hour. It travels at a speed of around 90 miles per hour.

3. It floats in the tube due to magnetic levitation. They travel on wheels.

Table 17.3: Differences between Hyperloop and Traditional Rail

Benefits of Hyperloop
It would be cheap.

It will save travelling time.

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It will pollute the airless.

It will reduce pressure on the road to a large extent.

How Hyperloop Works

The basic idea of Hyperloop work is the suction created by the removal of air from the tube-like in an air pump and
the use of magnetic levitation to reduce friction.

Critics of Hyperloop
It has been warned by critics of the hyperloop that travelling in the tube may be uncomfortable of nausea-inducing
acceleration and additional lateral G-force on bends on the route.

Recommendations of Rakesh Mohan Committee (National Transport Development Policy Committee

(NTDPC)

The recommendations of the committee are divided into short term reforms and long-run objectives. The short
reforms have been recommended at the national, state and metropolitan levels while long term objectives are for
national and metropolitan levels.

At the National Level

Making a high-level and independent Office of Transport Strategy (OTS) and shift towards investment and
technique for transport as an integrated system.

National Transport Infrastructure Finance should be neutral with means of delivering mobility, sustainability and
inclusion goals.

At the State Level:

Make urban transport a subject at the state level and develop ways for states to participate in decisions about
initiation, siting, size and other aspects of airports and railways.

Formation of state-level counterparts OTS, with particular focus on urban transport.

At the Metropolitan Level

Creation of Unified Metropolitan Transport Authority (UMTAs) as a statutory body.

Independent funds, experts in all urban areas with a population greater than 30 lakhs and the formation of
metropolitan planning committees as per the Constitution.

Creation of public-private centres of excellence in urban transport in all cities larger than 10 lakhs of population
and fund the unification of metropolitan databases.

Constraints
Congested networks: Over-stretched infrastructure with 60 per cent-plus routes being more than 100 per cent
utilized, leading to a lessening in an average speed of passenger and freight trains.

Organisational structure: Delays in decision making, insufficient market orientation and long project approval
durations lead to slow turnover times and delays in the implementation of railways projects.

Internal capital generation: Low non-fare revenues and high freight tariffs have resulted in a freight share that is
less than ideal. The decline in the share of railways has been attributed to the lower relative cost of transporting
freight by road. Low and stable passenger segment prices have also led to low internal resource generation.

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Protection and poor service delivery: In recent years, there has been a range of incidents and safety problems in
the IR. Train and station cleanliness, train departure/arrival delays, food quality, and ticket booking difficulties are
all major concerns.

The efficiency of terminals: Poor terminal facilities lengthen loading and unloading times. Eighty per cent of
railway loads come from terminals. The functioning of terminals needs to be strengthened to improve rail freight.
Economies of scale: The shortage of scale economies especially impacts management quality and system
accountability.

Way forward

Better use of existing infrastructure to address congestion:

Boost capacity efficiency by prioritizing ongoing projects. These ventures will produce more revenue if they are
completed on time. Simultaneously, we must preserve and update the current network to ensure that supply meets
demand.

Ensure that the dedicated freight corridors (DFCs) and the Mumbai-Ahmedabad High-Speed Rail (MAHSR) are
completed on time, especially by completing land acquisition for the DFCs in a timely manner.

Ease Organizational Rigidity through Structural Reforms

Consider allowing the private sector to own and operate freight terminals, as well as locomotives and rolling stock,
under a straightforward, neutral (non-railway) and equitable regulatory framework. This would boost efficiency
while also attracting private investors and players.

Consider transferring coach and locomotive manufacturing and repairs to private players. However, since human
safety is involved in the case of coaches and wagons, IR should continue to have regulatory and technical control
over their manufacture and maintenance to ensure the safety of users in compliance with the General Rules of IR.

Separate suburban commuter transit from the rest of the network and create a light rail system in all major urban
areas under the jurisdiction of local governments.

Rationalize Fare Structures and Subsidies, and Monetize Assets to Generate Revenues
Reconsider IR’s pricing model in order to keep the passenger and freight segments viable. Tariffs for freight should
be comparable with those for road transport.

Using railways to monetize land resources, especially by developing non-railway revenues such as retail or other
activities.

Invest in infrastructure, modernize stations, and lease space to private players to boost retail revenues from railway
stations.

Enhance the Safety of Trains to Reduce Accidents and Modernize stations

In 2017-18, the government formed the Rashtriya Rail Sanraksha Kosh (RRSK) to resolve critical safety issues.

To avoid collisions, remove level crossings and cattle crossings, and fence railway tracks in areas with high levels
of traffic.

Implement the 22 suggestions of Dr Kakodkar’s High-Level Safety Review Committee.

By-pass crossings and grade separations should be upgraded and kept in good working order.

Enhance the Ease of doing Business

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Set up an independent homologation and standardisation agency to adopt new railway technology and improve the
speed and reliability of the railway network.

An internationally accepted liability regime for domestic and international transportation and (ii) common carrier
status to all rail-based service providers.

Ensure that there are no interim amendments to tariff and non-tariff regulations to improve legitimacy.

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Previous Year Question (PYQ)

(2016, Mains)

Q. National Urban Transport Policy emphasises ‘moving people’ instead of ‘moving vehicles. Discuss
critically the success of the various strategies of the Government in this regard. (200 Words, 12.5
Marks)

Decoding the Question:

In the intro, you need to write about NUTP 2006

In Body,

Discuss provisions in the first part of the answer.

In the second part of the answer, you need to write various government strategies and issues related to
them.

Try to conclude, by writing suggestions with prospects for urban mobility.

Answer:

The National Urban Transport Policy (NUTP) in 2006 was brought in by GoI to bring about comprehensive
improvements in urban transport services and infrastructure. The objective of this policy is to ensure safe,
affordable, quick, comfortable, reliable and sustainable access for the growing number of city residents to
jobs, education, recreation and other needs within the cities.

Provisions of NUTP:

Incorporating urban transportation as an important parameter at the urban planning stage rather than being a
consequential requirement.

Encouraging integrated land use and transport planning in all cities so that travel distances are minimized
and access to livelihoods, education, and other social needs, especially for the marginal segments of the
urban population is improved

Improving access of business to markets and the various factors of production

Bringing about a more equitable allocation of road space with people, rather than vehicles viz. safety for
walking and cycling.

Hence, this policy is touted as aiming to move people rather than vehicles. Eight years have passed since
then and several new initiatives have been taken by MOUD to promote good mobility in cities. It was
revised in 2014 for addressing various other challenges with better policies with fulfilling city-wise needs.

Various government strategies to promote National Urban Transport Policy (NUTP):

Public transport system:

Bus Rapid Transit System: This is gaining acceptance as a means to scale up mass transit in Indian cities.
BRTS has dedicated lanes but it has not been successful in cities like Delhi.

The mass rapid transit system needs huge investment and technical support system, experts in big urban
cities of India. Therefore, it is limited to some big metro cities only.
Except for some of the cities, the mass transit system is failing in most of the urban areas, which need some
other ways to improve people’s mobility.
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Maintenance and repair of buses are the most critical issues in the urban transit system. Local bodies are not
having many resources to keep these buses in fit and environmentally good conditions.

Metros: Metro is one of the best and the most promising urban transport systems right now in India. For
example, the Delhi metro is the most successful mass transport system. It reduced stress on roads and
contributed to the conservation of the environment.

o But the issue with metros is to it is present in big metro cities only and tier 2 and 3 cities are not connected
by metro. This has become a key issue in the development of a faster and more efficient transport system in
tier 2 and 3 cities.

Monorail: Monorail is another mass rapid transport system that has a presence in cities like Mumbai.

But again, the problem is it does not have as wide a network as metro rail in Delhi. Also, the cost of metro
rail construction is a topic of debate among policymakers.

However, as per the UN, population fund report by 2030 India’s 35% population will be staying in urban
India. By looking at this population trend India needs a strong, faster, and most efficient transport system to
carry increasing numbers of commuters. Hence revamped National Urban Transport Policy is in need of the
hour as well as building capacities of urban local bodies.

To increase asset efficiency and utilisation, use technology to plan and route the freight industry.

Civil Aviation
Airport infrastructure development continues to be a matter of concern. Upgradation of many airports, including
the construction of new terminals, for improving air navigation services, the Airport Authority of India (AAI)
installed the new ATS automation system.

Fig. 17.4: Civil Aviation Statistics

Present situation
In 2021, India’s civil aviation sector contributed 3.5% to the country’s GDP, supporting 1.31 million direct,
indirect, and induced aviation employment.

In 2016, China’s domestic air travel demand was twice that of the United States.

The Ministry of Civil Aviation’s regional connectivity scheme, UDAN, is a 10-year initiative to facilitate
sustainable regional development and make flying accessible to the general public. It will improve access to the
countries underserved and unserved airports.

India is also catching up with other leading aviation markets in terms of market penetration.

Domestic passenger traffic amplified at a CAGR of almost 12.91 per cent between FY 16 to FY 20 and
international passenger traffic grew at a CAGR of 5.01 per cent during the same period. (According to IBEF
Research)

Agencies related to Civil Aviation

Director-General of Civil Aviation (DGCA)

DGCA is civil aviation regulating body under the Ministry of Civil Aviation (MoCA).

Headquarter in New Delhi.

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The functions of DGCA are as follow:

It certifies the aerodromes and CNS/ATM facilities.

It gives licenses to air traffic controllers and conducts examinations for them.

Doing investigation of accidents and serious incidents.

Taking measures to prevent accidents.

It issues a YA number (read as an authority number) to Non-scheduled flights by foreign or Indian operators to
destinations outside India. Without this number, such flights cannot fly.

Bureau of Civil Aviation Security (BCAS)

It was set up as a Cell in the DGCA in January 1978 on the recommendation of the Pande Committee.

The BCAS was made an independent department under the Ministry of Civil Aviation on 1st April 1987.

The headquarters is in Delhi.

The functions of BCAS are as follow:

It lays down Aviation Security Standards in accordance with Annex 17 to the Chicago Convention of ICAO for
airport operators, airline operators, and their security agencies.

It monitors the enforcement of security rules and regulations and carries out surveys of security requirements.

It certifies that the persons enforcing security controls are trained and possess all qualifications required to perform
their jobs.

Mock checking to test the professional efficiency and vigilance of security staff.

Airports Authority of India (AAI)

Airports Authority of India (AAI) is a Mini-Ratna Public Sector Undertaking (PSU) under the Ministry of Civil
Aviation.

Headquarter in New Delhi.

It was established on April 1, 1995, by merging International Airport Division (IAD) and National Airport Division
(NAD).

It was made by an Act of Parliament.

The functions of AAI are as follows:

To Design, Development, Operation and Maintenance of international and domestic airports.

To Control and Management of the Indian airspace extending beyond the territorial limits of the country according
to ICAO.

To Expand and strengthen the operation area. Runways, Aprons, Taxiway etc.

Provision of Communication and Navigation aids like ILS, DVOR, DME, Radar etc.

Pawan Hans Helicopters Limited (PHHL)

The Pawan Hans Helicopters Ltd. (PHHL) is one of the biggest helicopter companies in India and is known for its
reliability.

Headquarters is located in New Delhi.

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It is the first ISO 9001: 2000 certified Aviation Company in India.

Functions
It gives helicopter services to the Oil Sector for its off-shore exploration activities
It provides services in remote and hilly areas as well as charter services for the encouragement of travel and
tourism.

It has played an important role in the development of the Helicopter Industry in India.

National Civil Aviation Policy (NCAP ) 2016

Mission
Providing safe, economical and sustainable air travel for passengers and cargo to various parts of India and the
world.

Objectives
Make an integrated ecosystem which would lead to noticeable growth of the civil aviation sector, which would
promote tourism leading to increase employment and balanced regional growth.

Provide safety, security and sustainability to the aviation sector by the use of technology and effective monitoring.

Increase regional connectivity through financial support and infrastructure development.

Relax in doing business by deregulation, simplification of procedures and e-governance.

Encourage the entire aviation sector chain in an organized manner.

Cheap flights to Small Towns → UDAN

UDAN stands for Ude Desh Ka Aam Nagrik scheme.

The UDAN scheme was started by The Ministry of Civil Aviation in 2016.

The aim of the scheme is to facilitate/stimulate regional air connectivity and make air travel affordable for the
masses.

Udan 3.0 (2018)

Important Features of UDAN 3.0 included:

Including Tourism Routes under UDAN 3.0 with the Ministry of Tourism in confidence.

Including Seaplanes for joining Water Aerodromes.

Bringing in a number of routes in the North-East Region under the ambit of UDAN.

Build More Airports → NABH Nirman

The Government of India by the NABH programme intended to expand airport capacity in the country by more
than 5 times to handle one billion flights per year.

Important aspects of NABH are as follows:

There is a fair and equitable land occupying policy.

It has a long-term master plan for airport and regional development.

There should be a balanced economy among all stakeholders.

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Airfare Price Ceiling

Restricting the price rise in aircraft is called the airfare price ceiling.

The reasons for which airfare price ceiling are as follows:

Rent takers often misuse government policies to make undeserving profits.

The capacity limit and price floors appear to be a clientelist policy to cut down the wings of the big airlines in the
market and give breathing space to the financially weaker airlines.

Drone Regulation
The regulation provided for the flight of Drone beyond the restricted areas is called Drone Regulation.

They help to monitor the flight of drones and avoid any mishappenings.

GARUD Portal
GARUD is a short form for ‘Government Authorisation for Relief Using Drones’.

It is a portal for getting the necessary approvals from the Competent Authority in less than two weeks

It is the work of officials at MoCA, DGCA, AAI and NIC.

Important Government Objectives

Make travel more affordable so that domestic ticket sales can rise from 103.75 million in 2016 to 17 to 300 million
by 2022.

Increase air cargo handling from 3.3 million tonnes in 2017-18 to 6.5 million tonnes in 2018-19.

Raise the maintenance, repair, and overhaul (MRO) industry from USD 1.8 billion to USD 2.3 billion in 2017.

Boost airport capacity by more than five times in order to accommodate one billion annual trips.

By means of the Regional Connectivity Scheme, Ude Desh Ka Aam Naagrik, increase the availability and
affordability of regional air connectivity and revive/upgrade 56 underserved airports and 31 underserved helipads
(RCS-UDAN).

Ensure that airport tariffs, fuel taxes, landing fees, passenger facilities, freight fees, and other fees are calculated in
a timely, equitable, and transparent manner.

AERA Amendment Bill, 2021

Key Points
The Bill amends the Airports Economic Regulatory Authority of India Act, 2008. The Act established the
Airports Economic Regulatory Authority of India (AERA).

AERA regulates tariffs and other charges for aeronautical services provided at civilian airports with annual traffic
above 15 lakh passengers. It also monitors the performance standard of services across these airports.

Need for AERA: A few years back, private players started operating civilian airports. Typically, airports run the
risk of becoming a monopoly because cities usually have one civilian airport which controls all aeronautical
services in that area. To ensure that private airport operators do not misuse their monopoly, the need for an
independent tariff regulator in the airport sector was felt. Consequently, the Airports Economic Regulatory
Authority of India Act, 2008 (AERA Act) was passed which set up AERA.

Key provisions of the Bill:

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Definition of major airports:

The 2008 Act designates an airport as a major airport if it has an annual passenger traffic of at least 35 lakhs.

The central government may also designate any airport as a major airport by a notification.

The Bill adds that the central government may group airports and notify the groups of a major airport.

The purpose of this amendment is to pair the smaller non-profitable airports with profitable airports as a
combination/package to bidders to make it a viable combination for investment under PPP(Public-Private
Partnership) model. This move is also likely to help in expanding the air connectivity to relatively remote areas and
as a result, expediting the UDAN scheme.

Tariff: The amendment will allow The Airports Economic Regulatory Authority (AERA) to regulate tariffs and
other charges for aeronautical services for not just major airports with annual passenger traffic of more than 35
lakh, but also a group of airports.

Recommendations of NTDPC
The recommendations of the committee are divided into short term reforms and long-run objectives. The short
reforms have been recommended at the national, state and metropolitan levels while long term objectives are for
national and metropolitan levels.

At the national level:

Making a high-level and independent Office of Transport Strategy (OTS) and shift towards investment and
technique for transport as an integrated system.

National Transport Infrastructure Finance should be neutral with means of delivering mobility, sustainability and
inclusion goals.

At the state level:

Make urban transport a subject at the state level and develop ways for states to participate in decisions about
initiation, siting, size and other aspects of airports and railways.

Formation of state-level counterparts OTS, with particular focus on urban transport.

At the metropolitan level:

Creation of Unified Metropolitan Transport Authority (UMTAs) as a statutory body.

Independent funds, an expert in all urban areas with a population greater than 30 lakhs and the formation of the
metropolitan planning committees as per the Constitution.

Creation of public-private centres of excellence in urban transport in all cities larger than 10 lakhs of population
and fund the unification of metropolitan databases.

Constraints
Infrastructure and capacity:

As India’s civil aviation sector grows, airspace, parking bays, and runway slots will become increasingly scarce in
the coming years, especially at metro airports.

Capacity and infrastructure constraints could reduce efficiency and safety while also having a negative impact on
the economy.

Skilled Workers

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According to a Ministry of Civil Aviation Report, Indian aviation could sustain 1.0 to 1.2 million jobs directly by
2035. This means that over the next ten years, approximately 0.25 million people would need to be educated.

Shortage and gaps in the availability of industry-recognized skills, from airline pilots and crew to maintenance and
ground handling personnel, could constrain the growth of different segments of the sector.

High Cost to Passengers and Air Cargo

Tariff determination: All airports must move from a single to a hybrid structure, according to the Ministry of Civil
Aviation. While this is advantageous because it encourages infrastructure investment, it increases airline and
passenger prices.

Taxes on aviation turbine fuel (ATF): ATF is relatively expensive in India due to high taxes and a lack of
competition among providers. Since it is not part of the GST network, there are regional price differences. Because
of high central and state taxes, the price of aviation fuel in India may be up to 60% higher than in ASEAN and
Middle Eastern countries. India has a 45 per cent fuel cost as a proportion of operating costs, compared to a global
average of 30 per cent.

Incidence of GST on Aircraft Leases and Spare Parts: GST of 5 per cent is applied on aircraft lease rentals; GST
ranges between 5 per cent and 28 per cent on aircraft engines and spare parts. This also raises expenditure costs for
the sector.

Aviation safety: Despite the fact that the amount of aviation safety violations in 2017 (337) is down from 2016
(442), the overall number remains large.

Way Forward
Enhance aviation infrastructure

Complete the planned airports under the UDAN initiative as soon as possible. The rehabilitation of 50 under-
served and unserved airports/airstrips is scheduled to be completed.

In addition to completing two new airports in Delhi and Mumbai by 2022, the infrastructure capacity of the world’s
ten busiest airports should be substantially increased.

Increase investment in the sector through financial and infrastructure support

Increase aircraft parking infrastructure and facilities at metro airports.

Create additional parking hubs at suitable locations, accessible through short-haul flights, to accommodate
additional aircraft.

Monetize vacant real estate near AAI airports in every major centre of traffic to increase non-aeronautical
revenues.

Address shortage of skilled manpower

Promote cooperation between original equipment manufacturers (OEMs), industry, and educational institutions to
teach the most up-to-date concepts in the aviation industry, such as management principles, aviation information
technology, and so on.

Establish a manufacturing ecosystem in the country by establishing long-term plans for advanced research in
aviation technologies.

Facilitate greater involvement of the private sector in sponsoring aviation institutions, industrial training, and R&D
projects.

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Using the National Air Cargo Community System (NACCS) network, create an integrated digital supply chain or
e-cargo gateway.

Promote “Fly-from-India” by creating trans-shipment hubs. Ease the regulatory environment for airports.

Deregulate the aviation industry even further and help India increase passenger and freight traffic.

Adopt a consistent model for assessing tariffs in order to reduce passenger costs.

Consider putting aviation turbine fuel (ATF) under the GST umbrella to match taxation and pricing systems with
global benchmarks.

Strengthen regulatory capacity with respect to public-private partnerships and streamline the judicial review
process to ensure timely implementation of DGCA’s decisions.

Meet the regulatory and security requirements prescribed by the International Civil Aviation Organization (ICAO)
at all times. Additional skilling of personnel may be required for this and the DGCA should adequately build the
capabilities of its staff to ensure compliance.

Prioritize Aviation Safety

Shift the attention to preventing and avoiding injuries and incidents.

Security breaches should be viewed with zero tolerance.

For an effective aviation safety oversight scheme, the DGCA should be granted autonomy.

For all aviation-related transactions, requests, and grievances, the DGCA should develop a single-window system.

Ports, Shipping, and Inland Waterways

Present situation

Ports and Shipping

India has a 7,500-kilometer coastline, making it one of the world’s largest peninsulas, and ports handle roughly
90% of the country’s foreign trade by volume and 70% by value. On India’s coast, there are 12 major ports and 205
minor ports.

Despite this, roads and railways remain the most popular modes of cargo transportation.

Despite being the most cost-effective and efficient mode, water transport accounted for 6 per cent of freight
transport in India in 2016-17.

Fig. 17.5: Various Modes of Transportation

The Ministry of Shipping’s Sagarmala programme, emphasises modernizing and developing ports, enhancing port
connectivity, supporting coastal communities, and stimulating port-linked Industrialization.

Sagarmala intends to reduce the logistics costs for foreign and domestic trade, leading to an overall cost savings of
INR 35,000 to INR 40,000 crore annually by 2025. It moreover aims to double the share of water transportation in
the modal mix.

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Fig. 17.6: Port Led Development

Inland Waterways
Inland Water Transport (IWT) transports less than 2% of India’s organized freight and very little passenger traffic.

The annual freight volumes carried on inland waterways using National Waterways (NW-1, NW-2, and NW-3) and
Goa Waterways was 21.91 MMT in 2016- 17. Moreover, Maharashtra Waterways alone transported over 33.29
MMT. The Inland Waterways Authority of India (IWAI) is responsible for developing and maintaining fairways,
navigational aids, and terminal infrastructure.

The government is also proposing to fund NWs through the Central Road Fund (CRF).

The ministry is augmenting the capacity of NW-l under the ‘Jal Marg Vikas’ project.

National Maritime Development Programme (NMDP)

The National Maritime Development Programme (NMDP) has been established by the Ministry of Shipping of
India.

NMDP has undertaken 276 projects like construction/upgradation of berths, deepening of channels, and rail/road
connectivity projects.

79 projects are under the PPP model.

There has been an investment of Rs 1,00,339 crore divided among Port Sector, Shipping sector and Inland Water
Transport Sector.

Shipping
Shipping is defined as the physical moving of goods from one place to another, such as the moving of goods from
the warehouse to the customer.

Coastal Shipping
Coastal Shipping refers to removing the bottlenecks in the existing transport network and taking a limited
observation of the potential of Coastal Shipping specifically in a country like India which has a long coastline.

Inland Water Transport

The use of an internal drainage system for transportation is called inland water transportation.

Inland Waterways Authority of India (IWAI)

The Inland Waterways Authority of India (IWAI) came into existence on 27th October 1986 with the function to
develop and regulate the inland waterways for shipping and navigation.

Headquarters: Noida

Functions:

Carry out surveys and investigations for the development of National Waterways.

Provide/Permit setting up of infrastructure facilities.

Regulation of navigation and traffic.

Enter into joint ventures concerning inland shipping by way of equity participation.

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Regulate the construction of structures across the waterways.

Shipping Corporation of India

The Shipping Corporation of India came into existence on 2 October 1961 by the merging of the Eastern Shipping
Corporation and the Western Shipping Corporation.

Headquarters: Mumbai

Vision: To become a team of inspired performers in the field of maritime logistics, Offshore Port and Terminal
Management, serving Indian and global trade.

Fig. 17.7: Port Led Development

Shipbuilding Industry

Strength
The shipbuilding industry is very important for any country regarding the importance of ships in both trade and
defence.

The shipbuilding industry encourages the local development of difficult design and engineering skills which are
essential for the sustenance and growth of local defence capabilities.

Weakness
In Spite of 100% FDI in shipping since 1997 then also the Indian shipping industry and India’s national fleet is
smaller than compared with its global counterparts.

Presently, the Indian fleet has 1.2% of the world fleet in terms of capacity.

Opportunities
India is a place which lies in the middle of countries which produce and market countries. So it acts as an anchor
point in the middle.

Major Shipyards in India (Map)

Important Government Objectives

Increase the proportion of freight transported by coastal and inland waterways from 6% in 2016 to 17 to 12% by
2025.

By 2022-23, raise port handling capacity to 2,500 million metric tonnes (MMT).

By 2022-23, reduce turnaround times at major ports from 3.44 days (2016-17) to 1-2 days (global average).

Increase inland waterway throughout from 55.20 MMT in 2016-17 to 60-70 MMT by 2022-23.

Increase the minimum usable depth to increase inland water transport capability.

Constraints
Roads (54 per cent) continue to be the dominant mode of transporting cargo, followed by rail (33 per cent).
Transportation of cargo through waterways (shipping and inland water) accounts for a minuscule modal share (6
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per cent) despite it being the most cost-effective and efficient mode.

Drought levels: Due to insufficient depth, most Indian container handling ports are unable to accommodate large
container vessels; mother vessels must dock at ports with a minimum drought depth of 18 meters. With foreign
trade preferring more economically viable mother vessels, a port›s capacity to become a hub port is harmed by
shallow drought.

Connectivity to ports: Weak hinterland connectivity between production centres and gateway ports often leads to
higher costs and delays because of sub-optimal mode choices.

Transhipment port: A large percentage of containers in India are currently transshipped through other ports, such
as Colombo (just south of India), Singapore (East), Dubai and Salalah (West) due to the absence of a transhipment
port in the country. This has led to additional costs and delays due to the feeder voyage from India to the hub port.

Charges by the shipping lines: The business practices of shipping lines have played a key role in the present
negative perception of sea transport. A long-pending concern has been the high rate and multiplicity of charges
imposed by shipping lines.

Capital for inland vessels: At present, the cost of capital is very high and makes IWT freight uncompetitive. It is
tough to attract capital for building inland vessels, as it is a significant investment.

Technical issues in inland waterways: The varying and limited depths due to the meandering and braiding of
alluvial rivers and the erosion of their banks causing excessive siltation, lack of cargo earmarked for IWT, non-
mechanized navigation lock systems and insufficient unloading facility at terminals hinder the use of IWT by
shippers.

Inland waterway regulatory issues: Ferries Acts from different years regulate cross-ferry movement, which can
pose an obstacle to inland navigation because the legislation may not take safety into account.

Way Forward

Open up India’s Dredging Market

The government needs to open up the dredging market to attract more players, especially foreign players, to
increase and sustain draught depth at ports in order to attract large vessels and allow them to become hub ports.

At the moment, the Indian dredging market is served by the Dredging Corporation of India (DCI) and a small
number of private vendors, limiting competition.

If the government takes steps like consolidating dredging contracts through cohorts of ports and removing, at least
temporarily, the right of first refusal granted to Indian vendors, foreign players would be attracted to the market.

Expedite the implementation of Sagarmala

Expedite the accomplishment of various projects under Sagarmala, especially those aimed at improving port
connectivity, setting up coastal economic zones (CEZs) and establishing new ports.

The setting up of a single-window facility for cargo clearance and putting in place a fully mechanized cargo
handling infrastructure will be critical to increasing throughput.

Ease the Business Environment Around Shipping and Ports:

The Indian government needs to rethink its import policy on a “Free on Board” basis (FoB policy) in order to
balance risk between importers and exporters.

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Enhance technology use in ports and, wherever feasible, draw lessons from successful global ports such as
Rotterdam, Felixstowe and Singapore to improve efficiency.

Enhance last-mile connectivity to inland waterways

IWT should be integrated into multi-modal/inter-modal connectivity. Inland terminals with proper road and/or rail
connectivity and the seamless transfer of goods from one mode to the other are important for an efficient logistics
supply chain.

Procure floating terminals and cranes and place them suitably so that access to roads is possible.

Facilitate Access to Capital for Inland Vessels

Inland vessel financing could be included in priority sector lending by banks.

Categorizing inland vessels as infrastructure equipment would make it easier to access resources for a sector with
high capital and maintenance costs.

Address technical and regulatory constraints in inland waterways to ease the movement of inland vessels

CCEA, led by the Hon’ble Prime Minister approved the implementation of the Jal Marg Vikas project (JMVP) to
augment the capacity of National Waterway-1 (NW-1) with technical assistance and investment support from the
World Bank at a cost of INR 5369.18 crore. It should ensure that the project is completed by March 2023.

From a regulatory standpoint, the detention of a vessel without a valid reason should not be allowed.

A clear directive needs to be issued for the security of inland vessels, crew, and cargo.

Strengthen existing Inland Water Transport Directorates or Maritime Boards or set them up in states where they do
not exist to ease the IWT business and to ensure efficient regulation and facilitation of IWT for cargo movement.

Smart Cities
The GoI has launched the Smart Cities Mission with the collaboration of states and UTs for urban development.
The purpose of the mission is to drive economic growth and improve the quality of life of people by enabling local
area development and harnessing technology, especially technology that leads to Smart outcomes.

The Mission targets promoting cities that provide core infrastructure and give a decent quality of life to its citizens,
a clean and sustainable environment and the application of ‘smart’ solutions. The smart city includes the following
core infrastructure development:

Adequate water supply

Assured electricity supply

Sanitation, including solid waste management

Efficient urban mobility and public transport

Affordable housing, especially for the poor

Robust IT connectivity and digitalization

Good governance, especially e-Governance and citizen participation

Sustainable environment

Safety and security of citizens, particularly women, children, and the elderly; and

Health and education

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Strategy: The strategic components of area-based development in the mission are:

City improvement (retrofitting)

City renewal (redevelopment)

City extension (greenfield development)

A pan-city initiative in which smart solutions are applied.

Pradhan Mantri Awas Yojana -Urban

This initiative was launched in 2015 by the Ministry of Housing and Urban Affairs, in which affordable housing
will be given to the urban poor people with a goal of building 20 million affordable houses by 31st March 2022.
It provides central support to Urban Local Bodies (ULBs) and other types of implementing agencies with the help
of States/UTs.
Eligibility criteria: Every statutory town as per Census 2011 and towns notified subsequently would be qualified
for coverage under the scheme.
Provisions:
Credit Linked Subsidy.
Affordable Housing in Partnership.
In-situ Rehabilitation of existing slum dwellers utilizing the land as a resource with the help of private
participation.
Subsidy for Beneficiary-led individual house construction/enhancement.
The initiative encourages women’s empowerment by offering the ownership of houses in the name of female
members of the family or in a joint name.

Present Situation
The Government of India has so far selected 99 cities with an outlay of INR 2.04 lakh crore.

These cities have started implementing projects such as smart command and control centres, smart area-based
development, smart roads, solar rooftops, intelligent transport systems and smart parks.

These projects have the unique feature of integration between different infrastructural elements of the projects. As
of 14 May 2018, projects worth INR 4,800 crores have been completed and works worth more than INR 20,000
crores are underway, as per the Ministry of Housing and Urban Affairs’ Smart City MIS portal.

Important Objective
Leverage the ‘Smart Cities’ concept in select urban clusters to:

Drive job creation and economic growth.

Significantly improve efficiencies in service delivery.

By 2022-23, use technology to encourage inclusive, sustainable, and participatory growth.

Constraints
The key operational challenge areas in the Smart City Mission include the non-availability of the following:

For successful implementation, an operational framework for inter-agency collaboration, including special purpose
vehicles (SPVs).

A solid spatial plan that serves as an overarching structure for smart city planning, and implementation.

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Ingenious strategies for amplifying the voices of urban poor, slum dwellers, refugees, and other marginalised
people.
A digital strategy and roadmap, or a digital master plan.

Decision-making is based on data for service delivery and resource sustainability.

Human resources with the necessary skills to manage different functional domains are available.

Financing smart cities and ensuring the financial viability of urban local governments.

Way Forward

Four paradigms to leverage Smart Cities Mission

Fig. 17.8: Four paradigms to leverage Smart Cities Mission

Logistics Sector
Logistics is the backbone of the supply chain (management of flows of goods from the point of origin to the point
of consumption). It includes transportation, inventory management, warehousing, materials handling, packaging,
and integration of information.

The government has identified the action points to develop this sector in an integrated way. These action points are
—adopting new technology, improved investment, skilling, removing bottlenecks, improving inter-modal
transportation, automation, a single-window system for giving clearances, and simplifying processes.

Present Situation
The logistics industry in India employs over 22 million people (as of 2016). The logistics sector’s value grew at a
compound annual growth rate (CAGR) of 7.8% between 2011-12 and 2015-16.

However, existing logistics costs in India are high relative to other countries. Logistics costs have been estimated at
14 per cent of India’s GDP relative to 9 per cent of GDP in the United States, 11 per cent in Japan, 12 per cent in
Korea and 14.9 per cent in China.

Recognizing the importance of logistics for exports and development, the government has included it in the
infrastructure subsector’s harmonized master list.

This will ease access to credit and simplify the approvals process for building infrastructure in the sector.

The government has also created a new Logistics Division in the Ministry of Commerce and Industry that will
focus on the integrated development of the logistics sector.

Important Objectives of the Government

Achieve multi-modal cargo movement that meets global logistics requirements.

Reduce the cost of logistics to less than 10% of GDP, down from the current level of 14%.

Boost the logistics market to USD215 billion by 2020, up from USD160 billion now.

Increase the number of jobs in the logistics sector to 40 million by 2022-23, up from around 22 million in 2016.

Constraints

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Cost of logistics: Logistics costs are still high due to difficulties securing funding, underdeveloped infrastructure,
inadequate connectivity, and an unfavourable modal mix.

Lack of coordination: Transportation, warehousing, freight forwarding, and value-added logistics make up the
bulk of the logistics market. Each of these is subject to various forms of regulatory regulation, adding to the
system’s complexity. Duplicate procedures are normal when several entities are involved.

Warehousing capacity and fragmented structure: Handling and warehousing facilities are still largely un-
mechanised with manual loading, unloading, and handling in the case of many commodities.

Competition and underutilised capacity: There is no level playing field as the public sector is provided benefits
that are not available to private players such as container train operators or foreign vessel owners, leading to
limited competition, capacity underutilisation and other inefficiencies.

Interoperable technology across modes: The lack of interoperability of software systems used by the authorities
governing different modes of transport leads to inefficiencies as it increases transit time and the need for manual
intervention when switching modes.

Border compliance and document processing time: India’s average border compliance time (including customs
regulations and mandatory inspections) for exports is 106 hours and for imports 264 hours. India’s document
processing time (including documentary compliance for various agencies including regulators) is an average of 38
hours for exports and 61 hours for imports.

Way Forward
Tariff policies need to be rationalized. The Railway’s chapter provides details on rail freight while the Civil
Aviation chapter highlights the need to determine air cargo tariffs in a consistent manner across airports.

Improve the efficiency of warehouses and their operations, especially to optimise food storage.

Establish an overarching body that maintains a repository of all transportation data. Setting up multi-modal
logistics parks will help address issues related to underdeveloped infrastructure, an unfavourable modal mix and
connectivity.

There is no level playing field for private container train operators (CTOs) vis-à-vis the Container Corporation of
India (CONCOR). Providing shared space at CONCOR terminals to private CTOs will help utilise the
infrastructure better. Similarly, opening up port terminals to private players at a fee will enhance capacity
utilisation.

To increase efficiency and ensure compatibility, we should gradually adopt international standards, especially in
operations, and adopt global benchmarking on unit load devices such as containers and pallets. While this will
require changes in the overall infrastructure of ships, ports, and railways, it will help realize savings in cost, time,
and accounting.

PPP Models
Managing an adequate amount of funds for infrastructure development has always been a challenge for India. In
the reform era, the government evolved the idea of public-private partnership (PPP) for the sector aimed at
attracting investments from the private sector (domestic as well as foreign). A brief review of the major PPP
models (a few of them are non-PPP models, too).

BOT-TOLL

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The ‘Build-Operate- Transfer-Toll’ was one of the earliest models of PPP. Other than sharing the project cost (with
the Government), the private bidder was to build, maintain, operate the road, and collect toll on the vehicular
traffic.

The bid was given to the private company offering to share maximum toll revenue with the government. The
private party used to cover “all risks” related to: land acquisition, construction (damage), inflation, cost overruns
caused by delays, and commercial. The government was responsible for only regulatory clearances.

Due to inherent drawbacks, this model proved to be unsustainable for the private bidder: undue delay in land
acquisition due to litigation, cost over-runs and uncertainties in traffic movement (commercial risk)—made the
road projects economically unviable.

BOT-ANNUITY
This was an improvement over the BOT-TOLL model, which sought to reverse private companies’ declining
interest in road projects by reducing risk for private players.

Apart from sharing project costs, the private player was to build, maintain, and operate road projects without being
responsible for collecting traffic tolls.

The private players were offered a fixed amount of money annually (called ‘annuity’) as compensation—the party
bidding for the minimum ‘annuity’ used to get the project. Toll collection was the responsibility of the
Government.

This was different from the previous model (BOT-TOLL) in one sense— private players were not having any
commercial risk (traffic)—but they remained very much exposed to other risks (land acquisition delays, inflation,
cost over-runs, construction). Even this model, over time, proved to be unviable for the private sector due to the
leftover risks they were exposed to.

EPC MODEL
The PPP model which was seen to be a better way to promote the infra projects was visibly failing by the year
2010 and the Government was unable to attract the private players to the road sector. It was in this backdrop that
the Engineering-Procurement-Construction (EPC) Model was announced.

In this model, the project cost was fully covered by the Government (it means, it was not a PPP model and was like
normal contracts given to the bidders) together with the majority of the risks: land acquisition, cost over-runs due
to delay, inflation and commercial.

The private developers were supposed to design, construct and hand over the road projects to the government:
maintenance, operation and toll collection being the government’s responsibilities.

The contract was given to the private player who offered to construct roads at the quality levels. It means that the
private player in this model was only exposed to the construction-related risks which is a normal risk involved in
any contract given by the government to the private party.

The EPC (Engineering, Procurement and Construction) Model could have been a temporary way out to develop
road projects as it was fully funded by the government—the reform era had aimed to attract investment from the
private players by evolving a ‘business model’ for the road sector—the need was to develop a new PPP model. In
this backdrop we see the government coming up with a new PPP model for road projects—the Hybrid Annuity
Model.

HAM

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The Hybrid Annuity Model (HAM) is a cross between the EPC and the BOT-ANNUITY models. The cost of the
project is split 40:60 between the government and the private player in this model.

The private player is responsible for building and handing over the roads to the government, which will raise tolls
(if desired)—maintenance is the private player’s responsibility until the annuity period ends. The government pays
a fixed amount of economic compensation (called annuity, similar to the BOT ANNUITY model of the past) to a
private player for a set period of time (normally 15 years, though it is flexible).

The contract is awarded to the private player who offers the lowest annuity (in bidding). The government covers
the majority of the major risks in this model, including land acquisition, clearances, operation, toll collection, and
commercial, while the risks of inflation and cost overruns are shared in proportion to the project cost-sharing.

However, the private sector is still exposed to construction and maintenance risks (delays from the government
side in clearances and land acquisition have chances to enhance the degree of risks private players are exposed to).

But generally, this is the best PPP model for the time being, which is devoid of most of the flaws of the past. The
private sector has shown a good response to this model. By early 2018, this model was notified by the Government
for other infra sectors too.

Swiss Challenge Model

The Government of India, for the first time, announced the use of this model for the redevelopment of railway
stations in the country (in late 2015). This is a very flexible method of giving contracts (i.e., public procurement)
which can be used in PPP as well as non-P PPP projects.

In this, one bidder is asked by the government to submit the proposal for the project which is put in the public
domain. Afterwards, several other bidders submit their proposals aimed at improving and beating the original (first)
bidder— finally, an improved bid is selected (called a counter-proposal). If the original bidder is not able to match
the counter-proposal, the project is awarded to the counter bidder. The government has made it an online method.

Though the Government of India used this model for the first time, this has already been used by several states by
now—Karnataka, Andhra Pradesh, Rajasthan, Madhya Pradesh, Bihar, Punjab, and Gujarat—for roads and housing
projects. In 2009, the Supreme Court sanctioned the method for the award of contracts.

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Previous Year Question (PYQ)

(2013, Mains)

Q. Adaptation of the PPP model for infrastructure development of the country has not been free from
criticism. Critically discuss the pros and cons of the model. (200 Words, 10 Marks)

Decoding the Question:

An Introduction, define the concept of PPP.

In Body,

In the first part of the answer discuss the pros and;

In the second part of the answer, discuss the cons of PPP.

Conclude your answer with the underlying need for PPP.

Answer:

Public-private partnerships involve collaboration between a government agency and a private-sector

company that can be used to finance, build, and operate projects, such as public transportation networks,
parks, and convention centres. Financing a project through a public-private partnership can allow a project to
be completed sooner or make it a possibility in the first place. Public-private partnerships often involve
concessions of tax or other operating revenue, protection from liability, or partial ownership rights over
nominally public services and property to the private sector for-profit entities.

Pros of the PPP model:

Advantages to Both Parties: Partnerships between private companies and governments provide advantages
to both parties. Advantages such as fastening project completions, and involvement of the private sector will
improve business opportunities for them also.

Newer Technologies: Once the private sector is allowed or given work to complete, they bring all the
available latest technologies to finish projects. Private-sector technology and innovation, for example, can
help improve the operational efficiency of providing public services.

Competitive Economy: The public sector, for its part, provides incentives for the private sector to deliver
projects on time and within budget. In addition, creating economic diversification makes the country more
competitive in facilitating its infrastructure base and boosting associated construction, equipment, support
services, and other businesses.

Ensure the necessary investments into the public sector and more effective public resources management.

Ensure higher quality and timely provision of public services. Most investment projects are implemented in
due terms and do not impose unforeseen public sector extra expenditures.

A private entity is granted the opportunity to obtain a long-term remuneration. Private sector expertise and
experience are utilised in PPP project implementation.

Appropriate PPP project risk allocation enables to reduce the risk management expenditures. In many cases,
assets designed under PPP agreements could be classified on the public sector balance sheet.

Although there are certain advantages of PPP, it has been criticised widely as it has some cons as well-

Cons of PPP:

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Infrastructure or services delivered could be more expensive.

PPP project public sector payments obligations postponed for the later periods can negatively reflect future
public sector fiscal indicators.

PPP service procurement procedure is longer and more costly in comparison with traditional public
procurement.

PPP project agreements are long-term, complicated, and comparatively inflexible because of the
impossibility to envisage and evaluate all particular events that could influence future activity.

The private partner may face special risks from engaging in a public-private partnership. Physical
infrastructure, such as roads or railways, involves construction risks.

If the product is not delivered on time, exceeds cost estimates, or has technical defects, the private partner
typically bears the burden.
In addition, the private partner faces availability risk if it cannot provide the service promised. A company
may not meet safety or other relevant quality standards, for example, when running a prison, hospital, or
school.

Demand risk occurs when there are fewer users than expected for the service or infrastructure, such as toll
roads, bridges, or tunnels, recently the Tejas Train controversy, etc.

Public-private partnerships also create risks from the general public’s and taxpayers’ points of view.

Private operators’ partnership with the government may insulate them from accountability to the users of the
public service for cutting too many corners, providing substandard service, or even violating peoples’
civil/constitutional rights.

At the same time, the private partner may enjoy a position to raise tolls, rates, and fees for captive consumers
who may be compelled by law or geographic natural monopoly to pay for their services.

Although PPP has been criticized for its negative fallouts, India needs a huge amount of investment. The
Finance Minister announced her plans at the start of the year to launch $1.5 trillion in infrastructure spending
over the next five years. These infrastructural needs can be fulfilled by private sector involvement on a large
scale. If India wants to become $5 trillion by 2025, building world-class infrastructure is imperative and a
prerequisite.

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Previous Year Question (PYQ)

(2014, Mains)

Q. Explain how Private Public Partnership arrangements, in long gestation infrastructure projects,
can transfer unsustainable liabilities to the future. What arrangements need to be put in place to
ensure that successive generations’ capacities are not compromised? (200 Words, 12.5 Marks)

Decoding the question:

In the intro, write about PPP.

In Body,

Discuss how PPP leads to stagnation in projects and the transfer of burden on future generations.

The second part discusses the arrangements in which capacities cannot be compromised.

Try to conclude, write some suggestions, particularly any committee’s recommendations.

Answer:

PPP refers to a cooperative venture between the public and private sectors for providing a public asset or
service, in which the private party bears significant risk and management responsibility and remunerations,
are linked to performance. Such joint venture models are usually undertaken for infrastructure development
projects. Infrastructure projects generally span over a longer period of time, as it involves many
stakeholders’ activities like land acquisition, approval from various government departments, fund
availability, On-site conditions etc. While the PPP model aims at expediting the project implementation,
often despite PPP arrangements, long gestation infrastructure projects can transfer unsustainable liabilities to
the future.

Failing Scenario: To the World Bank database, India’s project failure rate is fast catching up with the rest of
the developing world—it was about 2% till 2011, but increased thereafter to 34 projects valued at $13 billion
(out of a total of 1,103 projects valued at $275 billion, or 3.1% by a number of projects and 4.9% by value of
projects, respectively).

Major causes for the failure of PPP Projects are

Land acquisition: Difficulty in land acquisition leads to delays in operations. A further cost of acquisition
and overhead due to delay make projects unviable.

Regulatory clearance: Mainly involvement of multiple agencies in coordination. Also, some of the
regulations are strict in nature like environmental clearance.

Disaster: The occurrence of a macroeconomic shock increases the likelihood of project cancellation (failure)
from less than 5% to more than 8%, controlling for other variables. The Covid-induced macroeconomic
shock is similar in its impact on PPP projects, from the demand and the supply side.
A number of parties involved: Parties involved such as farmers, banks for financing and various
government departments resulting in the delay in projects. For example, the Bullet train project land
acquisition has not been completed in Maharashtra due to land acquisition issues.

Complex relations: Involvement of various parties in the implementation of projects led to complexities.
Negotiations with all the parties and bringing them all on the negotiations table made PPP project
implementation overall time-consuming.

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Financing issues: As infrastructure projects are long and time-consuming, banks are the largest financiers
for most of the infrastructure projects, resulting in increasing NPA issues. These financing issues and long
gestation periods automatically transfer the burden to oncoming generations.

Involvement of public sector: Involvement of public sector companies in infrastructure projects and their
expenditure become government expenditure in various statistics books. This is again criticised by economic
experts that this leads to a burden on future generations through tax and other measures.

Therefore, the following arrangements can be put in place so that successive generations’ capacities cannot
be compromised,

Single window clearance: To give permissions as fast as possible and give them a green signal to start the
project, the Government needs to work on improving the single-window clearance mechanism. As India still
lacks project approval and registering properties as per Ease of Doing Business.
Corporate bond markets reforms: As infrastructure development is time-consuming and time taking then
corporate bonds will be very useful in financing infrastructure projects. As they will reduce the burden on
financial institutions and further transfer the burden to the next generations. For example, borrowing from
the market does not lead to a direct burden on the general public but it provides investment opportunities at
the same time.

Project implementation mechanism: There is a need for a constant project implementation mechanism
which will help in the review of the progress of infrastructure projects. This will also help in the involvement
of people in overall project monitoring indirectly.

Improving supply chain: Infrastructure projects need efficient supply chains as they need various raw
materials for construction activities. The faster, more efficient, and continuous nature of the supply chain will
also help in improving the speed of project completion.

Thus, India improving or fastening executions of PPP projects need design overhauling and the creation of a
much better mechanism for its implementation. Various committees for reforms in various infrastructure
projects such as the Deepak Pareekh committee on Energy sector reforms. Infrastructure development
projects need to align with the ease of doing a business report and need to give greater emphasis on the faster
development of infrastructure.

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Previous Year Question (PYQ)

(2017, Mains)

Q. Examine the developments of Airports in India through Joint Ventures under Public-Private
Partnership (PPP) model. What are the challenges faced by the authorities in this regard? (150 Words,
10 Marks)

Decoding the Question:

In the Intro, try to define Public-Private Partnership.

In Body,

Discuss airports with the PPP model with examples.

Discuss challenges faced by authorities in the PPP model in airport development.

Try to conclude with suggestions.

Answer:

Public-private partnerships (PPP) involve collaboration between a government agency and a private-sector
company that can be used to finance, build, and operate projects, such as public transportation networks,
parks, and convention centres.

Financing a project through a public-private partnership can allow a project to be completed sooner or make
it a possibility in the first place.

Public-private partnerships often involve concessions of tax or other operating revenue, protection from
liability, or partial ownership rights over nominally public services and property to the private sector, for-
profit entities.

Currently, the management of a few airport joint ventures under the PPP model is transforming the civil
aviation sector.

Construction and management: Build Operate Transfer (BOT) projects are awarded to private players for
both greenfield and brownfield projects. For Example, Greenfield airport in Bangalore and Hyderabad.

The government of India has been inviting big private players for managing airports like GMR, and GVK for
the development and upgradation of Mumbai and Hyderabad airports.

Merits of Upgradation under the PPP Model: Most of the upgrading is for increasing consumer
experience.

Governments’ invitation for managing airports leads to better efficiency and capacity of airline operators.
This has resulted in higher profits for the Airport Authority of India.

Modernisation of airports leads to improved local and national economy and it also helps in changing India’s
experience.

Private airports are making large scale profits due to increased traffic, higher aeronautical charges and other
non-aero revenue opportunities is a win-win situation.

However, there are certain concerns about higher charges on airlines and passengers. AAI has not given
commercial orientation to airports like Goa, Chennai, Kolkata etc. resulting in less attraction of passengers.

Challenges Faced By Authorities Under PPP:

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There is a lack of regulatory framework for the entire aviation sector which makes this sector less
attractive for private investment.

Projects are also delayed due to land acquisition, cost overruns, long gestation periods and lack of funding
and investment.

Lack of clarity over concessional agreements, revenue sharing and tariff structure framework. This led to
issues between private players and government agencies and it impacted private players’ participation in
airport development and management.

There is a lack of clarity over certain issues such as the degree of risk transfer to the private players in
areas such as asset conditions, operation risk, construction cost and non-insurable risk etc.

Despite the successes of the PPP airports, there are certainly areas for improvement, particularly in terms of
economic regulation, land monetization, management of project costs and at a broader level creating a more
predictable operating environment on issues such as bilateral policy, airspace efficiency and airline viability.

The Kelkar Committee report on revisiting and revitalising the public-private partnership (PPP) model for
infrastructure projects rightly pitches for pragmatism, transparency and a business-like approach. The idea is
that PPP contracts, like Operation, Management and Development Agreement (OMDA), must focus on
service delivery rather than fiscal benefits. Also needed is to have a unified regulatory structure for the
aviation sector for aeronautical and non-aeronautical services.

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