| 9th Five Year Plan (Vol-1) |
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Macro-Economic
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Infrastructure and Basic Industries 2.131 The Ninth Plan aims at achieving 6.5 per cent annual rate of growth in the economy with the targetted growth rate for agriculture sector at 3.9 per cent per annum and that for industrial sector at 7.6 per cent per annum. In order to realise this growth rate in GDP and to accelerate it in the perspective period matching infrastructure will need to be created to meet the requirement of different sectors of the economy. The demand for power, petroleum products, roads, ports, urban transport, telecommunication services, etc. is likely to increase rapidly and so will the investment requirements for creating these facilities. It is, therefore, crucial that an efficient, effective, user-responsive and environment - friendly infrastructure is created. In the light of the liberalised policy regime, as well as on account of the inability of the public sector undertakings to raise sufficient resources, the provision of infrastructure cannot be just in the domain of the public sector as has been the case hitherto. Contribution from private sector will become equally crucial. New ways and means of financing these projects will have to be explored, greater competition will have to be encouraged and the performance of the constituent sectors should be benchmarked against the rest of the world. 2.132 As has been pointed out, there has been considerable slippage in the growth of capacity in the infrastructure sectors during the Eighth Plan period. In view of this, even in the baseline scenario of 6.2 per cent growth, there is a need to improve the efficiency and capacity utilisation of the existing infrastructural assets. In the accelerated growth scenario for the Ninth Plan, such steps would need to be taken with even greater vigour. The first priority for augmenting the availability of infrastructural facilities will lie in accelerated completion of the ongoing projects so that they start yielding returns as early as possible. This in itself, however, will not be enough and efforts would have to be made to initiate new infrastructure investments. In view of the resource constraint, the Government will be able to provide only a part of the total requirements. This is even more pressing in view of the fact that a large number of infrastructure projects will be of a long gestation type, particularly in the road and irrigation sectors, which would have to be mainly in the public domain. Substantial private involvement in infrastructure will have to be encouraged, not only in order to provide the requisite capacity during the Ninth Plan but also to create the pipeline investment that would be necessary for maintaining and accelerating the growth rate of the economy in the post-Plan period. 2.133 In order to achieve the desired levels of investment, both public and private, in the infrastructure sectors, it is of great importance that the issues of appropriate pricing and cost recovery are tackled at the earliest. Appropriate pricing policy, on the one hand, will enhance the resource availability with the public authorities so that not only is the necessary finance available for undertaking adequate maintenance and upgradation of existing facilities, but also for providing investible resources for making fresh investment. On the other hand, the revision of prices is a necessary instrument for making the infrastructural projects viable and attractive for the private sector. At the same time, steps would have to be taken to reduce transmission losses, including theft of power, which by themselves are important reasons for raising the average cost of energy. Reduction of such avoidable losses will be critical for reducing the burden on the consumers and ensuring viability of investments. 2.134 There will, however, be other infrastructure sectors where the gestation periods would be long and immediate pay back cannot be expected. In such sectors, either the Government would have to undertake the bulk of the investment or would have to evolve appropriate methods of public-private partnership so as to make such projects attractive for private sector investment. Infrastructure projects are characterised by large investment requirements, inspite of the technological possibility of unbundling the services, as well as long gestation period. So far, the Governments (both Central and State) have owned, operated and financed nearly all the infrastructure as it was assumed that production characteristics and public interests were such that Government provision (and therefore monopoly) would yield better results. In practice, however, it was associated with mixed performance. As compared to the 1950s, the infrastructure sector has expanded rapidly. Be it power, petroleum, telephones, sanitation, roads, etc., these sectors serve a much larger proportion of the population now than 50 years back. However, the sector is also plagued by a number of problems viz. the cost of providing these facilities has been very high, focus has been mainly on creating new facilities and not on maintenance and getting the best out of the existing facilities, waste and inefficiency are rampant, etc. In the Ninth Plan, in view of the requirement of resources for infrastructure sector, greater attention has to be paid to get the best out of the facilities already created rather than creating new ones. The strategy obviously cannot be the same for all the sub-sectors; and for each of these, a different approach has to be followed. 2.135 Energy : Energy is one of the most important inputs required for sustaining the process of economic and social development. The final commercial energy consumption in the economy increased from 20.35 Million Tonnes of Oil Equivalent (MTOE) in 1953-54 to 142.73 MTOE in 1994-95, registering an annual average growth rate of 4.9 per cent. The primary commercial energy requirements of the economy have correspondingly gone up from 25.5 MTOE to 212.9 MTOE during the same period. 2.136 The demand for commercial energy for final consumption in the Ninth Plan and the perspective period upto the end of the Eleventh Plan in 2011-12 will depend upon the targetted growth in the economy based on both aggregate and sectoral, and the concomitant demand from the different consuming sectors. The commercial energy demand estimated on the basis of end-use analysis and co-relation of the past consumption with GDP growth, is given in Table 2-29 below based on the assumption of a sustained 6.5 per cent growth rate of GDP during the Ninth Plan ,7.7 per cent in the Tenth Plan and 8 per cent thereafter. Table 2-29 : Projected Demand for Final Consumption
of Commercial Energy
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1994-5 2001-2 2006-7 2011-2
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Electricity (Bkwh) 289.4 496.1 756.2 1150.2
(8.1) (8.8) (8.7)
Petroleum Pdts. (MMT)* 63.8 104.9 153.0 226.3
(7.3) (7.9) (8.1)
Coal (MMT)* 79.6 114.0 140.0 179.5
(5.1) (4.4) (5.1)
Natural Gas (MCM)* 12110 15730 18291 20853
(3.8) (3.1) (2.7)
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NOTE :(1) * Excluding demand for power generation.
(2) Figures in bracket are the CAGR over the period.
2.137 The installed generation capacity requirement in power Utilities in 2011-12, the terminal year of the Eleventh Plan, is estimated to be nearly 318,000 MW at the present level of capacity utilisation in the Utilities. This is 3.7 times the installed capacity of 85,019 MW as at the end of the Eighth Plan in 1996-97, thereby necessitating a further addition of nearly 233,000 MW in the Utilities in the next fifteen years. In the case of Ninth Plan, the total installed generating capacity requirement by the end of the year 2001-02 works out to 130,763 MW on the same basis, requiring a further addition of 45,744 MW during the Plan period. However, it may be possible only to add 40,245 MW during the Ninth Plan in view of the present status in respect of the ongoing projects as well as of those which can be taken up during the Plan period. The composition of the likely addition by modes is assessed as 9820 MW of hydel, 880 MW of nuclear, 4643 of gas thermal, 16097 MW of coal thermal and 8805 MW of oil thermal capacity. Out of the total additional capacity envisaged in the Ninth Plan, 43.7 per cent is likely to come from private sector. 2.138 The modal mix of power generation in future and the requirement of primary energy for the same will depend on the level of development of these modes in the coming years, the increase in the efficiency of power generation, transmission and distribution and end-use. The requirement of energy imports will depend on the extent to which the primary energy needs of the economy are met through indigenous production. As far as indigenous production of primary energy is concerned, the production profile for the year 2001-02 is on the basis of what is considered feasible within the time span under consideration. In the case of 2006-07 and 2011-12, the production of various forms of primary energy, particularly coal and primary electricity, is assumed on the basis of the growth achieved in the respective sectors during the period 1979-94. Coal production increased at an average annual growth rate of 6.13 per cent and the average annual addition to hydro capacity was around 695 MW during this period. Based on the balance of recoverable reserves of hydrocarbons, the production of crude oil and natural gas in future is projected to increase at a slow rate. In view of this, the production of crude oil, which is targetted at 36.978 million tonnes in the year 2001-02, is assumed to increase to 40 million tonnes in 2006-07 and further to 45 million tonnes in 2011-12. The production of natural gas is projected to increase by one billion cubic metres every year over the level of production in the year 2001-02. These assumptions are summarised in Table 2-30. Such a scenario can be termed as ‘Business As Usual’ Scenario (BAU). Table 2-30 : Assumptions for Primary Commercial Energy
Production in BAU Scenario
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1994-5 2001-2 2006-7 2011-2
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Hydro Capacity (MW) 20837 31456 34918 38380
Nuclear Capacity (MW) 2225 3105 4105 5105
Wind Generation (GWH) 182 1150 1900 2700
Solar Generation (GWH) - 30 60 120
Crude Oil (MMT) 32.2 37.0 40.0 45.0
Natural Gas (MCM)* 17339 29165 33915 38665
Coal (MMT) 253.7 370.6 498.9 671.8
Lignite (MMT) 19.1 46.1 61.0 75.0
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* Natural gas production
is net of flaring which is assessed at 5 per cent of gross production.
2.139 The dependence on energy imports has been increasing in the past to meet the primary energy needs of the economy. Nearly one-fourth of the total primary commercial energy needs are estimated to have been met through imports in the terminal year of the Eighth Plan. In the wake of the limited primary energy resource endowments of oil and natural gas and the increasing demand for petroleum products in the final energy consumption, the dependence on energy imports is likely to increase in the coming years. The dependence on imports may increase to 27.7 per cent by the end of the Ninth Plan and may go up steeply to over 47 per cent by the end of the Eleventh Plan if no concerted action is initiated to increase indigenous primary commercial energy production and higher efficiency of energy production and use. 2.140 The requirement of coal and oil (including natural gas) for power generation will depend on the quantum of power generated from these fuels. The requirement of coal for power generation in 2001-02 is assessed at nearly 300 million tonnes which may go upto around 880 million tonnes with accelerated growth, in the year 2011-12 if there is no acceleration in development of hydro power capacity. Similarly, the requirement of liquid fuels for power generation is estimated to be 13.3 million tonnes in 2001-02 and may go up to 17.9 million tonnes in 2011-12 if no further addition is allowed in capacity based on liquid fuels. However, if the share of hydro capacity increases to 35 per cent in 2011-12 and the liquid fuels based capacity is allowed to increase at the same rate as in the Ninth Plan, the requirement of coal for power generation may come down to 594 million tonnes. However, the requirement of liquid fuels (including LNG and fuel for flame support) for power generation may go up to 39 million tonnes in 2011-12. 2.141 A number of scenarios can be developed in order to assess the demand for imports of primary energy to meet the projected energy demand in the Ninth Plan and the perspective period. Scenario I is the business as usual scenario. Scenario II assumes an accelerated hydro power development in the next 15 years, thereby increasing the share of hydro capacity in total installed generation capacity to 30 per cent and 35 per cent in the year 2006-07 and 2011-12 respectively as compared to nearly 25 per cent in 2001-02. Also, the addition to liquid fuel based capacity increases at the same rate of 8805 MW per Plan during the Tenth and the Eleventh Plans. Scenario III assumes a savings of 10 per cent in electricity and oil consumption to be achieved in the Tenth and the Eleventh Plans as compared to a saving potential of about 7 per cent in the Ninth Plan. A gradual lowering of T and D losses and auxiliary losses is also assumed in the perspective period. The net import requirement of coal and liquid fuels in the three scenarios considered is summarised in Table 2-31. Table 2-31 : Net Import Requirement of Commercial Energy
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2001-02 2006-07 2011-12
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Coal (MMT)
Scenario I 40.5 161.7 388.5
Scenario II 29.8 45.2 101.9
Scenario III (-)3.5 (-)17.1 11.4
Oil and Oil Products(MTOE)
Scenario I 75.2 137.2 212.4
Scenario II 75.2 145.6 228.8
Scenario III 68.3 127.5 205.0
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Note:
Negative net imports implies surplus availability from domestic sources.
However, some coal imports may be required for specific uses.
2.142 Power : The demand for electricity for final consumption in the Ninth Plan will increase to 496.1 Bkwh in 2001-02 from 324.5 Bkwh in 1996-97. The gross generation in utilities is likely to increase to 606.7 Bkwh in 2001-02 as compared to 394.5 Bkwh in 1996-97. The energy shortage in 1996-97 was 11.5 per cent. The peak shortage was 18 per cent. Table 2-32 gives the demand for electricity as well as the generation requirement for electricity at the end of the Ninth, the Tenth and the Eleventh Plans. Table 2-32:Demand and Generation Requirement of Electricity
(Billion Kwh)
----------------------------------------------------------
2001-02 2006-7 2011-12
I II III IV
---------------------------------------------------------
Power (U+NU)
Demand 608 616 655 664 1016 1552
Generation 606 614 653 662 1013 1549
Imports 2 2 2 2 2 3
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NOTE : Scenario I = With Conservation Measures in Demand and Supply
Scenario II = With Conservation Measures in Demand
Scenario III = With Conservation Measures in Supply
Scenario IV = At present level of losses
2.143 The generating capacity to meet this requirement will have to increase to 130763 MW by the end of the Ninth Plan from the capacity of 85019 MW in 1996-97. It is, however, expected that the feasible capacity addition during the Ninth Plan is likely to be 40245 MW. This capacity addition will be short of the projected requirement. With this level of capacity addition, the shortage of energy is likely to be 1.4 per cent and the peak shortage will be 11.6 per cent. This will also call for an investment level of about Rs. 300 thousand Crore, including the investment required to upgrade the transmission and distribution system and to provide adequate pipe-line investment for the post-Plan period. Raising resources of this magnitude is not going to be an easy task particularly by the States, given the pricing structure of the different State Electricity Boards. Enhancing the contribution from capacities already created, demand management, rationalisation of prices, encouragement to private sector for greater participation, etc. are some of the steps needed urgently to improve the situation in the power sector. The major components of the strategy in the power sector would be : i) Greater attention has to be paid to early completion of the ongoing projects than on new projects. There are long delays in the commissioning of the hydro-electric stations as well as in nuclear power plants. This also results in substantial cost overruns. Early completion of ongoing projects will reduce the cost overruns and yield the much needed benefits. The share of hydel in total generating capacity of the country has declined from 34 per cent at the end of the Sixth Plan to 25 per cent at the end of the Eighth Plan. In order to have an optimal hydro-thermal mix in the total system, advance action has to be initiated on some of the hydro projects for benefits during the Tenth Plan. ii) It is essential to maximise benefits from the existing plants by (a) improving their operational efficiency and capacity utilisation and (b) improving/augmenting the T and D network and reducing the T and D losses to the maximum extent possible. The Plant Load Factor (PLF) has improved significantly over the last few years. As compared to the PLF of 55 per cent in 1991-92, the PLF was 64 per cent by 1996-97 i.e. the end of the Eighth Plan. The Common Minimum National Action Plan for Power Sector prepared by the Ministry of Power envisages further improvement in the PLF since large scope of improvement still exists in some of the states so that the overall PLF in the State sector improves to 65 per cent by the end of the Ninth Plan as compared to 60 per cent at the end of the Eighth Plan. The PLF at the national level is envisaged to improve from 64 percent to 70 percent during the Ninth Plan. The improvement in PLF can be achieved by adopting measures like renovation and modernisation of old power plants in a time bound manner that could result in upgradation and life extension of these plants, regular and timely maintenance, etc. The transmission and distribution losses are higher than the desirable levels. With every reduction of 1 per cent in T and D losses, it is possible to save 800 MW of new capacity addition. One of the reasons for higher T and D losses is the inadequate investment on T and D. Greater share of investment in power sector has to be spent on transmission and distribution system. System improvement is equally essential for improving the quality and reliability of electricity supplies in the rural areas where low voltage and brown outs are more common than in the urban areas. (iii) Rationalisation of electricity tariff is perhaps the most crucial step that has to be taken for improving the availability of electricity. According to the latest estimates, as given in Table 2-33, the average cost of supply for all the Electricity Boards taken together was about Rs.2.08 in 1996-97. As against this, the average revenue collection is Rs.1.58. While the agriculture and domestic sectors, on an average, paid 22 paise and Rs.1.04, the average tariff for industrial and commercial sectors was Rs.2.63 and Rs.2.60 respectively. The agriculture and domestic sectors are presently subsidised to the tune of nearly Rs. 20,000 crore. While cross subsidy from industrial and commercial sectors does improve the financial health of the State Electricity Boards (SEBs), it is not sufficient to offset the losses incurred on account of sales to agriculture and domestic sectors. There is a limit to which the burden of subsidised sales of electricity to the agriculture and domestic sectors can be passed on to industrial and commercial sectors. It can affect adversely the competitiveness of the industries, especially the energy intensive products. In addition, the SEBs are not able to raise enough resources for proper development of the power sector as well as the expansion of installed generating capacity. The negotiations with private producers will also suffer a great deal if the rationalisation of tariff does not take place. Since Rationalisation of tariff is a pre-requisite for carrying out the reforms in the power sector, an Electricity Regulatory Commission Ordinance 1998 was promulgated on 25.4.1998 for establishment of Central Electricity Regulatory Commission (CERC) and State Electricity Regulatory Commissions (SERCs) for rationalisation of tariffs and related matters thereto. Table 2-33 : Average Cost, Average Tariff and Agricultural
Tariff of Different SEBs (1996-97)
(paise/kwh)
------------------------------------------------------------
Average Average Agriculture
Cost Tariff Tariff
------------------------------------------------------------
1. Andhra Pradesh 169.7 128.0 14.9
2. Assam 373.8 211.8 160.5
3. Bihar 302.2 173.4 16.2
4. Delhi (DVB) 335.8 234.0 -
5. Gujarat 205.3 141.0 19.0
6. Haryana 219.6 162.0 50.0
7. Himachal Pradesh 134.8 132.0 50.0
8. Jammu and Kashmir 230.4 36.0 10.2
9. Karnataka 195.9 140.8 1.7
10. Kerala 146.7 103.2 23.7
11. Madhya Pradesh 205.6 147.4 4.3
12. Maharashtra 198.7 189.6 24.4
13. Meghalaya 180.1 108.4 50.0
14. Orissa 254.9 190.1 55.0
15. Punjab 186.1 137.9 32.6
16. Rajasthan 227.6 175.8 38.0
17. Tamil Nadu 192.3 171.0 0.0
18. Uttar Pradesh 198.9 147.0 51.3
19. West Bengal 210.1 168.8 23.7
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Average 207.7 157.8 22.2
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(iv) In view of the inability of the State sector to provide sufficient power mainly due to the inability to raise sufficient resources, private sector participation was envisaged in 1991 as a part of the process of reforms in this sector. Steps are being taken to make the private investment more attractive . Recently detailed principles for negotiating Power Purchase Agreements (PPAs) for Indian Private Power Project have been issued to the State Electricity Boards (SEBs). After reviewing the policy on Foreign Direct Investment, automatic approvals for foreign equity upto 74 per cent would be accorded in the areas such as i)Electricity generation and transmission , ii) Non-conventional energy generation and distribution and iii) Construction and maintenance of power plants etc. Private participation would lead to a shift away from discretionary government interventions to greater acceptance of market forces, from controls and administered prices to transparent fiscal incentives and disincentives, greater private investment instead of public investment with a major objective of greater competition and efficiency. Ownership transfer in itself, and by itself need not result in higher gains. The private sector could possibly exploit monopoly power more than the public sector. It is the competition that will help in maximising the benefits to the consumers. Greater participation by the private sector in the years to come will have to be encouraged in order to ensure greater competition. For this, it is important that the financial health of the SEBs improves. It is equally important that credit on liberal terms is given by the financial institutions, fiscal and other incentives are provided in a transparent manner rather than relying on pricing and administrative controls. In order to ensure that the desired objectives of maximising the consumer benefits as well as proper development and expansion of the power sector are met, it is essential to set up independent regulatory bodies both at the Centre and the State levels. (v) Demand management and energy conservation measures by different end-users will also reduce the need for additional capacity creation. Wide gap is observed in the off-peak and peak demand in Eastern, Western and Northern Regional grids . In order to avoid backing down of base load power stations , inter regional links need to be strengthened for optimal utilisation of the capacity . efforts have to be made to facilitate shifting from regional grid based operations to an integrated national grid. Rectification of pump sets will reduce the demand for electricity in the agriculture sector. Similarly, process changes/technology upgradation, other house-keeping measures will help in specific electricity consumption in some of the major energy intensive industries like cement, steel etc. In the domestic sector too, it is possible to contain the electricity demand by introducing energy efficient lighting viz.. compact fluorescent lamps (CFLs) and other devices. (vi) Suitable policy for development of all forms of renewable energy sources including that of hydel needs to be evolved by providing higher financial support . (vii) Concerted efforts have to be made by the concerned agencies to take appropriate steps in the areas of their responsibility so that the full programme of generating capacity addition would materialise during the Ninth Plan. It also needs to evolve a mechanism through which the languishing unfinished State projects could be transferred to Centre / private sector for its early completion . (viii) For improving the reliability and quality of power supplies to the consumers in different parts of the country and for increasing access to electricity in the rural areas, greater emphasis both by public and private undertakings would have to be laid in generation, transmission and distribution of power. Also, special emphasis would have to be placed on accelerated electrification of unelectrified villages, exploiting as far as possible, the decentralised non-conventional energy sources. (ix) In order to supplement the power available from utilities, maximisation of captive and co-generation in various industries is necessary for which adequate fiscal incentives need to be provided to respective industries. 2.144 Coal : The demand for coal at the end of the Ninth Plan is likely to increase to about 412 million tonnes as compared to 296 million tonnes in 1996-97. Production from domestic sources in 2001-02 is likely to be only 370 million tonnes. Table 2-34 gives the demand, likely production and the imports for coal for the Ninth, Tenth and the Eleventh Plans. Table 2-34 : Demand, Production and Imports of Coal
(Million Tonnes)
--------------------------------------------------------
2001-2 2006-7 2011-12
--------------------------------------------------------
Demand 412.12 544.6* 775.3*
Production 370.60 498.9 671.8
Gap 41.52 45.7 103.5
--------------------------------------------------------
* Corresponding to
low hydro-generation and high liquid fuel based generation of power. The
demand may be higher if there is decline in the liquid fuel ( including
LNG) based power generation.
2.145 There is a large unmet gap which has to be met through increasing the domestic production further. Otherwise it will necessitate larger imports and consequent foreign exchange outgo. The investment requirement for meeting the Ninth Plan requirements alone for raising the domestic production would be over Rs.20,000 crore. Therefore, it is essential to get the best returns from this investment. This will call for :
2.146 Petroleum Sector : In the recent years, the share of petroleum products and natural gas in the total final energy consumption has increased significantly. This share was about 35 per cent in 1980s. It increased to about 54 per cent in 1996-97. Natural gas is a clean and environment friendly fuel and as a result, its use in the years to come could increase. Table 2-35 gives the refinery throughput, indigenous crude oil production and imports of crude oil at the end of Ninth, the Tenth and the Eleventh Plans. Table 2-35 : Demand, Production and Imports of Crude Oil
(Million Tonnes)
--------------------------------------------------------
2001-2 2006-7 2011-12
--------------------------------------------------------
Crude Throughput 108.2* 150* 200*
Crude Oil Production 37.0 40 45
Gap 71.2 110 155
--------------------------------------------------------
* Subject to creation of refinery capacity.
2.147 The country is heavily dependent on imports of crude oil and petroleum products and this dependence will increase in the years to come. As a result, there will be substantial foreign exchange outgo. Raising of domestic oil production, setting up of refineries, laying pipeline for transportation of gas as well as oil products will raise the requirement for investible resources in the Ninth Plan. The priority areas in the oil sector are as follows:
2.148 Non Conventional Sources of Energy: In India, majority of rural population still depend upon the locally available non-commercial sources of energy such as animal dung, crop waste and fuel wood. As the country is endowed with a large potential of non-conventional and renewable sources, there is scope to meet the energy needs of the rural areas through these sources of energy. The potential and the achievements from various sources is indicated in Table 2-36. Table2-36: Potential and Achievements of Renewable Energy Sources -------------------------------------------------------- Source/System Approximate Achievement Potential (October 1997) -------------------------------------------------------- Biogas Plants(Nos.) 12 million 2.57 million Improved Chulhas(Nos.) 120 million 26 million Biomass 17000 MW 105 MW Solar Photovoltaic 20 MW/sqm 28 MW/sqm Solar Thermal System 35 MW/sqm 4.36 lakh sqm Wind Power 20000 MW 925 MW Small Hydro Power 10000 MW 151 MW Power from Municipal Wastes 1700 MW 3.75 MW -------------------------------------------------------- In order to ensure the efficient use of these energy sources in an environmental friendly manner, it is important to promote the programme of non-conventional energy sources on an increased scale. This can be achieved through:
2.149 Transport Sector : The major modes of transport viz. rail, road, waterways and airways have witnessed a rapid growth in the last 50 years and contributed to the development process in the country. The railways have a vast network and carry large volume of passenger and freight traffic. The aggregate road length in the country is nearly 3.3 million kms. However, a large proportion of villages are still without all-weather road connections. Most of the roads comprise of one lane. In a number of urban areas, there is heavy congestion on roads and lack of adequate mass transport system and the consequent explosion of the personalised modes of transport (mainly two wheelers) has resulted in low speed, high energy consumption, traffic jams as well as high levels of air and noise pollution and alarming rate of accidents. The traffic on the ports has also increased over the years. However, much of the equipment at the ports is over-aged and technologically obsolete. Another lop-sided development of the modern transport network is that it caters mainly to the needs of urban areas, and not to those of the rural areas to the desired extent. In the Ninth Plan, the transport sector has to gear itself to resolving some of these problems. Complementarity of transport services in the presence of all round excess demand in every segment presents an opportunity for coordinated planning of all the segments. The aim should be to have balanced excess demand in all sectors. The major issue in transport policy, therefore, is to achieve an optimal inter-modal mix in such a way that the resource cost of movement of passenger and goods is the least. The strategy for the major transport sectors would be as follows: 2.150 Railways The railways are most suitable for long distance traffic. The share of railways in the total movement of passengers and goods has declined over the years due to the inability of the railways to expand their capacity. Priority is given for movement of bulk traffic. One of the reasons for the movement of goods to shift towards roads even over long distances, is the skewed tariff policy followed by the railways in which the movement of passengers is cross subsidised by goods movement. In the Ninth Plan, this trend will have to be contained and reversed. This will call for rationalisation of tariff, electrification of dense routes, containerisation of goods movement etc. It is likely that in the Ninth Plan, greater movement of goods (including foodgrains) will be from eastern to southern regions. The movement from northern to southern region will grow at a slower pace. As a result, greater attention will have to be paid to the eastern and southern regions for laying new lines, multiple tracks, etc. The following measures are contemplated for achieving the goal of greater share in passenger and freight movement :
2.151 Roads : While the vehicle population in the country has grown at the rate of 10 per cent in the last 45 years, the road length has extended by about 4 per cent only. A number of villages are yet to be connected by all-weather roads. Another major problem is the slow movement of traffic on Indian roads. This is not only on account of poor conditions of the roads, but also due to numerous check-posts for the collection of octroi. In the Ninth Plan, the focus regarding roads should be on the following to ensure speedier movement of goods.
2.152 Ports : As there will be a greater dependence of the Indian economy on international trade (larger volume of exports and imports), it will call for the expansion and better utilisation of the existing port facilities in the country. The productivity of ports in India is extremely low. Both the idle berth time as well as the turn-around time of ships is quite high by international standards. Equipment utilisation has been low on account of various operational constraints such as equipment break-down, over-aging of equipment, power failure etc. The Ninth Plan will have to mainly address itself to improving the productivity at the ports.
2.153 Telecommunication : The telecommunication sector has witnessed a substantial growth rate in the last decade or so. The spread of telecommunication facilities on per capita basis has nevertheless been slow as compared to even the other developing countries. Most of the rural areas still do not have any means of telecommunication. This sector is characterised by near monopoly of the provision of services by the public sector. Even manufacturing of telecomm equipment was mainly in the hands of public sector till 1991. Since then, the manufacturing of telecom equipment has been deregulated. During the Eighth Plan, resource mobilisation in this sector has been fairly encouraging vis-a-vis the target set at the beginning of the Eighth Plan. During this period, the sector has also witnessed rapid diversification of value-added services viz. radio paging, cellular mobile phone, etc. registering a healthy growth. With the opening of the sector, the prices of some of the telecom equipments as well as provision of the services have declined. As a result, the telecom sector is likely to be one of the fastest growing sector in the economy. 2.154 The Ninth Plan would aim at providing telephone on demand, achieving universal coverage, ensuring the world standard services, the emergence of the country as a major manufacturing base of telecom equipments and their exports, etc. Rural connectivity would also be an important goal in the Ninth Plan. The strategy to achieve this objective would be as follows:
2.155 Steel : The production of crude steel (including from secondary producers) increased from 22.16 million tonnes in 1991-92 to 27.38 million tonnes in 1995-96. The demand for steel in 2001-02 is likely to be 31.06 million tonnes. The production target has been fixed at 38.01 million tonnes. Table 2-37 gives the demand, production and the exports, imports for finished steel during the Ninth Plan and the perspective period. It may be seen that despite a sizeable increase in both production and exportable surplus of steel in India, there will be an increasing trend in imports. This arises essentially on account of the demand for special grades of steel which is expected to rise with increasing sophistication in the manufacturing sector and which would not be possible to meet in an economic manner from domestic sources. Table 2-37:Demand,Production,Exports and Imports of Steel
(Million Tonnes)
--------------------------------------------------------
2001-2 2006-7 2011-12
--------------------------------------------------------
Demand 31.0 45.6 66.4
Production 38.0 54.0 80.0
Imports 0.5 1.5 3.0
Exports 7.5 9.9 10.6
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2.156 The Ninth Plan aims at producing steel not only for the domestic market but also for exports on the basis of the inherent strengths of the Indian steel industry. For this, the best quality of steel has to be provided at competitive prices. India has certain advantages viz. the indigenous availability of cheap and good quality iron-ore, lower labour cost, etc. On the other hand, the labour productivity is low, the quality of indigenous coal is poor and the energy usage (which is the major component of steel-making), though it is declining, is quite high by international standards. As a result, the energy cost accounts for nearly 33 per cent of the cost of producing steel in India as compared to 20 per cent in the developed countries. The competitive advantage in iron-ore and labour cost is wiped out because of the old age of the plants, obsolete technology, lower degree of automation, poor quality of coal, higher energy cost, etc. In the Ninth Plan and beyond the following areas should receive priority so that better quality steel is available at competitive prices.
2.157 Cement : The cement industry is vital for the development of infrastructure sector. The present installed capacity of cement is over 100 million tonnes while the production in 1996-97 is 76 million tonnes. The liberalisation policies, which in the case of cement industry started in 1982, helped in the strong growth of the cement sector. The capacity was 27 million tonnes in 1980-81, yielding an average annual growth rate of capacity of above 8.5 per cent. In the Ninth Plan, the production of cement is projected to increase to 110 million tonnes. Table 2-38 gives the demand, production, exports and imports of cement at the end of the Ninth Plan. Table 2-38:Demand,Production,Exports and Imports of Cement
(Million Tonnes)
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2001-02
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Demand 109.0
Production 113.0
Imports -
Exports 4.0
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2.158 The cement industry is characterised by high energy cost, requirement of infrastructure facilities like coal, power, railways, ports for movement, alternative processes of producing cement etc. In recent years, most of the cement plants have shifted away from wet process to dry process. The energy consumption per tonne of cement has been declining, though it still remains substantially higher than the international levels. Shortage of power, railway wagons and good quality coal are the major problem areas that have to be overcome in the Ninth Plan. The strategy for the Ninth Plan would include the following measures :
2.159 Fertiliser : The fertiliser industry is also highly capital and energy intensive. Because of their use in the farm sector, the prices of fertilisers are kept low. The Eighth Plan had advocated removal of subsidy in a phased manner and creation of free market conditions for fertilisers. The phosphatic and potash fertilisers were decontrolled while the prices of nitrogen fertiliser are still controlled. As a result, the prices of phosphatic and potash fertilisers have increased rapidly resulting in distortions in the use of fertilisers. The over dosing of comparatively cheaper nitrogen fertilisers has serious implications for long-term fertility of soil. Table 2-39 gives the demand, production, imports and exports of nitrogenous fertiliser on the basis of the recent experience. Table 2-39:Demand, Production, Exports and Imports of
Nitrogenous Fertiliser
(Million Tonnes)
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2001-02 2006-07
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Scenarios
I II
Demand 13.4 17.9 16.4
Production 14.0 14.0
Imports - 3.9
Exports 0.6 -
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Note: 1.
Scenario I for 2001-02 assumes that the subsidy on nitrogenous fertilisers
is removed in a phased manner,and is consistent with the strategy outlined
for agriculture. Scenario II is the counter-factual which assumes continuance
of the subsidy.2. The projection for 2006-07 is consistent with cenario I. 2.160 The pricing policy for fertilisers should aim at maintaining the nutrient contents of soil, reducing the subsidy provided and encouraging fresh investment in the sector. The choice of feedstocks for producing fertilisers is also an important issue. The cost of producing fertiliser by naphtha route is higher than producing fertiliser with natural gas as the feedstock. However, due to the uncertainty about the availability of gas, the dismantling of the APM regime in the petroleum sector would mean that naphtha would not be available to fertiliser sector at concessional rates. The question of domestic production of fertiliser versus imports will have to be looked into in view of the decontrol of fertiliser prices. The economics of setting up fertiliser plants based on LNG will also have to be considered. Import of fertilisers will require proper infrastructure (port and railway facilities) for movement of fertilisers. While setting up these facilities, note has to be taken of the fact that the demand is seasonal. A comprehensive scheme for buffer stocks will have to be implemented in view of the large and rising demand and to facilitate better utilisation of railways and port infrastructure. |
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