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Growth of Infrastructure in India

Growth of Infrastructure in India. Introduction. Defined as a set of activities through which goods and services are provided to public. Definition keeps on evolving with time. It is fluid. (e.g. irrigation, fibre optic)

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Growth of Infrastructure in India

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  1. Growth of Infrastructure in India

  2. Introduction • Defined as a set of activities through which goods and services are provided to public. • Definition keeps on evolving with time. • It is fluid. (e.g. irrigation, fibre optic) • Does not produce goods and services but provide a suitable environment for the production.

  3. Infrastructure Growth in India • Progress of primary and secondary sector directly depends upon infrastructure. • Ensures synergy through backward and forward linkage providing strong base. • Indian Government taking every possible step. • RBI notified 100% FDI in construction development sector. (Automatic Route) • Has relaxed rules regarding FDI, liberalized the exit norms.

  4. Bottlenecks To Infrastructure Development • Meeting the needs of burgeoning population. • Inhospitable Business Environment for infrastructure investors. • Indiscriminate Urbanization. • Reforming Infrastructure Financing. • Attracting foreign investment. • Speedy implementation of Projects. • Environmental Clearance Policy to be Articulate. • Co-ordination between Government Agencies. • Short Tender Process.

  5. Meeting the needs of burgeoning population. • Indian population- 1.2 billion. • Population places demand on infrastructure. • Hence infrastructure faces pressure.

  6. Inhospitable Business Environment for infrastructure investors. • Plagued by certain problems like unpredictable regulations, bureaucratic delays, struggles to secure land rights, corruption, low transparency and labour laws.

  7. Indiscriminate Urbanization. • Rapid and unbalanced urbanization. • 590 million people will shift to cities by 2030. • This unbalanced growth puts a pressure on the infrastructure and also leads to governance issues.

  8. Reforming Infrastructure Financing. • Large funding gap in 12th 5 year plan. (Rs.14,60,870 cr.) • Hence immediate challenge to introduce reforms in infrastructure financing.

  9. Attracting foreign investment. • Ending of 12th year plan, 47% of infrastructure share would be with private sector. • New potential investments- 1. China. 2.Japan 3.US

  10. Speedy implementation of Projects. • Infrastructure projects get delayed due to land acquisition. • Solution- Land acquisition be done by the government prior to the project bidding stage and project commences only after land acquisition.

  11. Environmental Clearance Policy to be Articulate. • Major roadblock- Government does not have clear and well defined environmental clearance policy. • Solution- Suitable bodies or independent consulting companies should be fostered to help bidders get clearance at a faster pace.

  12. Co-ordination between Government Agencies. • Currently 7-8 clearances are required to set up power projects. • Situations in other sectors equally grave. • Takes about 1.5-2 years. • Solution- Single window clearance system with specific guidelines for time bound approvals.

  13. Short Tender Process. • Reduction in time lag would reduce the project costs. • Rise in material costs due to inflation would also be controlled.

  14. Energy Policy Objectives • Energy Access • Energy Security • Climate Change

  15. Energy Demand and Supply Situation • 68% India’s population in rural areas. • Increased population- Increased energy consumption • Commercial energy supply- Dependant on fossil fuels. • Renewable sources- Underutilized. • Energy sector dominated by Public sec tor.

  16. Coal Energy • Major source of energy in India. • 31.03.13 – Estimated reserves – 298.94 billion. • 40% of electricity worldwide is produced using coal. • India is third largest producer of coal. • It is the most controlled sector as 90% is in the hands of public company. 1. CIL 2. SCCL

  17. Initiatives of Government for Coal Sector • The Coal Mines ( Nationalization) Act, 1973. • Colliery Control Order 2000. • New Coal Distribution Policy 2007.

  18. Challenges • Poor Quality. • Opencast Mining. • Poor Infrastructure. • Poor Technology • Monopolistic Nature.

  19. Renewable Energy • It is energy obtained from resources that are indigenous and inexhaustible. Example –wind power, solar power, Geothermal energy , tidal power and Hydroelectric power. • It can be created without release of harmful pollutants. • India has abundance opportunities for using solar, wind and small hydro resources to produce Energy. • India has land suitable to produce Bio Mass energy. • These energy resources also helps in reducing Global threats of Climate change. • It will reduce country`s dependency on fossil fuels. • Renewable resources are Diffused and Decentralised which helps to satisfy energy needs of rural people and it will also crate job opportunities.

  20. Share of Different Sources in Total World Renewable Energy Consumption

  21. Core Drivers 1.Energy Security 2.Elecricity Shortages. 3.Energy Access 4.Climate change 5.Progress in India

  22. Growth of Renewable Power Generating Capacity (Cumulative Capacity in MW)

  23. Government Initiatives Renewable energy has been an important component of India`s Energy planning Process since Quite some time .The importance of renewable energy sources in the transition to a sustainable Base was recognized in the early 1970`s. • Setting up of Commission for Additional Sources of Energy (CASE) • Department of Non-Conventional Energy Sources(1982) • Indian Renewable Energy Development Agency (IREDA) • Ministry of Non –Conventional Energy Sources • Ministry of New and Renewable Energy (MNRE) • The National Solar Mission.

  24. Setting up of Commission for Additional Sources of Energy(CASE) • The two oil shocks in 1970 led to the establishment of CASE in Department of Science and Technology in March 1981. • This commission was charged with responsibility of Policy formulation and their implementation programme for development of new and Renewable energy • It also helps in coordinating and intensifying Research and Development in the sector.

  25. Department of Non-Conventional Energy Sources (DNES) • In 1982 a new Department was created in the Ministry of Energy . • It incorporated CASE.

  26. Indian Renewable Energy Development Agency (IREDA) • This was crated in 1987 to finance renewable energy projects.

  27. Ministry of Non-Conventional Energy Resources • In 1982 DNES become Ministry of Non-Conventional energy resources • In october2006 this Ministry was Rechristened as the Ministry of New and Renewable energy • KEY OBJECTIVES;- • promotion of deployment of Grid –interactive renewable power generation projects. • Promoting energy initiatives for:- • Meeting energy needs of rural people • Supplementing energy needs in urban areas industry and commercial establishments. • Research design and development

  28. Encourage development of a Robust manufacturing Industry. • Functions:- • Policy and regulatory framework • Fiscal and financial incentives • Human Resource Development • Fostering International Cooperation • Information , Publicity and Public Awareness • Supporting Research and Development • Undertaking resource assessment and Potential estimation • Other special Incentives.

  29. The National Solar Mission • Aims to promote the development and use of solar energy for power Generation . • OBJECTIVE:- To reduce the cost of solar power generation through:- • Large scale deployment goals • Aggressive R and D • Domestic production of Critical Raw material , components and equipments • Schemes:- • Scheme for setting up of over 300 MW of Grid connected Solar PV power projects by Defence Establishments • Scheme for setting up 1000MW of Grid Connected solar PV power projects • Scheme for setting up of solar parks and ultra mega solar power projects

  30. Grid connected solar PV power projects • Pilot-cum –demonstration project for development of grid connected PV power plants

  31. Incentives offered by Govt. Of India • For development of Solar Energy Sector:- • Exemption from Excise duties and concession on import duty. • A 10 year tax holiday • Wheeling ,banking and third party sales , buyback facility by states • Guaranteed market • GBI schemes for small solar projects • Reduced wheeling charges • Special incentives for exports from INDIA • Loans at concessional rates • For Biomass Power Projects:- • 80% claim of depreciation in the first year • A 10 year income tax holiday

  32. Concession on custom duty and exemption from Excise duty • Exemption from sales tax • Financial incentives from IREDA • For Small Hydro Power Projects:- • Preferential Tarrifs • Financial incentives • Subsidy to upgrade watermills • Custom duty concessions • A 10 year tax holiday

  33. Challenges • Land Acquisition • Water shortage

  34. POWER • Power is the main input in all the Economic activities be it Agriculture , Industry or other commercial Business and is equally important for Domestic Lighting • India`s power sector is experiencing the Growth • Power is the main source of energy and GOI is making many efforts to improve this sector POWER SECTOR OUTLAYS (crores)

  35. Sources of Power in India :- • Thermal power • Hydro power • Renewable sources • Nuclear power INSTALLED GENERATION CAPACITY (MW) FROM 2006-07 TO 2012-13

  36. Within the Thermal sector coal has been a dominant fuel which account for about 85%OF THERMAL POWER capacity share of diesel is approx. 0.8% and gas been approx. 13% INSTALLED THERMAL GENERATION CAPACITY (MW) from 2006-07 to 2012-13

  37. Generation of Power in India Source wise share in Total Generation in 2006-07 and 2012-13

  38. Initiatives by Govt. 1.Electricity (supply) Act ,1948 :- To facilitate faster development of power Sector and State Electricity Boards are set up at level to ensure systematic growth of Power supply industry across the country . It was set up to rationalise production and supply of electricity and taking measures conducive to electrical development.

  39. 2. Private Power Policy 1991 : • Under this policy private companies were allowed to invest in:- • thermal projects • Hydro projects • Wind and solar projects • Foreign Investors were allowed to invest in projects with 100% ownership with Govt. Approval.

  40. 3.Liquid Fuel Policy , 1995 :- • under this Policy Private Players were Permitted to set up power projects using fuels like Naphtha and Fuel oil • Focus was to encourage the use of liquid fuel in power plants.

  41. 4.Policy for Renovation and Modernisation of Existing Plants 1995:- This policy was set up in order to modernise the Existing plants both through Public and private investment , and for modernisation purpose funds were also raised through traditional funding like from financial institution and external agency. The ownership of the renovated plant remained with SEBs

  42. 5.The Electricity Regulatory Commission Act,1998 :- • this act focused on the establishment of Central Electricity regulatory commission at central level and State Electricity Regulatory Commission at state level. • Commission has the power to determine and ratinalisation of tariffs subsidies etc.

  43. 6.Hydro Power Policy ,1998 :- • the aim was to accelerate the development of Hydropower. • Idea was to set up vast Electric potential at faster pace with supportive policies from the Govt. • Aimed at promotion of small and mini hydro projects for remote areas • Strengthening the role of PSUs and SEBs in taking new hydro projects.

  44. 7.Mega power policy ,1998:- • its focus was on the development of projects with capacity of 1000 MW and more ,which cater to the power needs of more than one state. • These projects are known as mega power projects • Projects were awarded through competitive bidding • This policy was revised in 1998 and after that it offer some fiscal incentives as well • Due to which it create interest in private players to enter into mega projects so to avail different benefits .

  45. 8.The Energy Conservation Act,2001 :- It was passed to enforce measures relating to energy conservation :- • Energy consumption standards • Direct mandatory display of label • Prohibit manufacture ,sale , purchase of notified equipment and appliances not conforming to energy consumption Standards • Notifying designated consumers • Establishing norms and standards for designated consumers.

  46. 9.The Energy Conservation (Amendment) Act,2010:- • The Central govt. May issue certificate to those Designated Consumers whose energy consumption is less than the prescribed norms and standards. • The Designated consumers whose energy consumption is more than prescribed norms and standards shall be entitled to purchase the Energy Saving Certificate • Prescribe the value of per metric ton of oil equivalent of enrgy consumed.

  47. 10. The Electricity Act , 2003 :- The main features of the act are as follows:- • De-licensing of generation and permitted the captive generation without restriction. • Its also provides for the transmission , distribution and trading in electricity with a license. • The act empowered central Govt. To make region-wise demarcation of the country • The state govt. Required to unbundle State Electricity board • Setting up State Electricity Regulatory Commission made mandatory • An appellate tribunal to hear appeals against the decision of CERCs and SERCs • Metering of electricity supplied made mandatory • Provisions related to theft of electricity become more stringent.

  48. Initiatives for Rural Electrification 1.Rural electrification under Minimum Needs Program (MNP): It was started in 5th five year plan . Under this funds were provided as Central assistance to the states in the form of partly grants and partly loans. 2. Kutir Jyoti Scheme : it was launched in 1988-89 to provide single point light connections to households of rural families below the poverty line. 3.Pradhan Mantri Gramodaya Yojana (PMGY) :- it was implemented in 2001-02 . Under this funds were provided to the states as Additional Central Assistance.

  49. 4.Accelerated Rural Electrification Programme (AREP): it was launched in the year 2003-04 . Under this interest subsidy of 4% was to be provided on loans availed by State Governments / power Utilities from Financial institutions for carrying out rural electrification program. 5.Accelrated Electrification of One Lakh Villages and One crore households:- it was launched in 2004-05 . Under this there was a provision for providing 40% capital subsidy for rural electrification projects and the balance as loan assistance on soft terms. 6.Rajiv Gandhi Grameen Vidyutikaran Yojna (RGGVY):- I was launched in April 2005 to provide Access to electricity to all rural households plus rural electricity infrastructure . It also focused on providing a free electricity connection for all the BPL households.

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