India readies ambitious plans to meet infrastructure targets

A meeting was held by Prime Minister Manmohan Singh on Wednesday to finalise the targets for infrastructure for the year 2012-13. The meeting was attended by ministers and secretaries of key infrastructure ministries - power, railways, roads, shipping, civil aviation and coal.

Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission made a presentation in which he pointed out the detailed process through which these targets were finalised and the high level of ambition they represent. The deputy chairman then made a presentation highlighting the key targets for each sector.

The Planning Commission proposed a set of targets for these five sectors in consultation with the concerned ministries. This was followed by a second round of meetings in PMO with the principal secretary in which there were significant enhancements in targets in some areas - most notably in ports, civil aviation and railways.

Further, keeping in view the direct relation with the power sector, PMO included the coal sector as well in the target setting exercise.

The process was important as it generated a sense of collective ownership of the targets among all. This is a demonstration of the collective intent and seriousness to achieve significant progress in infrastructure particularly in challenging economic times.

This is a clear indication to the external world of the push being given to the achievement of targets in important infrastructure sectors so that it inspires confidence about the overall economic growth rate.

The prime minister reviewed the targets for the coming year (2012-13) and approved them. In his remark, he expressed happiness at the level of commitment being shown by his ministerial colleagues and their officers  in giving a major push to these important sectors.

He explained the reason behind giving this push to the infrastructure sectors. India is at a critical juncture in its quest for prosperity and eradicating poverty.

After achieving remarkably fast growth rates over the past eight years and emerging as the second-fastest growing large economy in the world, we are now running into more turbulent weather. The global economy is passing through difficult times. This has affected us. It is therefore imperative to take measures to give a boost to our economy. There is a need to revive business and investor sentiment.

There is a need to give a thrust to investment, both public and private. There is a need to create an atmosphere which is conducive to investment and to removing any bottlenecks to growth. The government is not only aware of the challenges but is committed to taking the necessary measures to reverse the situation and revive India's growth story. These will turnaround India and take it back to a growth path of 9 per cent.

In this context, infrastructure investment plays a major role. In the short term, it boost investment rates across the economy. In the long run, it will remove the supply constraints that affect industry and trade. The needs of the sector are vast.

Infrastructure needs over $1 trillion in the next five years. The government alone cannot invest this amount. Therefore, importance is being given to PPPs. Achieving targets in key infrastructure sectors is key to success and will inspire confidence about the overall economic growth rate.

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The prime minister felt that the targets set are certainly ambitious and impressive. They are a significant scale up over earlier performance. He was encouraged by the ministers' commitment to meet these targets.

Highlights of the targets:

Ports:

1. The target for FY 12-13 will consist of a total of 42 projects. These will be for a value of Rs 14,500 crore (Rs 145 billion) and a capacity of 244 MTPA. This is three times what was achieved last year.

2. Two projects for brand new major ports will be taken up during the year.

a) These will be in East Coast (Andhra Pradesh) and West Bengal.

b) The total investment will be Rs 20,500 crore (Rs 205 billion) for a capacity of 116 MTPA.

3. The total capacity which will be awarded this year will be 360 MTPA with an investment of Rs 35,000 crore (Rs 350 billion).

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Roads

1. Total road length to be awarded in FY 12-13 will be 9,500 kms, an increase of 18.7 per cent over last year. The investment will rise by 73.6 per cent.

2. 4,360 kms of roads will be awarded for maintenance under the OMT (Operate, Maintain, Transfer) system for the first time.

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Civil aviation

1. Work on Itanagar airport would be commenced by AAI. The total investment on AAI projects will be Rs 2100 crore (Rs 21 billion).

2. Three new Greenfield Projects will be awarded in FY 13. These will be at Navi Mumbai, Goa and Kannur.

3. New international airports will be declared in 3 or 4 of the following locations this year - Lucknow, Varanasi, Coimbatore, Trichy and Gaya.

4. An airline hub policy would be finalised and Hubs would be operationalised at Delhi and Chennai in FY13.

5. By end-July 2012, additional PPP projects would be finalised for 10-12 existing airports and for 10-12 greenfield airports. These would be awarded during the year.

6. PPP in airport operations would be explored.

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Railways

These targets are only for PPP projects.

1. Dedicated freight corridor - PPP for the Sonnagar - Dankuni stretch will be awarded in FY 12-13.

2. Elevated rail corridor, Mumbai with a total investment of Rs 20,000 crore (Rs 200 billion) will be awarded in FY 12-13.

3. The concessions for two locomotive manufacturing units at Madhepura and Marhowra will be awarded.

4. Station redevelopment of 4/ 5 station will be done in PPP mode.

5. Proposal and approach for  a High Speed Corridor (Bullet Train) from Mumbai to Ahmedabad will be finalised.

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Power

1. The capacity addition target for this year will be 18,000 MW (17,957 MW to be precise) including 2,000 MW to be added by the Kudankulam Atomic Power Project.

2. The power generation target is 930 billion units, an increase of 6.2 per cent.

3. Ministry of Power is increasingly laying transmission lines with higher voltage (765 KV in place of 400 KV) and consequently of higher transmission capacity per kilometre.

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Coal

1. CIL will disptach 470 MT of coal to all sectors, an increase of 8.8 per cent. Of this, it will dispatch 347 MT coal to the power sector in FY 12-13 against 312 MT dispatched last year ( a 11.2% increase).

Click on NEXT to read PMs closing remarks at the meeting on infrastructure... 

"I am very happy that a detailed exercise has been undertaken for finalising targets for the major infrastructure sectors for the year 2012-13. We are all aware of the need to give a major push to these important sectors and today's exercise is a part of our efforts in this direction. I would like to compliment all those who have been associated with this exercise.

"After achieving remarkably high growth rates over the past eight years and emerging as the second-fastest growing large economy in the world, we are now running into more turbulent weather. The global economy is passing through difficult times with the Eurozone being the cause of concern all around.

"There is a flight to safety taking place globally. Then there has been the persistent problem of rising international petroleum and commodity prices in the last few years. Domestically, rising demand, along with supply side bottlenecks have contributed to inflationary pressures. All these factors combine to constitute a formidable economic challenge.

"In these difficult times, we must do everything possible to revive business and investor sentiment. We must work to create an atmosphere which is conducive to investment and to removing any bottlenecks to growth. We as a government are committed to taking the necessary measures to reverse the present situation and revive India's growth story. We are aware that we have to act on multiple fronts to achieve this and we will indeed do all that is required of us.

"I am sure all of us would agree that development of infrastructure would always be an integral part of any strategy for fast economic development. In the short term, development of infrastructure will boost investment rates across the economy. In the long run, it will remove the supply constraints that affect industry and trade. The needs of the infrastructure sector are vast-over $ 1 trillion in the next five years. The government alone cannot invest such huge amounts and therefore it is important that we involve the private sector in our efforts, through Public Private Partnerships.

"The targets that we are setting for ourselves today are certainly ambitious and impressive. They are a significant scale up over earlier performance. For example in roads, we plan to award 9,500 kms of roads for construction this year and over 4,000 kms for maintenance under the new system.

"In Railways we plan to award work on the Elevated Rail Corridor in Mumbai, two new Loco manufacturing units and the PPP stretch of the Dedicated Freight corridor, in addition to redeveloping 4 or 5 stations through PPP. In shipping we have set for ourselves the challenging task of awarding work for two new Major PPP Ports, the first in decades, in addition to capacity addition targets which are three times the targets for the last year.

"In civil aviation, work will be awarded on three new greenfield airports in Navi Mumbai, Goa and Kannur and new international airports at Lucknow, Varanasi, Coimbatore, Trichy and Gaya. Also, two new hubs will be developed in the country making us a destination as well as a transit point. In Power, we plan to add a record 18,000 MW of capacity.

"The challenge now is to work together to achieve these targets. I would urge all the Ministries to go the extra mile in implementing what we have planned. I would expect them to very expeditiously resolve any inter-ministerial differences that might arise as we move forward.

"I am encouraged by your efforts and am confident that you will deliver. I wish you all the very best and look forward to reviewing the second and third quarterly progress."

Thank you.