For me to commute to Delhi and back from Meerut involves 5:30 hours of travel. In a place with better developed infrastructure this journey could have been done in 1:30 hours in train at ¼ th the cost and I could have continued to work on my laptop even during this time. My productivity would have increased several times and cost incurred in terms of money as well as time reduced. I am almost in the NCR. If this is the condition in NCR, imagine the state of infrastructure in remote areas! Infrastructure directly affects efficiency and economic growth. In this blog we shall review the state of India’s major infrastructure to analyze whether it is in keeping with the economic aspirations.
Road network carries over 65 percent of India’s freight and about 85 percent of passenger traffic. It is the most important aspect in infrastructure. The major problems are highlighted below:
- In terms of all season, 4 or more lane highways, developed countries such as United States and France have a highway density per 1000 people that are over 15 times of India.
- In India the average truck/bus speed is 40 km/h. The worldwide average is 60-80 km/h.
- Large parts of rural habitation are still unconnected.
- Traffic congestion causes high fuel consumption (big loss to the country), environmental degradation, and increased cost in terms of both time & fuel.
Increase/ improvement in roads can add 2% to the GDP every year.
Transportation by water is the cheapest and sea transportation accounts for 90% of the world’s trade. 95 per cent of India’s trading by volume and 70 per cent by value is done through maritime transport. The handling capacity of major ports in India is sufficient to match trade demand. The capacity of all the major ports as on March 31, 2015 was 871.52 MMT, compared with 581.54 MMT in cargo traffic handled through 2014–15. Thus, the capacity utilisation through 2014–15 was around 66 per cent. With 8 to 10% GDP growth expected in the future and plans for India becoming a major manufacturing hub, capacity will have to be increased in the future.
Inland Water Transportation
India is estimated to have nearly 14,500 km of navigable inland waterways. Inland waterways in India make up a paltry 3% of the total transport, compared with China’s 47%, European Union’s 44% and Bangladesh’s 35%. Inland water transportation is cheaper, causes much lesser pollution and is much more efficient than rail or road because of higher carrying capacity. It also bestows the additional advantage of reducing the load from railways and roads. This immense potential must be exploited for economic growth.
In 1945, China had 27,000 km of rail while India had 53596 km of track. Chinese Railways today has 78,000 km while IR has 65,000 km of track. As of 2007, Chinese Railway owned about 578,000 freight wagons, 44,000 coaches and 18,300 locomotives. India had 225000 freight wagons, 45000 passenger coaches and 8300 locomotives. IR carries 22% of the freight carried by the Chinese Railways. China regularly runs freight at speed up to 120 km/h. IR is very inefficient. Average speed of trains is 54 km/h. The reasons for inefficiency are:
- Heavy congestion and insufficient tracks.
- Inadequate number of platforms and weak infrastructure.
- Obsolete design of coaches with open doors and windows and heavy coaches reduce speed.
- Railways should be, like in Japan, self supporting, implying generating fund for maintenance and expansion. In India it is loss making and sucks up public fund which could have been used elsewhere. Only in Lalu Prasad’s tenure IR, a perpetual drain on public revenue made a profit of Rs. 25000 crore in 4 years (2004-09). Mamta Banerjee reversed the trend back to losses and accidents. Even in the current year IR plans to suffer a loss of Rs 30,000 crores in passenger fares. No increase in fares and freights for political reasons have been a major problem. Rs 5 crores are lost due to travel without ticket every year.
- IR has seen large number of accidents. Accidents not only result in loss of life and property, but lower the confidence of customers. Damage is often caused during agitations to railways.
- There has been inadequate investment over the years due to poor management.
Aviation infrastructure in India is woefully inadequate. Only 21 airports serve more than one million passengers. Of these only six airports, Delhi, Mumbai, Chennai, Bengaluru, Kolkata and Hyderabad, dominate the traffic. As air traffic is expected to double by end of the decade, we need massive increase and improvements in the airports and safety aspects. Since the sector is growing, it is attracting FDI, but a lot needs to be done to make the business attractive. As on date, apart from Indigo, practically all airlines are suffering losses. Air India had incurred losses of approximately Rs 45,000 crores till 2013.
India still has by far the world’s largest number of households without electricity. About 400 million people still live without electricity, mostly in rural areas. While 16 % of the global population resides in India, its share of global energy consumption is only 4.2 %. In communities with daily service outages of 20 hours or more, the household adoption rate is just 38 percent, compared to more than 80 percent for those with few or no outages.
Bihar and Uttar Pradesh—the two states that lag farthest behind in terms of both village coverage and household adoption—face the highest average daily outages. With such outages, in the evening children cannot study and water cannot be pumped for agriculture, thus lowering yields.
Conclusion: India’s Infrastructure
The above analysis shows that India’s major infrastructure is a hindrance to the economic growth. Infrastructure needs massive investment and rapid growth. Infrastructure creation itself generates considerable employment and improved infrastructure enhances efficiency and reduces cost of doing business. In the next blog we shall see as to what are the government’s plans to improve infrastructure and are they adequate?