Yojana ENG July 2009 Om

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July 2009 Vol 53
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Let noble thoughts come to us from every side

Rig Veda
CONTENTS
Agenda for Inclusive Growth................................... 5 shodh yatra A 'Dropout’ Innovator.................... 31

Private Participation in Irrigation in India........................................................... 34
Infrastructure Sector in India................................. 7 Surinder Sud
Ravi Mital
do you know? . ................................................................ 37
J&K Window . ................................................................... 12
Ultra Mega Power Projects ...................................... 38
Sea Ports : Harbouring Growth............................... 13
Umesh Kumar Shukla
A P V N Sarma
North east diary . ....................................................... 16 best practices Watershed for
Integrated Rural Development . ............................42
National Highways : The Path Ahead..................... 17
V K Sharma Airports Sector Taking Off........................................ 45
D C Mehta
Market-Based Financing of Urban
Infrastructure................................................................ 21 Health Infrastructure in Rural India . ............. 48
Chetan Vaidya Urmilesh Singh
Sustaining Urban Infrastructure........................ 28 book review Urbanization and

Usha P Raghupathi Social Transformation................................................ 51
Our Representatives : Ahmedabad: Manisha Verma, Bangalore: M. Devendra, Chennai: I. Vijayan, Guwahati: Anupoma Das, Hyderabad: V. Balakrishna,
Kolkata: Antara Ghosh, Mumbai: Jyoti Ambekar, Thiruvananthapuram: M. Jacob Abraham.
YOJANA seeks to carry the message of the Plan to all sections of the people and promote a more earnest discussion on problems of social and economic development. Although
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YOJANA July 2009 1
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YE-7/09/05
send Rs. 50/- by Money Order
2 YOJANA July 2009

About the Issue
F
ew subjects in the policy debate have created as much convergence of interests
as the topic of infrastructure development. Anybody who takes more than just
a passing interest in the state of affairs of the economy will be convinced that
infrastructure development is vitally necessary.
Having said that, it equally true there are fewer areas where the plans have proved
so difficult to execute. It is not a simple case of weakness in the rate of execution
of government plans, whether at the state or at the centre. The challenges for
developing infrastructure have stymied even the best intentions of the private sector
too. The challenges are on all fronts. The key challenge is of course is generating
resources to finance the projects, as infrastructure plans invariably demand huge
expenditure. The Prime Minister led committee on infrastructure has estimated
that it would take an investment of about Rs 25,00,000 crore ($500 billion) in the next five years. To put
that number in perspective, it is three fourth the size of our annual GDP. But as of now we are able to spend
not more than 3 to 4 % of our GDP for investment in infrastructure. This means we have to mobilise a huge
amount of resources from the financial sector.
The other issue is the subject of returns from such investment. The public would be hard pressed to pay
for all the bridges, water pipelines, roads and the true cost of electricity that developers would expect them
to pay. But without such an assurance it becomes difficult for even government departments to raise such
investments. In this context, the government and other agencies have to demonstrate to the public the necessity
of such payments and yet be ready to partially pay for some of the costs from the exchequer.
We have already seen the benefits of good infrastructure. It is impossible to imagine the traffic chaos that
would have resulted if the metro had not become operational in Kolkata and now in Delhi. Mumbai is racing
against time to develop one such system and other cities are following suit. The development of the telecom
sector has become so widespread that we may not realise that the success of the IT industry in India was
made possible by it. But on the darker side, several key investments that can create employment and income
across the country are not happening because of the lack of reliable power supply and of decent roads that
can carry the produce of the farms and the industry from the producers to the markets in other states.
So we need to find the answers to these questions fast and in good time. The ensuing budget will be
expected to answer many of these questions for the economy; answers that will also tell us how fast the
economy develops on the growth path. In this issue therefore we take a detailed look at several of these topics
and try to find answers to them. q
YOJANA July 2009 3

YE-7/09/04
4 YOJANA July 2009

President Speaks
Agenda for Inclusive Growth
I
n 2004 my Government had abled and the elderly along with implementation of women-
set before the country a vision strengthened social protection; cen tr ic p r o g r a m m e s i n a
of an inclusive society and mission mode to achieve better
an inclusive economy. It worked l Governance reform;
coordination;
diligently towards translating Creation and modernization
this vision into policies and
l
l A voluntary national youth corps
of infrastructure and capacity which could take up creative
programmes. My Government addition in key sectors;
sees the overwhelming mandate social action around the river
it has received as a vindication of l Prudent fiscal management; cleaning and beautification
the policy architecture of inclusion l Energy security and environment programme beginning with the
that it put in place. It is a mandate protection; river Ganga;
for inclusive growth, equitable Restructuring the Backward
l Constructive and creative l
development and a secular and Regions Grant Fund,
engagement with the world
plural India. My Government is which overlaps with other
and
determined to work harder and development investment,
better to realize these goals. l Promotion of a culture of
to focus on decentralized
enterprise and innovation.
My government is acutely planning and capacity
conscious of the challenge of My Government will intiate steps building of elected panchayat
rising expectations. There would within the next hundred days on the representatives. The next
be ten broad areas of priority for following measures: three years would be devoted
my Government for the next five l Early passage of the Women's to training panchayat raj
years. Reservation Bill in Parliament functionaries in administering
providing for one-third flagship programmes;
l Internal security and preservation
reservation to women in State A public data policy to place
of communal harmony : l
legislatures and in Parliament; all information covering non-
l Stepping up of economic growth l Constitutional amendment to strategic areas in the public
in agriculture, manufacturing provide 50 percent reservation domain. It would help citizens
and services; for women in panchayats and to challenge the data and engage
l Consolidation of the existing urban local bodies. Women directly in governance reform;
flagship programmes for suffer multiple deprivations l Increasing transparency and
employment, education, health, of class, caste and gender public accountability of NREGA
rural infrastructure, urban and enhancing reservation in by enforcing social audit and
renewal and introduction of new panchayats and urban local ensuring grievance redressal
flagship programmes for food bodies will lead to more women by setting up district level
security and skill development; entering the public sphere; ombudsman;
l Concerted action for the welfare l Concerted effort to increase l Strengthening Right to
of women, youth, children, other representation of women in information by suitably
backward classes, scheduled central government jobs; amending the law to provide
castes, scheduled tribes, l A National Mission on for disclosure by government in
minorities, the differently- Empowerment of Women for all non-strategic areas;
(This is an extract from the address of President of India Smt. Pratibha Devisingh Patil to the Parliament. We bring
extracts relating to priority areas, agenda for 100 days and plans for infrastructure as outlined in the address.)
YOJANA July 2009 5

l Strengthening public centres in all panchayats in the Coordinated action for energy
accountability of flagship next three years; would be guided by the integrated
programmes by the creation energy policy. The effort would
of an Independent Evaluation Infrastructure is a fundamental
enabler for a modern economy be to see that at least 13,000
Office at an arm's distance MW of generating capacity is
from the government catalysed and infrastructure development
will be a key focus area for the added each year through a mix
by the Planning Commission. of sources coal, hydel, nuclear
It would work on a network net five years.
and renewables. Village and rural
model by collaborating with Public investment in
leading social science research household electrification and
infrastructure is of paramount
organizations and concurrently reduction in aggregate technical
importance. Bottlenecks and
evaluate the impact of flagship and commercial losses will
delays in implementation of
programmes and place it in the infrastructure projects because of continue to be given the highest
public domain; policies and procedures, especially priority. Competitiveness and
in railways, power, highways, efficiency in the power sector
l Establishing mechanisms for
ports, airports and rural telecom will be enhanced through time-
performance monitoring and
performance evaluation in will be systematically removed. bound measures, including
government on a regular basis; Public-private partnership (ppp) operationalising the provision of
projects are a key element of open access.
l Five Annual Reports to be the strategy. A large number of
presented by government ppp projects in different areas The pace of oil and gas
as Reports to the People on currently awaiting government exploration will be intensified and
Education, Health, Employment, approval would be cleared India's oil diplomacy aggressively
Environment and Infrastructure expeditiously. The regulatory and pursued. Reforms in the coal sector,
to generate a national debate; legal framework for pps would be for which a detailed blueprint has
l Facilitating a Voluntary Technical made more investment friendly. been prepared, will be pursued
Corps of professionals in all My Government will continue its with urgency. The international
urban areas through JNNURM special emphasis on infrastructure civil nuclear agreements will
to support city development development in the North-East and be operationalised with various
activities; Jammu and Kashmir and enhance countries even as domestic sources
connectivity to these regions. of uranium are exploited and work
l Enabling non government
Our fellow citizens have every continues on the indigenously
organisations in the area of
development action seeking right to own part of the shares of designed fast breeder and thorium
government support through public sector companies while the reactors.
a web-based transaction on a government retains majority share-
holding and control. My Government My Government will ensure
government portal in which the
will develop a road-map for listing that our space programme which
status of the application will be
transparently monitorable; and people-ownership of public has achieved wide recognition
sector undertaking while ensuring continues to bring rich dividends
l Provision of scholarships and that government equity does not fall to society in agriculture, tele-
social security schemes through below 51%. medicine, tele-education and by
accounts in post offices and providing information to rural
banks and phased transition to My Government is firmly
committed to maintaining high knowledge centres, besides
smart cards;
growth with low inflation, contributing to telecommunication,
l Revamping of banks and post particularly in relation to prices of television broadcasting and
offices to become outreach essential agricultural and industrial weather forecasting. Several
units for financial inclusion commodities. It will steadfastly innovative initiatives commenced
complemented by business observe fiscal responsibility so that by government in the science
correspondents aided by the ability of the Centre to invest and technology sector in the
technology; in essential social and economic last five years and now under
l Electronic governance through infrastructure is continuously implementation will be further
Bharat Nirman common service enhanced. strengthened. q
6 YOJANA July 2009

infrastructure
overview
Private Participation in Infrastructure

Sector in India
Ravi Mital
T
he N ational is a pre-requisite for sustaining
Development Council the growth momentum and that
(NDC) in its meeting held investment in physical infrastructure
on May 20, 2006 passed would have to be increased from
the following resolution: about 5 per cent of GDP during the
Tenth Plan (2002-07) to 9 per cent
“Recognising that improvement
of GDP by the terminal year of the
in physical infrastructure has
Eleventh Plan period (2007-12).
emerged as a common priority and
increased private participation has The investment in infrastructure
now become a necessity to mobilize during the Tenth Plan was Rs.
the resources needed to achieve 887,842 crore which constituted
its expansion and upgradation, 5.07 per cent of GDP. This included
The Eleventh the NDC observed that successful Rs 1,75,203 crore (2006-07 prices)
promotion of private participation of investment by the private sector.
Five Year Plan in infrastructure requires a well- To overcome the infrastructure
recognizes that designed framework of policies in
which investors have the assurance
deficit, the Government has planned
for an investment in infrastructure
adequate, that standards of services will be of Rs.20,56,150 crore during the
maintained and concession will Eleventh Plan period which would
cost-effective be transparently awarded and imply an investment of 9 per cent
and quality directed the Central Government of GDP in the terminal year of
to work towards evolving such a the Plan (2011-12). This includes
infrastructure is framework, which could be adopted public sector investment of Rs.
a pre-requisite by the States.” 7,65,622 crore in the Central sector
and Rs. 6,70,937 crore by the
The Eleventh Five Year Plan
for sustaining the recognizes that adequate, cost-
States. It is envisaged that the
private sector would invest Rs.
growth momentum effective and quality infrastructure
6,19,591 crore, including through
The author is Adviser (Infrastructure), Planning Commission, New Delhi.
YOJANA July 2009 7

PPPs, during the Eleventh Plan in the allocation of budgetary attractive to investors and also seen
period. This is 30 per cent of the resources. The strategy for the to be fair to consumers, especially
projected total investment during Eleventh Plan encourages private since many infrastructure projects
the Eleventh Plan, as compared to sector participation directly as have an element of monopoly.
20 per cent realised during the Tenth well as through various forms of This calls for an environment in
Plan. The amount of investment in PPPs where desirable and feasible. which either the market itself is
infrastructure and infrastructure It is expected that as in the case competitive, giving consumers a
investment as a percentage of of telecommunications sector, choice among different suppliers, as
GDP are shown in Figures 1 and 2 competition and private investment in the case of telecommunications
respectively. will not only expand capacity but or freight container carriers; or
also improve the quality of service concessions are given to the
Infrastructure development
in Indian infrastructure. most competitive bidders in an
is capital intensive and requires
environment where regulatory
huge resources. However, public Achieving high volumes of
system limits user charges to
resources available for investment in private investment in infrastructure
reasonable levels and regulations
physical infrastructure are limited, is not easy. It is necessary to develop
set appropriate standards of service
as social sectors have a priority an environment which is both
as in the case of airports, ports and
roads.
The Eleventh Plan has also
made an assessment of the deficit
in various infrastructure sectors
and set quantitative targets for these
sectors. These targets are given
below:
Policy initiatives to promote
private participation
With a view to encouraging the
development of infrastructure in
general and private participation in
infrastructure sectors in particular,
a number of initiatives have been
Figure 1 : Investment in Infrastructure taken by the government. These are
outlined below:
Committee on Infrastructure
(CoI)
The Committee on Infrastructure
(CoI) was constituted in 31st August,
2004 under the chairmanship of
Prime Minister. Its members
include the Finance Minister,
Deputy Chairman Planning
Commission and the Ministers in-
charge of infrastructure ministries.
The objective of COI is to initiate
policies that would ensure time-
Figure 2: Infrastructure Investment as a per cent of GDP bound creation of world class
8 YOJANA July 2009

Infrastructure – Deficit and Eleventh Plan Physical Targets Committee (PPPAC) has been
Sector Deficit Eleventh Plan Targets constituted consisting of Secretary,
Roads/ 65590 km of NH comprise of 6-lane 6500 km in GQ; 4-lane
Department of Economic Affairs
Highways only 2% of network; carry 40% 6736 km NS-ES; 4-lane 20000 as Chairman and Secretaries of
of traffic; 12.4% 4-lanes; 50% km; 2 lane 20000 km; 1000 km Planning Commission, Department
2-lanes; and 38% single-laned Expressway of Expenditure, Department of
Ports Inadequate berths and rail/road New capacity:485 m MT in Legal Affairs and the Administrative
connectivity major ports; 345 m MT in minor Department concerned as members.
ports The project proposals are appraised
Airports Inadequate runways, aircraft Modernize 4 metro and 35 by the Planning Commission and
handling capacity, parking space non-metro airports; 3 greenfield
approved by PPPAC. Until March
and terminal buildings in NER; 7 other greenfield
airports. 2009, the PPPAC has approved 94
projects involving an investment of
Railways Old technology; saturated 8132 km new rail; 7148 km
routes; slow speeds (freight:22 guage conversion; modernize Rs.84,406 crore.
kmph; passengers:50 kmph); 22 stations; dedicated freight
Viability Gap Funding
low payload to tare ratio (2.5) corridors.
Power 1 3 . 8 % p e a k i n g d e f i c i t ; Add 78577 MW; access to all Recognising that externalities
9.6% energy shortage; 40% rural households engendered by infrastructure projects
transmission and distribution can not always be captured by project
losses; absence of competition
sponsors, a Viability Gap Funding
Irrigation 1123 BCM utilizable water Develop 16 mha major and (VGF) Scheme was notified in 2006
resources; yet near crisis in per minor works; 10.25 mha CAD;
to enhance the commercial viability
capita availability and storage; 2.18 mha flood control
only 43% of net sown area of competitively bid infrastructure
irrigated. projects which are justified by
Telecom/ Only 18% of market accessed; Reach 600 m subscribers – economic returns, but do not pass
IT obsolete hardware; acute human 200 m in rural areas; 20 m standard thresholds of financial
resources’ shortages broadband; 40 m Internet returns. Under the scheme, grant
assistance of upto 20 per cent of
infrastructure, developing structures (ESCOI) was constituted on 16th
project capital costs is provided
that maximize the role of PPPs, and May 2005. The main objective
by the Central Government to PPP
monitoring the progress of key of constituting this empowered projects undertaken by the Central
infrastructure projects to ensure that committee was to accelerate Government, State Government,
established targets are realised. The formulation, review and approval Statutory entities and local bodies,
COI has also initiated institutional, of policy papers and proposals for
regulatory and procedural reforms. thus leveraging budgetary resources
submission to CoI; monitoring and to access a larger pool of private
The CoI is serviced by the Planning
follow up on implementation of the capital. An additional grant up to
Commission through the Secretariat
decisions of CoI; and undertaking 20 per cent of project costs can be
for CoI. It held several meetings and
gave direction to the entire policy such other actions as may be provided by the sponsoring Ministry
framework for accelerating the necessary in furtherance of the or State Government. Upto March
growth in infrastructure sectors. objectives of CoI. 2009, 139 projects, were approved
with a total capital investment of Rs.
Empowered Sub-Committee of Public Private Partnership
1,19,041 crore.
CoI Appraisal Committee (PPPAC)
Empowered Committee /
With a view to facilitating With a view to streamlining
Institution
the functioning of the CoI, an and simplifying the appraisal and
Empowered Sub-Committee of approval process for PPP projects, a An institutional framework
the Committee on Infrastructure Public Private Partnership Appraisal comprising an inter-ministerial
YOJANA July 2009 9

Empowered Committee has been project agreements, structuring of standard documents streamlines
established for the purpose of projects, etc. Planning Commission and expedites decision-making by
appraising and approving projects has operationalised a scheme for the authorities in a manner that is
for availing of the VGF upto 20 per technical assistance to project fair, transparent and competitive.
cent of the cost of infrastructure authorities by way of appointing The CoI has, therefore, mandated
projects undertaken through PPP. consultants for them. The Ministry the adoption of model documents
It has approved 44 projects in the of Finance has also created an India such as concession agreements and
State Sector and 1 project in the Infrastructure Project Development other bid documents for award of
central sector involving a capital Fund (IIPDF) to provide PPP projects. All projects that are
investment of Rs. 34,635 crore till development expenses, including based on such documents benefit
March 2009. cost of engaging consultants for from fast-track appraisal and
PPP projects. approval
India Infrastructure Finance
Company Limited (IIFCL) Foreign Direct Investment As part of the aforesaid
initiatives, Model Concession
India Infrastructure Finance 100 per cent Foreign Direct
Agreements have been published for
Company Limited (IIFCL) was Investment (FDI) under automatic
national highways, state highways,
set up as a non-banking company route is permitted for all
Operation & Maintenance of
for providing long-term loans for infrastructure projects.
highways, Operation of Container
financing infrastructure projects Trains, Non-metro airports, Urban
Tax Exemption
that typically involve long gestation Rail Systems, Greenfield Airports,
periods. The IIFCL provides The Government has provided
re-development of Railway Stations,
financial assistance up to 20 per several incentives such as tax
new port terminals and a long-term
cent of the project cost both through exemption and duty free imports
procurement-cum- maintenance
direct lending to project companies of road building equipment and
contract.
and by refinancing banks and machinery to encourage private
financial institutions. Upto one- sector participation. Also, 100 per Standardised guidelines and
half of the lending by IIFCL can cent exemption on income tax is model documents that incorporate
also be in the form of subordinated available for a period of 10 years. key principles relating to the bid
debt, which often serves as quasi- process for PPP projects have also
Model Documents
equity. IIFCL raises funds from been developed. Guidelines for
both domestic and overseas markets PPP projects typically involve the pre-qualification of bidders
on the strength of Government transfer or lease of public assets, along with a Model Request for
guarantees. Upto March 2009, delegation of Government Qualification document have been
IIFCL has raised Rs.15,700 crore. authority for recovery of user approved by the CoI for application
It has approved 88 projects with a charges, operation and/or control to all PPP projects. Guidelines for
total investment of Rs. 1,47,092 of public utilities/services in a inviting financial bids on the basis
crore of which IIFCL lending will monopolistic environment and of a Model Request for Proposal
be Rs.18,720 crore. It has disbursed sharing of risk and contingent Document (RFP) have also been
Rs. 4,891 crore upto March 2009. liabilities by the Government. The approved and published. Similar
Of the 88 projects sanctioned by terms of the project agreements model documents for procuring
IIFCL, financial closure has taken as well as the bidding process the services of consultants
place in 78 projects involving an for award of concessions are and advisers have also been
investment of Rs. 1,15,689 crore. usually complex because of published.
the nature of the risks and the
Advisory Services Other reform initiatives
involvement of many participants
Implementation of PPP projects in PPPs including project sponsors, CoI has identified several
requires appropriate advisory lenders, Government agencies, and areas for reform of processes and
services in terms of preparation of regulatory authorities. The use of guidance to project authorities. The
10 YOJANA July 2009

following Reports and Guidelines and Functioning of Container of private investment in the
were finalised under the aegis of Freight Station and Ports infrastructure sector will require
CoI. • Report of the Task Force on significant improvements in
Financing Plan for Ports the quality of governance. The
• Guidelines for Financial Support
Government has constituted
to PPPs in Infrastructure (VGF • Manual of Specifications and
independent regulators in
Scheme) Standards for Two-Laning of
Highways through PPPs the power, telecom and civil
• Guidelines on Formulation, aviation sectors. Tariffs in the
Appraisal and Approval of PPP • Manual of Specifications and port sector are also fixed by
Projects (PPPAC) Standards for Four-Laning of an independent authority. The
Highways through PPPs
• S c h e m e f o r F i n a n c i n g role of independent regulators
Infrastructure Projects through • Report on Restructuring of is particularly evident in the
the India Infrastructure Finance NHAI infrastructure sectors where
Company Ltd. (IIFCL) • Guidelines for Pre-Qualification economic policy changes have
of Bidders (RFQ) for PPP led to a shift from the earlier
• Report of the Task Force on
projects system, where infrastructure
the Delhi-Mumbai and Delhi-
Howrah Freight Corridors • Model Request for Proposal was provided almost exclusively
Document (RFP) for PPP b y t h e p u b l i c s e c t o r, t o a
• Report of the Committee system where private suppliers
projects
of Secretaries on Road Rail of infrastructure services
Connectivity of Major Ports • An Approach to Regulation in
are actively encouraged. For
Infrastructure
• Report of the Core Group initiating further improvements
on Financing of the National • Institutional Mechanism for in the regulatory structures and
Highways Development Performance Monitoring of PPP practices, the government has
projects approved a paper titled “Approach
Programme
• Guidelines for Selection of to Regulation”, which has since
• Report of the Task Force on
Consultants been published by the Planning
Financing Plan for Airports
Independent Regulators Commission. q
• Report of the Inter-Ministerial
Groups on Customs Procedures The Eleventh Plan vision (E-mail : r.mital@nic.in)
Yojana August 2009

&
September 2009
Forthcoming
Issues
Y
ojana’ will bring you the Budget 2009-10 in its August 2009 issue. Along with budget highlights,
there will be articles from sector experts on how the budget is likely to impact certain important
sectors.
The September 2009 issue of ‘Yojana’ will be devoted to the Education Sector in India – what have been
the major policy initiatives in this area, our important milestones and the challenges we are faced with.
YOJANA July 2009 11

J&K Window
Ban on polythene soon in the Valley
T
he government had decided to implement the law, which bans the use of polythene. The law would
be initially implemented in some specific areas of the Valley like towns, notified areas and tourist
places.
The government, is also looking to introduce the jute and paper bags, which would serve as an alternative
to the polythene.
The J&K Agro Industries in collaboration with an Italian firm were developing the biodegradable jute
bags and government had already provided Rs 20 lakhs for it. The ban would be effective when the jute bags
are manufactured locally and made available to people.
The government is also committed to restoration the Dal Lake and other water bodies. An Anti-
pollution rally was held recently and a fleet of rafting boats, canoes and motorboats participated in the
river Jhelum. The event was a part of the campaign to create awareness among masses about preserving
the water bodies. Polythene is a biggest source of pollution. It has destroyed water bodies which are
the back bone of tourism. q
(Courtesy : The Greater Kashmir)
Bamboo sector to get boost
T
he state government of J&K has submitted a proposal worth Rs. 7.58 crore under National Bamboo
Mission to the Union Ministry of Agriculture to promote growth of bamboo sector in the State.
Out of the approved programme of Rs. 2 crore, Rs. 50 lakh were received for implementing the
programme during the year 2008-09. Bamboo Mission Programme was extended to J & K in 2008-09 fiscal
and is being implemented through Departments of Agriculture, Social-Forestry, State Forest Research Institute
(SFRI) and the Forest Department.
The objective of the Mission is to envisage marketing of bamboo and bamboo-based handicraft, development
and dissemination of technologies through a seamless blend of traditional wisdom and modern scientific
knowledge, as well as generate employment for skilled and unskilled labourers.
The major focus of the programme is to establish bamboo nurseries, training of farmers and field
functionaries, establishment of Kissan and Mahila Nurseries, management and improvement of existing
bamboo forest and plantations.
Five centralized nurseries, three mahila nurseries and four kissan nurseries have been established by various
departments to produce bamboo seedlings for plantation during the coming monsoon. This step is expected
to cover both forest and non-forest area including agricultural lands.
About 40 farmers and field functionaries were sent for training at FRI, Dehradun. In the meeting,
SBSC approved annual programme for the year 2009-10 for Rs. 727.35 lakh, which will be sent to the
Union Ministry of Agriculture for its consideration. q
(Courtesy : The Greater Kashmir)
12 YOJANA July 2009

infrastructure
vision
Sea Ports : Harbouring Growth
A P V N Sarma
I
nternational trade as also along the sea islands. The
is the cornerstone of global coastline is studded with 12 Major
economy. Exchange of Ports besides 200 Non-Major
goods amongst countries Ports. While the major ports come
widens the choice of supply under the administrative purview
and ensures that production takes of the central government, the
place where it is the cheapest and responsibility for the development
the best. This is reflected in the and management of the non-major
intensification of globalization and Ports rests with the respective
the fact that world trade is growing maritime states/ union territories.
faster than the world output. World
The 12 Major ports are
trade relies on cheap and secure
With initiatives transport. Seaborne trade plays a
at Kolkata/Haldia, Paradip,
Visakhapatnam, Chennai, Ennore,
being taken for key role in this context since an
Tuticorin, Cochin, New Mangalore,
estimated 90% of global trade by
development of weight takes place by seaborne
Mormugao, Mumbai, Jawaharlal
Nehru Port at Nhava Sheva, and
ports it is hoped mode. As trade grows, the demand
for maritime transport also grows.
Kandla. Port Trust Boards have been
set up for the administration, control
that the port sector Ports are economic and service and management of 11 of these 12
would be able to provision units of remarkable ports, except Ennore Port, which
importance since they act as has been incorporated as a company
meet the challenges points for the interchange of under the Indian Companies Act,
of the international two transport modes- maritime
and land, either rail or road.
1956. The Department of Shipping
under the Ministry of Shipping
traffic demand and Ports are India’s gateways to the and Road Transport and Highways
in the Government of India is
match world class world. India’s coastline of about
7517 Kms is spread on the western responsible for the development of
standards and eastern shelves of the mainland the major ports with the objective of
The author is Secretary (Shipping), Ministry of Shipping, Road Transport & Highways,
YOJANA July 2009 13

providing necessary and adequate has also put in place a scheme A National Maritime
cargo handling capacity to meet for private sector participation Development Programme
India’s EXIM trade requirement, a in major ports for handling bulk, (NMDP) has been finalized to
major portion of which is borne by break bulk and multipurpose and implement specific programmes/
the sea route. specialized cargo, warehousing schemes. Under the Programme,
and public storage facilities, dry specific projects to be taken up
There has been a tremendous
docking and ship repair facilities. for implementation over a defined
increase in the traffic handled by
In addition, all the 12 major ports period have been identified. Total
Indian ports in the last ten years.
have formulated Port Business investment involved under the
The traffic increased at a CAGR of
Plan, with a 20 years perspective Programme is Rs.1, 00,339 crores.
7.4% from 227.26 MT in 1996-97
, as well as Action Plan for a Out of this, Rs. 55,804 crores are
to 463.78 MT in 2006-07. In the
seven year period with a view to for the Port Sector and the balance
10th Plan the traffic increased at a
transforming them into ports with is for the Shipping and Inland
CAGR of 10 % from 287.59 MT in
world class facilities. The total Water Transport Sectors. In the
2001-02 to 463.78 MT in 2006-07.
proposed outlay for the Eleventh Major Ports, 276 projects have
The non-major ports handled 185
Plan period for the major ports is been identified for inclusion in
MT in 2006-07 which was 28%
Rs.17551.24 crores, of which the the Programme. These projects,
of the overall sea borne trade. In
Gross Budgetary Support (GBS) to be taken up over a period upto
spite of the global slowdown, the
component is Rs.2056.98 crores. 2011-12 will be implemented in
cargo carried by major ports in
In view of the resource constraint phases. Out of these, about Rs.34,
2008-09 was 530.35 MT which is
in the public domain, active 505 crores are expected from private
higher by 2.1% in comparison to the
public private partnership (PPP) is sector mainly in commercially
cargo of 519.3 MT carried during viable projects like development
envisaged for the purpose. Private
the financial year 2007-08. There and operation of berths, terminals,
sector investment is anticipated to
has been an impressive growth etc. Public funds will be principally
the tune of Rs.36868.24 crores.
in the cargo related to fertilizers, used for creation of common
thermal coal, petroleum, oil and To encourage private sector user infrastructure facilities.
lubricants. participation, it is essential to have The objective is to upgrade and
an enabling policy framework. modernize the port infrastructure
Development Initiatives
The Department of Shipping has in India which will enable it to
The increase in traffic requires already put in place an independent benchmark its performance against
a concomitant increase in capacity tariff regulator to take care of the global standards. Some projects
of the ports. Accordingly, the interests of all the stake holders. A included in the Programme have
capacity of major ports is planned new Model Concession Agreement already been completed whereas
to be enhanced to 1016 million (MCA) has been approved by the a number of projects are under
tonnes per annum (MTPA) to cater government, bringing in several implementation.
to a projected traffic of 708 MTPA refinements and improvements
over the earlier Model Licence Major Projects
under the Eleventh Five Year
Plan. Major ports have identified Agreement of 2000. The tariff Some of the important projects
projects covering the entire gamut setting mechanism has also been which have been successfully
of activities, namely, deepening modified with tariffs being set completed are:
of channels/berths, construction upfront before the projects are bid • Development of additional
and reconstruction of berths/ out on a revenue sharing basis. link road from port junction to
jetties, floating jetties, rail and road Guidelines in this regard have the industrial by pass road at
connectivity projects, procurement, already been issued. New Model a Cost of Rs.114.00 crore at
upgradation and modernization of Bidding documents viz. Request Vishakhapatnam;
equipment and other schemes for Qualification and Request for • Crude Oil Handling for Kochi
in order to meet the capacity Proposal have been approved by Refineries Ltd. at Cochin Port
requirement. The Government the government. with total cost of Rs.743.60
14 YOJANA July 2009

crore resulting in capacity • Construction of two off-shore with representatives from NHAI,
addition of 7.50 MT; container terminal. Development the railways and State Governments
• Redevelopment of Bulk Terminal of two container berths of total to prepare comprehensive plans
into Container Terminal at JN quay length of 700 mtrs. and aimed at improving road-rail
Port, Nhava Sheva with a cost related upgradation for handling connectivity of ports. The NHAI
of Rs.1078.00 crore , resulting vessels of 6000 TEUs capacity. – has taken up port connectivity as
in a capacity addition of 15.60 Cost Rs.1228.00 crore; Capacity major component of NHDP. An
MT; 9.6 MT at Mumbai Port efficient multi-modal system, which
uses the most efficient mode of
• Construction of 12th Cargo Challenges transport from origin to destination,
Berth & setting up of state-of-
The tremendous growth in is a prerequisite for the smooth
art -Container Terminal through
EXIM trade will put an enormous functioning of any port. It involves
BOT at 11th &12th Cargo Berth
pressure on the port infrastructure. coordinating rail and road networks
at a Cost of Rs.446.77 crore at
To ensure that the Indian exports to ensure good connectivity between
Kandla, with a capacity addition
remain competitive, it is essential ports and the hinterland. While
of 7.20 MT;
that the transaction costs are capital dredging in Major Ports is
• Setting up of marine terminal being undertaken to increase the
by M/s. VOTL at Vadinar for reduced. The efficiency at the
Ports is being improved through draught availability in the entrance/
M/s.Essar Oil Ltd. At a cost of approach channels it is still a major
Rs.750.00 crore and capacity a judicious use of information
issue impacting the passage of
addition 12.00 MT; technology by implementing web
large size vessels. Recognizing
• Development of a Marine Liquid based electronic data interchange
the criticality of having adequate
Terminal to handle LPG, POL, at all Major Ports between various
draught at the seaports, several
Chemicals and other liquids at stake holders such as shipping lines/
projects have been identified in the
Ennore Port – Cost Rs.200.00 agents, banks, customs, etc. with
NMDP for “Deepening of channels
crore; Capacity 3 MT; matching backend computerisation
for improvement in draughts”.
in the Ports and discontinuance of
Some of the important projects manual exchange of documents, Ports security is an area of deep
in progress are: modernisation of equipments, concern for the government as well
• Deepening of channel to handle training for Port employees and as the Port Trusts. In view of the
1, 25,000 DWT vessels - Cost modern management practices terrorist activities in Mumbai last
Rs.253.36 crore and 4 laning year, several steps have also been
of road from Chandikhole to The main problems being taken to improve the security along
Paradip NH-5A – Cost Rs.442.00 faced in port operations relate to the coastline. The Ports have been
crore at Paradip Port. congestion at the berths, lack of directed to install VTMS devices
• Development of a Coal Terminal proper storage facilities and the and all maritime states have been
to handle coal for users other problem of draught due to which directed to re-visit their security
than TNEB – Cost Rs.300.00 the modern large size vessels find plans and set up Marine police
crore; Capacity 8 MT and it difficult to call at the Indian ports. stations and take other measures
Development of an Iron Ore Despite having adequate capacity to maintain an effective round the
Terminal – Cost Rs.350.00 and modern handling facilities, the clock surveillance of the Ports.
crore; Capacity 12 MT at Ennore average turnaround time was 3.85
days during 2008-09, compared With all such initiatives being
Ports Ltd.
with 10 hours in Hong Kong; this taken for development of ports and
• Dredging the Dock Basin and for improving their efficiency it is
Channel – Cost Rs.538 crore at undermines the competitiveness
hoped that the port sector would be
Tuticorin Port. of Indian Ports. Since ports are not
able to meet the challenges of the
• I n t e r n a t i o n a l C o n t a i n e r adequately linked to the hinterland
international traffic demand and
Transhipment Terminal (ICTT) – the evacuation of cargo is slow
match world class standards. q
Cost Rs.2118.00 crore; Capacity leading to congestion. To this end,
12.50 MT at Cochin Port. all port trusts have set up groups (E-mail : secyship@nic.in )
YOJANA July 2009 15

North east diary

Mizoram’s potential in carbon trading
M
izoram has been identified as a state having huge potential in carbon trading, thanks to its vast
forest reserve. The Mizoram Industries Department has teamed up with Electronic Test and
Development Centre (ETDC), Union government, Guwahati and Mumbai-based Intrux System
Pvt. Ltd. to calculate carbon footprint in Mizoram.
Mizoram has a huge potential for carbon trading. Currently, the ETDC will calculate the carbon footprint
in Mizoram. This will determine their Participation in the carbon trading.
Carbon footprint is the total set of GHG (greenhouse gas) emissions caused directly and indirectly by
an individual, organisation, event or product, Mizoram manages to be the greenest state in India despite the
large-scale deforestation through the jhum cultivation. With 88.34 per cent forest covered area, against the
national average of 33 per cent, Mizoram has the largest forest in India. Of the 88.63 per cent forest, as much
as 58.72 per cent is open forest.
Carbon credits are awarded to countries or groups that have reduced their green house gases below their
emission quota, Carbon credits can be traded in the international market at their current market price. In India
Orissa, has already earned revenues from carbon trading while in the Northeast, Mizoram is the first state to
take such initiatives.
The Carbon credit system was ratified in conjunction with the Kyoto Protocol. Its goal is to stop the
increase of carbon dioxide emissions. For example, if an environmentalist group plants enough trees to reduce
emissions by one tonne, it will be awarded a credit. If a steel producer has an emissions quota of 10 tonnes,
but expects to produce 11 tonnes, it could purchase this carbon credit from the environmental group. q
(Courtesy : The Sentinel)
Self-help groups enabling women to earn in Tripura
W
omen members elected packaging to marketing is being also in poverty alleviation at
to the village council done all by women. Another 200 the grass roots.
in Tripura have taken a women work under them and
Apart from creating varied
lead in paving the way for a large have become self employed and vocations, the Self-Help Groups
number of poor women to become earn for their families by making have also been active in other
self-reliant. This has been made incense sticks which are made out spheres such as education,
possible by these enterprising of raw natural materials available drinking water and community
women representatives by setting locally. health programmes. The self-help
up Self-Help Groups (SHGs), Groups have also been instrumental
Although the Self Help Groups
which generate allied productive in the construction of link roads
exist only at the village level,
vocations for the poor families.’ in the villages including building
the fact is that these women
culverts across streams and other
One such self-help group members of the village councils rivulets. q
consists of 11 women and right have played a stellar role in
from making incense sticks and empowerment of women and (Courtesy : The Sentinel)
16 YOJANA July 2009

infrastructure
taking stock
National Highways : The Path Ahead
V K Sharma
I
nfrastructure pollution and enhanced road
development i s safety.
absolutely critical for India’s At about 3.3 million kilometers,
economic growth and for India has the second largest road
sustainable development. network in the world. Of this, the
Building world class infrastructure highway network accounts for
is a pre-condition for attaining a about 2 %, with a total length of
sustained growth of 7% to 8% 66,754 km, but carries about 40%
per annum, which is needed to of the total traffic. At present,
improve the quality of life of
Successful the citizens. Road connectivity
14% of national highways are 4
or 6 lane, about 59% two-lane
completion of holds the key to infrastructural and 27% single lane. The existing
such mega development, especially for a network has inadequate capacity
country of such vast proportions to handle high traffic density in
projects would as India. The share of road in total many places and suffers from poor
require pro- traffic is growing everyday. The riding quality.
active support rapid expansion and strengthening The Central Government is

of the road network, therefore,
of various is imperative, both to provide
responsible for development
and maintenance of the national
Central/State for present and future traffic and highways system. The National
Government for improved accessibility to Highways Authority of India
the hinterland. In addition, road (NHAI), set up under the Ministry
Departments and transport needs to be regulated of Shipping, Road Transport &
other stakeholders for better energy efficiency, lesser Highways has been vested with
The author is General Manager (Environment & Press Relations), National Highways Authority of India
YOJANA July 2009 17

special powers for taking up the Porbandar. Under this project, paved shoulders. This is being
highway development program four laning of 3,541 km length implemented by the Deptt. of Road
with certain investment decisions, has been completed and 2,810 km Transport & Highways.
acquisition of land and speedy length is under implementation.
NHDP Phase V. for 6-laning of
implementation of the projects. Work for 791 km length is yet to
6500 km of existing 4 lane highways.
NHAI’s endeavour is to meet the be awarded.
This constitutes about 5,700 km of
nation’s need for providing and
Port connectivity, 380 km the Golden Quadrilateral and 800
maintaining national highways
length of national highways to be km of other NHs with high density
network to global standards and upgraded to 4-lane for improving of traffic which are otherwise
to meet the expectations of users connectivity to 10 major ports of important for tourist or economic
in the most cost and time effective the country to NHDP. So far, work reasons. The project would be
manner. on 206 km has been completed, implemented on DBFO basis. Out
National Highways Development 168 km is under implementation of 6,500 km, 123 km has already
Programme and 6 km of length is to be been completed. 911 km is under
awarded. implementation and 5,466 km is to
The Government of India has
Out of 962 km of other National be awarded.
chalked out a massive investment
plan in the road sector, under the Highways, so far 800 km has NHDP Phase VI. This phase
National Highways Development been completed, 142 km is under envisages development of 1,000
implementation and balance length km of expressways connecting
Programme (NHDP). An investment
of 13 km is to be awarded. important commercial and industrial
of over Rs. 2,20,000/- crore has been
planned for extensive up gradation NHDP Phase-III townships through Public Private
of the national highways network Partnership. Four stretches have
It comprises of widening of been identified - 400 km long
till 2015. The projects under Phase-I
existing National Highways to 4/6
& Phase-II of NHDP, and their Vadodara-Mumbai section would
lane standard for a length of about
current status is as follows: be taken up in the first stage, 66
12,109 km, having high traffic
km long Delhi-Meerut Expressway,
Golden Quadrilateral, i.e., density, connecting important
334 km long Bangalore-Chennai
National Highways connecting tourist locations, economically
Expressway and 277 km long
four metropolitan cities - Delhi, important areas, state capitals on
Kolkata-Dhanbad Expressway. All
Mumbai, Chennai & Kolkata, BOT basis. Four-laning of 827 km
these expressways would be on a
having a length of 5846 km. Four has already been completed. 1,920
new alignment and are scheduled
laning of about 98% (5,724) km has km is under implementation and
for completion by Dec 2015.
been completed and work is going 9,362 km remains to be awarded.
on in the remaining length. NHDP Phase VII. It envisages
In next 5-6 years the government
construction of Ring Roads, Flyovers
North-South & East-West proposes to carry forward the
and Bypasses in several important
Corridor which comprises 4-laning National Highways Development
cities for proper regulation and
of 7300 km of national highways Project through various phases.
movement of traffic.
These include :
connecting North-South corridor
Ppp in Highway Development
from Srinagar to Kanniakumari NHDP Phase IV. under which
with Cochin-Salem spur and East- there are plans for 2-laning of 20,000 While the first two phases
West corridor from Silchar to Km of the national highways, with of NHDP were largely EPC
18 YOJANA July 2009

contracts, public funded, most of request for proposal have been delineators, crash barriers and
the future projects under NHDP finalised and are in use by the NHAI median railings. For safety of
would be through public-private since December 2007. road users during construction
partnership (PPP) model. PPP in stage, provisions are made for
The new model concession
highway development seeks to safety features such as advance
agreement, which provides for the
tap the resources, expertise and traffic warning signals, retro-
revenue sharing mechanism, was
professionalism of private sector reflective signs and reflective
introduced in January 2007. It has
for public development under a lights at hazardous locations.
now been accepted by all parties
framework attractive to both parties. Once the construction work is
as fair and has helped to balance
The framework enables a private over, highways are maintained
the risk and obligations between
entrepreneur to secure reasonable through long-term and short-
the government and the private
returns at manageable risk, assures term Operation and Maintenance
parties.
the user of adequate service quality, (O&M) contracts which have
at an affordable cost, and facilitates The approval of the Toll Rules inbuilt safety provisions to
the Government in procuring value 2008, is expected to further increase ensure the safety of road users.
for public money. private sector participation. The rule At present about 4310 km of
is likely to increase the viability of National Highways are being
The cess on petrol/diesel for privately funded projects. maintained through Operation and
road users, dedication of the Maintenance contracts.
cess to a central road fund, the Shift from BOT to DBFO-
decision to involve the private The NHAI has shifted from the Several initiatives have been
sector are some of the factors Build-Operate –Transfer model for taken to ensure safe and comfortable
awarding projects to the Design- journey on completed corridors of
helping the sector. The reliance
Build-Finance-Operate model for National Highways. They include
on the private sector increased
projects under NHDP. This model thermoplastic road marking on
due to an expansion in the project
allows the concessionaire to design carriageway, crash barriers at
scope of the NHDP and the
the project and removes the risk of the location of high embankment
inadequacy of funds to implement
changes in project scope resulting and curves, railing at the central
the expansion. Such a reliance has
in time and cost overruns. median/service road in urban areas
also necessitated some policy and
to prevent crossing of pedestrian/
regulatory changes in the last few Road Safety
cyclists and shrubs/plantations
years. Well defined, standardized,
NHAI is designing roads with in the central median to improve
transparent and quick processes
international standards with great aesthetics along with mitigating
have been put in place in order to
emphasis on enhanced safety the glare of light of vehicles
foster greater confidence in the
features. Provisions for flyovers, coming from opposite direction. In
private sector. The current policy
bypasses, Railway Over/Under addition, there is provision of well-
framework has all the ingredients
Bridges, etc. are made with an equipped ambulance with requisite
required to ensure a competitive
eye on enhancing road safety. paramedical staff and necessary
road development industry. Some medical equipments for every 50
In the Detailed Project Reports
of the key recent initiatives taken km of completed stretch to provide
(DPRs), provisions are also made
by Government of India include: immediate help to accident victims
for overhead signs, cautionary/
Standard bidding documents: regulatory/informatory retro- and taking them to nearest trauma
The request for qualification and reflective signboards, cat eyes, care centre or hospital. Also tow-
YOJANA July 2009 19

away vehicle facility is available refuelling, refreshment, rest and environmental clearance, utility
on all completed stretches for relaxation, separate places for shifting etc., NHAI is largely
towing away the broken down parking of cars, buses and trucks, dependent on the State Govts.
or damaged vehicles from the workshop for repairs of vehicles, Simultaneously, the projects
carriageway so that such vehicles telephones small shopping centers also suffer due to the law and
do not cause any safety hazard etc. order situation in some states.
to the road users. Route patrol Once the construction of the
Challenges
vehicles on 24 hours basis are project is complete, Operation
provided for every 50 km length One of the most important & Maintenance of the highway,
of completed corridors to assist challenges is timely completion of incident management, asset
the road users and continuous the projects. The projects under management and safety of the
surveillance of highway assets. NHDP are spread in almost all highway assets/furniture is another
Each patrol vehicle is equipped states of the country. NHAI is challenge. Good highways need
with adequate sign boards, traffic required to hand over encumbrance good and responsible driving habits.
cones, fire extinguishers, gas free site to the contractor as Lack of adherence to the traffic
cutters, hydraulic jack , first aid kit per the contract agreement for rules may prove to be disastrous
and communication equipment. timely execution of the projects. for the road users. Therefore,
With a view to making road NHAI is also required to co- successful completion of such
journey safer, comfortable and ordinate with the Central Deptt. mega projects would require pro-
convenient and to reduce the on the issues related to defence active support of various Central/
fatigue in a long distance driving, land, ROB clearance, wild life State Govt. Departments and
NHAI has initiated a drive to clearance etc. For expeditious and other stakeholders. q
develop comprehensive wayside timely pre-construction activities
amenities like provisions for such as land acquisition, forest & (E-mail vksharma@nhai.org)
Growth in the Infrastructure Sector
R
iding on the back of 6.7 per cent weight in the Index of Industrial Production
gross domestic product (GDP) Growth (IIP), rose by 4.3 per cent during the month
growth and sign of economic under review as compared to 2.3 per cent in
recovery in the economy, the growth
rate of April 2008.
rate of core industries including cement, cement, The output of cement during April went up
finished steel, coal and electricity, nearly
doubled to 4.3 per cent during April, the steel, by 11.7 per cent as compared to 6.9 per cent.
Finished steel output recorded a 1.6 per cent
first month of the current fiscal. coal and growth against a drop of 0.6 per cent in April
The news of robust growth in the 2008.
electricity
core sectors and could signal the revival
Coal production registered a growth rate of 13.2
of the economy that has been on the nearly per cent as compared to 10.4 per cent. Similarly,
downslide for the last few months.
With indications of the economic gloom doubled electricity generation increased by 6 per cent
against 1.4 cent. q
blowing away, the output of six core in April
sectors, which has over 26 per cent (Courtesy : The Hindu)
20 YOJANA July 2009

infrastructure
avenues
Market-Based Financing of Urban

Infrastructure
Chetan Vaidya
R
apid largest urban population in the
urbanization has world. The proportion of urban
increased the demand population was 27.8% in the year
for urban infrastructure 2001 and the decadal growth of
in India. Since public urban population was 31.2% in
funds for these services are 1991-2001.
inadequate, Urban Local Bodies
The urban population is expected
have to look for alternative sources
to rise to around 38 percent by
for financing their infrastructure
2026. It is clear that urbanization
needs. Accessing capital markets has
is inevitable. India needs to
emerged as viable options for ULBs
A market- to finance urban infrastructure.
improve its urban infrastructure and
governance to improve productivity
based approach to Several urban local bodies and
and create jobs for the poor.
utility organizations have issued
financing urban bonds and have so far mobilized
Rapid urbanization has increased
the demand for urban services.
infrastructure linked over Rs.12,000 million through
The Eleventh Five Year Plan of
taxable bonds, tax-free bonds and
with JNNURM pooled financing. The JNNURM, a
India (2007-2012), has estimated
that total fund requirement for
will further flagship urban investment program
implementation of the Plan target
of Government of India encourages
strengthen ULBs ULBs to link the projects with
in respect to urban water supply,
sewerage and sanitation, drainage
and help achieve market-based financing. The market
and solid waste management is
access is important innovation in
the decentralization the financing of urban infrastructure
Rs. 12,702 billion. Financial
resources from all public sources,
objective of the in the country.
however, fall far short of the urban
74th Constitutional In 2001, about 286 million sector’s estimated investment
requirements. Since public funds for
persons were living in urban areas
Amendment of India and it was the second these services are inadequate, ULBs
The author is Director, National Institute of Urban Affairs (NIUA)
YOJANA July 2009 21

have to look for alternative sources system has come to be regarded by system, strengthening of AMC’s
for financing their infrastructure India’s private financial community workforce and financial management,
costs. Market-based financing has as a solid indicator of a city’s and development of a comprehensive
emerged as a viable alternative to performance and competitiveness. capital improvement program. Due
finance infrastructure investments. In the last 12 years, all major to these measures, AMC was able to
rating agencies – CARE, FITCH, turn around its financial position from
Market-Based Financing
ICRA and CRISIL - have provided a cash deficit municipal corporation
System
ratings for municipal and municipal to achieve a closing cash surplus of
Since 1994, the Indo-US enterprise bond offerings. Under Rs.2,140 million by March 1999.
Financial Institution Reform and JNNURM, about 52 cities have These reforms laid the necessary
Expansion (FIRE-D) project is been credit rated and out of them groundwork for AMC’s bond issue
working with national, state and about 42 have received investment and the successful implementation
local governments in India to grade rating. of the water supply and sewerage
develop a market-based bond project.
Taxable Municipal Bonds
market. Several ULBs and utility
The debt market in India for
organizations have issued bonds The Government of India,
municipal securities has grown
that so far have mobilized over recognizing infrastructure’s key
considerably since the issuance of
Rs.12,249 million through taxable role in the process of economic
Ahmedabad bonds. Since 1998,
bonds, tax-free bonds and pooled development, set up the Expert
other cities that have accessed the
financing (Table 1). Group on the Commercialization
capital markets through municipal
of Infrastructure, often known as
Table 1: Municipal Bonds in bonds without state government
the Rakesh Mohan Committee, in
India guarantee include Nashik, Nagpur,
1994. The FIRE-D project worked
S. Type of Amount (Rs. Ludhiana, and Madurai. In most
closely with this Committee to
No. Bond in Million) cases, bond proceeds have been
provide international experience
1. T a x a b l e 4,450 used to fund water and sewerage
on tax-free municipal bonds. The
bonds schemes or road projects. India’s
Committee recommended private
2. T a x - f r e e 6,495 city governments have thus
sector participation in urban
bonds mobilized about Rs.4,450 million
infrastructure development and
3. P o o l e d 1,304 from the domestic capital market
accessing capital markets through
finance through taxable municipal bonds.
issuing municipal bonds.
TOTAL 12,249
Tax-Free Municipal Bonds
The Ahmedabad Municipal
Credit Rating Corporation (AMC) was the first To boost the municipal bond
In 1995, the Credit Rating ULB to access the capital market market, the Government of India
Information Services of India in January 1998. It issued Rs.1,000 decided to provide tax-free status to
Limited (CRISIL) to develop a million in bonds to partially finance municipal bonds. During his budget
methodology for carrying out a Rs.4,390 million water supply speech of 1999-2000, the Finance
municipal credit ratings based on and sewerage project. This was a Minister announced the Government
careful study of ULBs in India remarkable achievement since it was of India's intention to permit ULBs
and international experience. the first municipal bond issued in to issue tax-free municipal bonds.
Ahmedabad was the first city India without a state guarantee and The Government of India issued
where this methodology was represented the first step towards a guidelines for issue of tax-free
applied in India. In February 1996, fully market-based system of local municipal bonds in February 2001.
Ahmedabad received a rating government finance. The AMC had These guidelines stipulate eligible
from CRISIL for a bond offering. previously instituted significant issuers, use of funds, essential
This was the first rating received fiscal and management reforms, pre-conditions, maturing period,
by a municipal bond offering in including improved tax collection, buy-back, nature of issue and
India. The municipal credit rating computerization of its accounting tax benefits, ceiling amount for a
22 YOJANA July 2009

project, compulsory credit rating, by pooling 14 municipalities for and Sanitation Pooled Fund
and external monitoring of the commercially viable water and (KWSPF) was established under
tax-free municipal bond. Tax-free sewerage infrastructure projects. the Indian Trust Act to access the
status provided an incentive to A special purpose vehicle, the capital market by issuing a bond
local governments to improve their Water and Sanitation Pooled Fund on behalf of the participating
fiscal management sufficient to (WSPF), was set up to issue the ULBs. The KWSPF was created
meet the demands of the investment municipal bonds. The WSPF as the intermediary between
community.. structured a Rs.304 million bond the local municipalities and the
issue whose proceeds financed capital market. The KWSPF
Ahmedabad was the first
small water and sanitation projects borrowed from the market and
municipal corporation in India to
in the 14 small ULBs. The Trust on-lends to the ULBs at terms
issue tax-free municipal bonds
vehicle enabled the local bodies d e t e r m i n e d b y t h e K W S P F.
for water and sewerage projects.
to participate in the capital During June 2005, the KWSPF
In April 2002, AMC issued a tax-
market without increasing the successfully floated Rs.1,000
free 10-year bond with an annual
contingent liabilities of the state million tax-free municipal bonds
interest rate of 9.00 percent. The
and to channelize private financial at an annual interest rate of 5.95
bond issue amount was Rs.1,000
resources into infrastructure percent. USAID under its DCA
million. The Municipal Corporation
investments. This was the first program provided a guarantee of
of Hyderabad also issued a tax-free
municipal pooled issue. It had a up to 50 percent of the principal
municipal bond in May 2002 for
fifteen-year maturity and an annual amount of market borrowing. It
Rs.825 million. The MCH thus
interest rate of 9.20 percent. USAID is felt that the tax-free status of
became the second city to issue tax-
provided a backup guarantee of 50 the bonds and the DCA guarantee
free municipal bonds. The money
raised by MCH through municipal percent of the bond’s principal lowered the interest rate by about
bonds was used for providing urban through the Development Credit 1.5-2.0 percent per year compared
infrastructure in the city especially Authority (DCA) mechanism. The to similar credit enhancement
in slums. The tenure of the bond proceeds helped ULBs to refinance structures and helped to extend
was seven years with a rate of their loans at lower interest rates, the bond’s tenure to 15 years.
interest of 8.50 percent. connect periphery areas to new
The success of the pooled
water supply schemes, and provide
Pooled Financing finance model as demonstrated
underground drainage and solid
in the States of Tamil Nadu and
Only financially strong, large waste management schemes. The
Karnataka subsequently led the
municipal corporations are in a issue demonstrated a successful
Government of India to create a
position to directly access capital model of pooled financing in
central fund that enables capital
markets. Most small and medium India.
investments to be pooled under
ULBs are not able to directly access Subsequently, the Government one state borrowing umbrella.
capital markets on the strength of of Karnataka used the concept The objective is to provide a cost-
their own balance sheets. Also, the of pooled financing to raise effective and efficient approach for
cost of the transaction is another debt from investors for the smaller- and medium-sized ULBs
barrier. In the United States and G r e a t e r B a n g a l o r e Wa t e r and to reduce the cost of borrowing.
elsewhere, small local bodies Supply and Sewerage Project FIRE-D project supported GoI’s
pool their resources and jointly (GBWASP). This project covers MOUD in formulating the Pooled
access the capital market. Based eight municipal towns around Finance Development Fund (PFDF)
on this model, the Governments Bangalore and has a total project Guidelines to help small- and
of Tamil Nadu and Karnataka cost of Rs.6,000 million. These medium-sized ULBs access market
issued municipal bonds by pooling eight municipal towns were funds for their infrastructure projects
municipalities. m e rg e d w i t h t h e B a n g a l o r e and to encourage municipalities
In 2003, the Tamil Nadu Urban Municipal Corporation. A debt undertake fiscal, financial and
Development Fund issued a bond fund called the Karnataka Water institutional reforms required to
YOJANA July 2009 23

create efficient and equitable urban • C o m m e r c i a l b a n k s , bond structures that respond to

centers. governed by the RBI’s asset investor needs while providing
and liability management the issuer with the longest
Linkages with JNNURM
(ALM) requirements, prefer possible tenor, lowest possible
The Government of India has to lend over the short- to interest rate, and lowest possible
attempted to meet the challenge medium-term as their assets cost of issuance.
of inadequate urban infrastructure and liabilities are short- to
• T h e r e a r e a v a r i e t y o f
through a flagship program, the medium-term in nature.
“administrative and managerial”
Jawaharlal Nehru National Urban
• F u r t h e r, b a n k s c a n n o t constraints that inhibit and
Renewal Mission (JNNURM).
take exposures to ULB discourage potential issuers of
States and ULBs accessing the
financing in bonds/structured municipal bonds. Though, the
JNNURM must complete a total
instruments due to “mark- reforms initiated by the Ministry
of 22 reforms, some mandatory
to-market” requirements. of Urban Development shall help
and some optional, during the
Lending by banks in the form change the situation. Presently,
seven-year period (2005-12). The
of loans is not subject to such here is divergence of opinion
mandatory and optional reforms of
requirements. on the optimal debt equity ratio
states/ULBs under the JNNURM
for ULBs. Therefore, the rating
include decentralization of urban • Since there is lack of credit agencies must communicate the
governance and empowering enhancement, hedging tools for optimal debt equity ratio for
urban local bodies, introduction investors to mitigate credit risk, projects by ULBs.
of improved accounting systems, and limited reliability of credit
improved revenue base, reform • There is need for further clarity
information, investors perceive
of rent control acts, delivery of on how the Government of
municipal bonds to be risky.
services to poor, etc. The JNNURM India will operationalize the
encourages ULBs to access market- • The fixed cap on tax-free interest sanctioning mechanism for
based financing and PPP for urban from municipal bonds does not Tax-Free Pooled Finance
infrastructure projects that are respond to market conditions. Development bonds.
funded by the Mission. The Nagpur Municipal bonds become
Municipal Corporation issued a unattractive when market rates • There is need for further clarity
Rs.212 million municipal bond in on how will the RBI approved
exceed the cap.
March 2007 to fund a WSS project credit rating agency carry out
under JNNURM. • Given the poorly developed the surveillance throughout the
government securities market, tenor of the Tax Free Pooled
Constraints for Municipal municipal bonds are relatively Finance Development Bonds.
Bonds illiquid investments for lack
• Out the surveillance throughout
Supply-side Constraints are: of exit opportunities for
the tenor of the Tax Free Pooled
institutional investors. Further,
• Institutional investors with Finance Development Bonds.
there is an inefficient clearing
long-term funds face regulatory and settlement mechanism. The funding and reform
constraints on purchasing agendas of the JNNURM and the
municipal bonds: Demand side constraints are:
PFDF will help to address the
• Institutional investors such • There are too few creditworthy demand-side constraints on the
as the insurance companies issuers seeking bond financing. use of municipal bonds. Other
are constrained because of supply-side constraints can only
• There are too few financially be addressed by the institutions
restrictions imposed by the viable projects seeking bond
investment guidelines of responsible for the regulation and
financing. development of India’s financial
the Insurance Regulatory
Development Authority • There is a lack of intermediation markets. Therefore a Working
(IRDA). support to help issuers achieve Session is to reach consensus to
24 YOJANA July 2009

address the key supply-side constraints that impede

further development of India’s long-term municipal SAROJ KUMAR’S IAS ERA
bond market. Recommendations to the responsible IAS-2009-10
institutions regarding the supply-side constraints (fgUnh & English Medium)
are: With SAROJ KUMAR
Hkwxksy lkekU; v/;;u bfrgkl
• Expand the range of “approved investments” for Geography General Studies History
insurance and pension organizations to include OUR SELECTED CANDIDATES IN I.A.S.
municipal bonds of investment grade or higher.
General Purpose bonds may also be included in
the list of ‘infrastructure’ category. Krishan Kumar Virendra S. Yadav Ram Niwas Yadav Love Kumar
• Municipal bonds to be classified under ‘hold

to maturity’ category rather than in ‘marked-to
market’ category. Harkesh Meena Shraddha Joshi Krishna Kr. Nirala Vinod Kumar Sanjay Aggarwal
• Specify municipal bonds under the ‘priority sector’

category for investment/lending purposes. Manoj Kr. Sharma Sumit Yadav Premvir Singh
Anoop Jaiswal Rinku Kumari
OUR SELECTED CANDIDATES IN P.C.S
• Provision of “bond insurance” as credit enhancement
may be explored as a security against default by
municipal bodies.
Rajendra Purohit Devendra Pincha Rakesh Saini Dilip S. Tomar Gudakesh Ranjan Singh
• Review the 8% cap on interest rate for tax-free

municipal bonds and prescribe a benchmark market
rate linked to State Bank of India-Prime Lending
Nirupam Mondal Shakti Singh Rajendra Sharma Rajeev K. Ambast Devrat Sirmour
Rate rather than an absolute percentage.
GEOGRAPHY Mains special 2 Months
• Provide investment opportunity in municipal bonds
HISTORY Mains special 2 Months
to individual/retail investors, CBDT to include
municipal bonds in the list of eligible investments/ GEN. STUDIES Mains special 2 Months
subscriptions for the purpose of claiming deduction GEOGRAPHY (P.T.& Mains) 4-5 Months
under section 80C of the Income Tax Act, 1961.
HISTORY (P.T.& Mains) 4-5 Months
• Include municipal bonds in the list of eligible GEN. STUDIES (Mains + P.T.) 4-5 Months
investments for Employee Provident Fund
Organization.
P.C.S. Special
TEST SERIES 1 Month
Great progress has been made in developing the
policy and legal framework for local governments Geog., G.S., History, Essay, Pub.Admn.,
to access the capital market to finance urban Com. English Classes
infrastructure. However to routinely access capital Postal course
markets, ULBs will have to have the capacity to
develop commercially viable projects. The most Personality Development & Interview classes
critical factor for obtaining market finance will be WEEKEND OR REGULAR CLASSES
a healthy municipal revenue base. A market-based FOR DAY SCHOLARS (Working People) -
EARLY MORNING OR EVENING BATCH
approach to financing urban infrastructure linked
Con
tac
t:
Dr. Veena Sharma
with JNNURM will further strengthen ULBs and SAROJ KUMAR’S IAS ERA
help achieve the decentralization objective of the 74th 1/9, Roop Nagar, G.T. Karnal Rd., Near Shakti Ngr. Red Light,
YE-7/09/07
Constitutional Amendment. q Above P.N.B. Near Delhi University, North Campus, Delhi - 7
(E-mail:cvaidya@niua.org) Ph. : 011-64154427 Mob. : 9910415305, 9910360051
YOJANA July 2009 25

LIST OF COUNCIL OF MINISTERS

CABINET MINISTERS
1. Dr. Manmohan Singh Prime Minister and also in-charge of the Ministries/Departments not specifically
allocated to the charge of any Minister viz.:
(i) Ministry of Personnel, Public Grievances & Pensions;
(ii) Ministry of Planning;
(iii) Department of Atomic Energy;
(iv) Department of Space;
(v) Ministry of Culture; and
2. Shri Pranab Mukherjee Minister of Finance.
3. Shri Sharad Pawar Minister of Agriculture and Minister of Consumer Affairs, Food & Public
Distribution.
4. Shri A.K. Antony Minister of Defence.
5. Shri P. Chidambaram Minister of Home Affairs.
6. Km. Mamata Banerjee Minister of Railways.
7. Shri S.M. Krishna Minister of External Affairs.
8. Shri Virbhadra Singh Minister of Steel
9. Shri Vilasrao Deshmukh Minister of Heavy Industries and Public Enterprises
10. Shri Ghulam Nabi Azad Minister of Health and Family Welfare
11. Shri Sushilkumar Shinde Minister of Power
12. Shri M. Veerappa Moily Minister of Law and Justice
13. Dr. Farooq Abdullah Minister of New and Renewable Energy
14. Shri S. Jaipal Reddy Minister of Urban Development
15. Shri Kamal Nath Minister of Road Transport and Highways
16. Shri Vayalar Ravi Minister of Overseas Indian Affairs
17. Shri Dayanidhi Maran Minister of Textiles
18. Shri A. Raja Minister of Communications and Information Technology
19. Shri Murli Deora Minister of Petroleum and Natural Gas
20. Smt. Ambika Soni Minister of Information and Broadcasting
21. Shri Mallikarjun Kharge Minister of Labour and Employment
22. Shri Kapil Sibal Minister of Human Resource Development
23. Shri B.K. Handique Minister of Mines and Minister of Development of North Eastern Region
24. Shri Anand Sharma Minister of Commerce and Industry
25. Shri C.P. Joshi Minister of Rural Development and Minister of Panchayati Raj
26. Kumari Selja Minister of Housing and Urban Poverty Alleviation and Minister of Tourism
27. Shri Subodh Kant Sahay Minister of Food Processing Industries
28. Dr. M.S. Gill Minister of Youth Affairs and Sports
29. Shri G.K. Vasan Minister of Shipping
30. Shri Pawan Kumar Bansal Minister for Parliamentary Affairs and Minister for Water Resources
31. Shri Mukul Wasnik Minister of Social Justice and Empowerment
32. Shri Kantilal Bhuria Minister of Tribal Affairs
33. Shri M.K. Alagiri Minister of Chemicals and Fertilizers
MINISTERS OF STATE (INDEPENDENT CHARGE)
1. Shri Praful Patel Minister of State (Independent Charge) of the Ministry of Civil Aviation
2. Shri Prithviraj Chavan Minister of State (Independent Charge) of the Ministry of Science and Technology;
Minister of State (Independent Charge) of the Ministry of Earth Sciences; Minister of
State in the Prime Minister’s Office; Minister of State in the Ministry of Personnel,
26 YOJANA July 2009

Public Grievances and Pensions; and Minister of State in the Ministry of Parliamentary
Affairs
3. Shri Shriprakash Jaiswal Minister of State (Independent Charge) of the Ministry of Coal and Minister of State
(Independent Charge) of the Ministry of Statistics and Programme Implementation.
4. Shri Salman Khursheed Minister of State (Independent Charge) of the Ministry of Corporate Affairs and
Minister of State (Independent Charge) of the Ministry of Minority Affairs
5. Shri Dinsha J. Patel Minister of State (Independent Charge) of the Ministry of Micro, Small and Medium
Enterprises
6. Smt. Krishna Tirath Minister of State (Independent Charge) of the Ministry of Women and Child
Development
7. Shri Jairam Ramesh Minister of State (Independent Charge) of the Ministry of Environment and Forests
MINISTERS OF STATE
1. Shri Srikant Jena Minister of State in the Ministry of Chemicals and Fertilizers
2. Shri E. Ahammed Minister of State in the Ministry of Railways
3. Shri Mullappally Ramachandran Minister of State in the Ministry of Home Affairs
4. Shri V. Narayanasamy Minister of State in the Ministry of Planning and Minister of State in the Ministry of
Parliamentary Affairs
5. Shri Jyotiraditya Madhavrao Scindia Minister of State in the Ministry of Commerce and Industry
6. Smt. D. Purandeswari Minister of State in the Ministry of Human Resource Development
7. Shri K.H. Muniappa Minister of State in the Ministry of Railways
8. Shri Ajay Maken Minister of State in the Ministry of Home Affairs
9. Smt. Panabaka Lakshmi Minister of State in the Ministry of Textiles
10. Shri Namo Narain Meena Minister of State in the Ministry of Finance
11. Shri M.M. Pallam Raju Minister of State in the Ministry of Defence
12. Shri Saugata Ray Minister of State in the Ministry of Urban Development
13. Shri S.S. Palanimanickam Minister of State in the Ministry of Finance
14. Shri Jitin Prasada Minister of State in the Ministry of Petroleum and Natural Gas
15. Shri A. Sai Prathap Minister of State in the Ministry of Steel
16. Smt. Preneet Kaur Minister of State in the Ministry of External Affairs
17. Shri Gurudas Kamat Minister of State in the Ministry of Communications and Information Technology
18. Shri Harish Rawat Minister of State in the Ministry of Labour and Employment
19. Prof. K.V. Thomas Minister of State in the Ministry of Agriculture and Minister of State in the Ministry
of Consumer Affairs, Food and Public Distribution
20. Shri Bharatsinh Solanki Minister of State in the Ministry of Power
21. Shri Mahadev S. Khandela Minister of State in the Ministry of Road Transport and Highways
22. Shri Dinesh Trivedi Minister of State in the Ministry of Health and Family Welfare
23. Shri Sisir Adhikari Minister of State in the Ministry of Rural Development
24. Shri Sultan Ahmed Minister of State in the Ministry of Tourism
25. Shri Mukul Roy Minister of State in the Ministry of Shipping
26. Shri Choudhury Mohan Jatua Minister of State in the Ministry of Information and Broadcasting
27. Shri D. Napoleon Minister of State in the Ministry of Social Justice and Empowerment
28. Dr. S. Jagathrakshakan Minister of State in the Ministry of Information and Broadcasting
29. Shri S. Gandhiselvan Minister of State in the Ministry of Health and Family Welfare
30. Shri Tusharbhai Chaudhary Minister of State in the Ministry of Tribal Affairs
31. Shri Sachin Pilot Minister of State in the Ministry of Communications and Information Technology
32. Shri Arun Yadav Minister of State in the Ministry of Heavy Industries and Public Enterprises
33. Shri Pratik Prakashbapu Patil Minister of State in Ministry of Youth Affairs and Sports
34. Shri R.P.N. Singh Minister of State in the Ministry of Road Transport and Highways
35. Shri Shashi Tharoor Minister of State in the Ministry of External Affairs
36. Shri Vincent Pala Minister of State in the Ministry of Water Resources
37. Shri Pradeep Jain Minister of State in the Ministry of Rural Development
38. Ms. Agatha Sangma Minister of State in the Ministry of Rural Development
q
YOJANA July 2009 27

infrastructure
reforms
Sustaining Urban Infrastructure
Usha P Raghupathi
T
he number of people Urban areas make a significant
living in India’s urban contribution to the economy of
areas is rising rapidly. the country. According to the 11th
The country’s urban Five Year Plan document (Vol
population, which was 3, Chapter 11) the urban sector
109 million in 1971, has contributes about 62%–63% of the
grown to over 300 million at present GDP and this is expected to increase
(2009). Growth of urban population to 75% by 2021. It further states
without concomitant investment in that “Indian cities will be the locus
infrastructure exerts tremendous and engine of economic growth
pressure on systems such as water over the next two decades, and the
supply, sewerage and drainage. realization of an ambitious goal of
JNNURM, Increasing quantities of uncollected
solid waste poses serious threat to
9%–10% growth in GDP depends
fundamentally on making Indian
therefore, provides a the health of citizens. Vanishing cities much more livable, inclusive,
bankable, and competitive”. There
urban spaces such as parks and
unique opportunity open areas lead to urban congestion is an urgent need to ensure that good
and the ever-growing traffic on quality water supply, sanitation,
to cities to not only city roads creates daily traffic solid waste management, roads
get substantial snarls. Lack of maintenance of
existing infrastructure further adds
and public transportation are in
place to support this growth. The
funds for urban to the pressure on civic services. efficiency with which the cities are
According to the Eleventh Plan managed will determine the rate of
infrastructure document, in 2001, 50.3% of the the country’s economic growth.
development but to urban households had no piped
water within their premises and 44%
The Government of India has,
in the past, provided funds for
transform cities and of them were devoid of sanitation
facilities. The challenge is to
infrastructure through various
make them better address the infrastructure deficit by
schemes and programmes, but it
was increasingly being realized
mobilising public as well as private
places to live sources of funds.
that without bringing about reforms
The author is Professor, National Institute of Urban Affairs, New Delhi.
28 YOJANA July 2009

in the urban sectors, such funding of financing and managing urban achieved during the seven-year
will not be sustainable. Since services. period of the Mission.
the 1990s, the Government has
Jawaharlal Nehru National Urban There are two sets of reforms
initiated several reforms aimed at
Renewal Mission (JNNURM) under JNNURM - mandatory and
strengthening urban local bodies
(ULBs), which are the bodies optional. Both sets of reforms are
In response to the investment
mainly responsible for provision compulsory. Optional reforms only
requirements of the urban sector
of civic infrastructure. provide an option to the states and
in the country, the Government
ULBs to select any two reforms in
of India launched the Jawaharlal
Reforms in the Urban Sector in any given year.
Nehru National Urban Renewal
India
Mission (JNNURM) on 3rd The reforms under JNNURM
The 74th Constitution December 2005. The Mission are as follows:
Amendment Act, 1992 was a has a provision of Rs.50,000
major step to decentralize crores for investment in urban Mandatory Reforms
urban governance and provide infrastructure for 63 mission cities, At the Level of ULBs and Parastatal
constitutional status to which will be made available as Agencies
ULBs. This reform aimed at reform linked Central assistance
improving governance through over a period of seven years • Adoption of modern double
decentralization. This and other beginning from 2005-06. Along entry accrual-based system
reforms initiated by the Government with JNNURM, a parallel funding of accounting in ULBs and
since 1990s mainly dealt with the arrangement has been made for parastatal agencies.
restructuring and redefining the the other cities and towns of the
• Introduction of of e-governance
role of the ULBs. Further push to country under UIDSSMT (Urban
using IT applications, such
reforms came with the realization Infrastructure for the Development
of Small and Medium Towns and GIS and MIS for various
that the traditional ways of funding
infrastructure projects through IHSDP(Integrated Housing and services provided by ULBs
plan and budgetary allocations Slum Development Programme). and parastatal agencies.
is not sufficient to finance the The difference between JNNURM • Reform of property tax with
requirement for infrastructure and the other infrastructure funding GIS – the collection efficiency
investment. The ULBs have to initiatives of the Government in to reach at least 85 per cent.
find ways of mobilizing funds from the past is the linking of reforms
other sources such as accessing to funding. JNNURM seeks to • Levy of reasonable user charges
capital markets. This would incentivize policy and institutional by ULBs and parastatals with
necessitate credit rating of ULBs reforms, leading to improved the objective that the full
and the financial instruments they service delivery and governance in operation and maintenance
issue. Reforms are essential to the Mission cities. The emphasis on cost is collected.
improve the credit worthiness of reforms is to ensure improvement • Internal earmarking of funds,
ULBs. in urban governance so that within ULB’s budgets, for basic
the urban local bodies (ULBs) services to the urban poor.
In the union budget 2002- become financially sound and
03, the Central Government self-sustaining and deliver services • Provision of basic services
announced two fiscal incentives to efficiently. to the urban poor including
accelerate the reform process: 1) security of tenure at affordable
The Urban Reforms Incentive Fund Each city seeking funds prices, improved housing, water
(URIF); and 2) The City Challenge under JNNURM has to sign a supply and sanitation.
Fund (CCF). Both URIF and Memorandum of Agreement (MoA)
CCF had an initial allocation of which is a tripartite agreement At the Level of States
Rs. 500 cr. each. Both these were between the ULB/parastatal, the • I m p l e m e n t a t i o n o f 7 4 t h
set up to provide reform linked State Government and the Central Constitutional Amendment
assistance to states and have been Government. The MoA lists 23 Act.
subsumed under JNNURM. Other reforms and the states/ ULBs have
reforms have emphasized public- to indicate a time schedule within • Repeal of Urban Land Ceiling
private partnerships as a means which each of the reforms will be and Regulation Act (ULCRA).
YOJANA July 2009 29

• Reform of Rent Control Laws. Reforms are central to to basic services for this strata
• Rationalisation of Stamp Duty JNNURM and the funding of society. Encouraging public-
to bring it down to no more than available under it is an incentive private partnerships in urban
to change. Reforms are crucial infrastructure provision as well as
5 per cent
for sustainability of investments in management will not only bring
• E n a c t m e n t o f t h e P u b l i c in the long run. The reform in the much required funds from
Disclosure Law to release package when viewed as a whole the private sector but will also
quarterly performance is expected to transform ULBs, bring in efficiency in management
information to all stakeholders. their finances and the way they of services.
• Enactment of the Community function. The infrastructure
created under JNNURM and the What will reforms achieve?
Participation Law to
i n s t i t u t i o n a l i s e c i t i z e n ’s implementation of reforms is also The reforms under JNNURM
participation in urban areas. expected to transform the urban aim to achieve the following:
areas. Reforms in Rent Control
• Associating ULBs with “city laws, repeal of ULCRA, reduction • Transparency and accountability
planning function”. in stamp duty, property titling in urban governance
Optional Reforms and revision of bye-laws has the
• Inclusive planning and universal
potential to change the land and
(common to States, ULBs and housing market dramatically. access to basic services
Parastatal Agencies)
Bringing reforms in property • Making ULBs financially
• R e v i s i o n o f b y e - l a w s t o sustainable and improving their
taxation will substantially increase
streamline the approval process revenue base
the revenue generating potential of
for construction of buildings, this tax and improve the quality of
development of site etc. • Sustaining infrastructure by
services in cities. Another reform, providing for operation and
• Simplification of legal and which would have long lasting effect maintenance expenditure
procedural frameworks for on sustainability of infrastructure,
conversion of land from through maintenance, and lead • Encouraging public-private
agricultural to non-agricultural to improvement in the quality partnerships and bringing
purposes. of services is the levy of user private investment into urban
charges to recover operation infrastructure and services
• Introduction of Property Title
and maintenance cost of service
Certification System in ULBs. provision.. The Public Disclosure • Using information technology
• Earmarking at least 20-25 per Law and the Community for improving governance
cent of developed land in all Participation Law together can • Enhancing capacity of municipal
housing projects (both public make the ULBs accountable by governments to govern and
and private agencies) for EWS bringing transparency in ULB’s deliver services
and LIG category. functioning and by building
community pressure groups to • I m p r o v i n g t h e u s e a n d
• Introduction of computerised availability of water resources
demand accountability. Making
process of registration of land
rainwater harvesting compulsory
and property. • Making ULBs efficient and
in buildings and encouraging
effective
• Revision of byelaws to make recycling of wastewater will go
rain-water harvesting mandatory a long way in easing the critical JNNURM, therefore, provides a
in all buildings water situation in urban areas. unique opportunity to cities to not
Earmarking of funds for the only get substantial funds for urban
• B y e l a w s f o r r e u s e o f
urban poor in ULB budgets and infrastructure development but to
wastewater.
earmarking 20-25% of developed transform cities and make them better
• Administrative reforms land in all the housing projects places to live. Reform is the key to
• Structural reforms. for the economically weaker such transformation. q
sections will address the acute
• Encouraging PPP. shortage of housing and access (E-mail : uraghupathi@niua.org)
30 YOJANA July 2009

shodh yatra
A 'Dropout’ Innovator
I
n 1958, in a small village a laboratory, which he did, in
Babapur in district Amreli, due course of time, so that his
all the efforts of engineers mechanical innovations could
to start a new water pumping minimize hardships of the villagers.
machine had failed. On the He often explained the working of
insistence of a villager, a 12-year the farm and water machineries
old boy from amongst the curious to the folks around and fired their
villagers, was allowed to tinker imagination. Unfortunately he
Diamond Tawa with the machine and to everyone’s
had to leave his village due to
surprise, he made it work! This boy,
the lack of proper facilities and
Ravjibhai Savaliya grew up to be
his susceptibility to water borne
known as a ‘maverick innovator’
infections there.
in Gujarat. Always concerned
with finding solutions to social After shifting to Ahmedabad in
The story of problems, Late Ravjibhai showed 1968, he stayed with his cousin,
signs of Creativity from an early
his achievements age. As a small boy, he often stared
Ramjibhai Nakrani. After getting
cured of his illness, Ravjibhai
and failures in at the new electronic toys in the started earning Rs 60 per month
village exhibitions and thought of
market place and making them himself one day. He
by working as an assistant in an
electric supply store. The flame
his deep human brought recognition to his school,
Sarvodaya, by participating in
of scientific spirit could not be
values remind various Science fairs. But then,
smothered for long and soon he
set up a workshop along with his
there came a time when his family
us of the need to could not afford his school fee cousin. They carried on with the
see grassroots of 50 paisa. Ravjibhai had to experiments that he had abandoned
in the village. Joyfully dealing with
leave his studies. However, his
innovators not teachers Gunubhai Purohit and the vicissitudes of experimental
just as tinkerers/ Hasuben, recognizing his aptitude
towards science and his potential to
life, the cousins became the best
of friends!
mechanics but innovate, sent him to Mumbai to do
In 1971, after getting married
a vocational course at ITI.
also as to Triveniben, Ravjibhai started an
In 1966 he returned to Babapur electrical shop. His wife became
philosophers with the dream of setting up a symbol of strength in the new
YOJANA July 2009 31

machines. There was not enough II. Wheat Thresher (1974-76) -

money to even hire a tempo to go This thresher reportedly saved
to the village. He along with his 80 percent energy as compared
cousin Babubhai hitched a lift in a to the old models.
tempo that was going in the same
III. Foot Pump (1984) - Looking
direction, to deliver the machines.
at the problem faced by the
With no money they were dropped
people in filling the air in the
Foot Pump outside the village. They carried
tyres, Ravjibhai innovated a foot
the machines on their head and
pump. With its help even a child
chain of struggles. The electrical walked through two feet deep silt
can pump air in the tyres of the
shop had to be closed as there to sell them.
tractors. He was awarded by the
was not much profit. Ravjibhai With determination, integrity and then President of India, Giani
innovated his first ‘social-appliance’ commitment, Ravjibhai made some Zail Singh for this innovation.
Chaas Valona Yantra (Buttermilk money and restarted his workshop.
Churning Machine) in 1972. The IV. Electrical Furnace Type Wood
The buttermilk churning machine
response to his first innovation was soon became a household object. In Based Crematorium (1991)
an outright rejection. Triveniben 1977, the Savaliya Research Centre - This furnace saved wood
Savaliya narrated this story with was started. This gave the impetus significantly. Gujarat Energy
tears, how those were the most to his vision of rendering social Development Association
service. He always tried to find the (GEDA) subsidized it and it is
difficult days. Ravjibhai had drained
scientific answers to the daily chores now widely used. Crematorium
all his resources and had huge loans
and problems. And all his thoughts designed by him has sufficient
to be repaid. He had asked his wife to
led to a single question, “Will this air flow for better aeration from
pack the bags to return to the village.
be useful for the society?” all three sides (bottom and two
But his uncle encouraged them to side walls) so that there is proper
stay back. He sold his ancestral land A Social Innovator burning of wood.
to help Ravjibhai start anew.
Ravjibhai was an innovator V. Water Harvesting Methods
Later, the Buttermilk Churning for the working class and all his (1998) – To recharge the ground
Machine was improved upon and in innovations were aimed at reducing water, Ravjibhai developed
1974 he developed a commercially drudgery. These were centered on the low cost techniques for water
suitable design. But selling an problems faced by the villagers and harvesting. He got a tank of one
electrical gadget to replace the hard working people. Through sheer lakh liter capacity built for the
age old wooden butter churner self-learning he built his knowledge same purpose in his house.
was tougher than all his previous base of renewable energy - wind,
struggles. The traditional churner water, aerodynamics and pressure. VI. Electrical Burner (1999)
Energy conservation was also his -Using this, the diamond
was integral to the cultural set up
passion and a frequent trigger for industry has been saving power
of the state. All types of stories
innovation. His innovations are as worth Rs. 12 crore every year.
preceded its sales. People said that
follows:
women could die of electrocution; VII. Diamond Polishing Lathe
some said that buttermilk from it I. Butter Milk Churning Machine (2001) - Used in diamond
was poisonous. (1974) - It reduced three hours industry, this lathe replaced old
of churning buttermilk by hands machines, and saved energy up
Patience and consistent to just 20 minutes of work to 90 megawatt, equal to a small
communication with the villagers for women. In the history of power station.
started bearing results. Triveniben thousands of years, the rural
shared an incident of how once women who would sleep late VIII. Artificial Rain (2003) –
there was an order of 15 machines doing household chores and get He conducted artificial rain
from a village near Surat and all up early to churn the butter, got experiments in Kutch, Saurashtra
the money that Ravjibhai had, freedom from tiring, strenuous and Mumbai. In his “Cloud
went into manufacturing those hours. Seeding” experiment he sprinkled
32 YOJANA July 2009

other translations of his social

innovations.
A Philanthropic Rationalist
Ravjibhai used to call himself “a
mere matric fail”. But as his family
narrates, he was always studying,
finding solutions and innovating.
Einstein and Thomas Edison were
his idols. Making the students aware
of the world of science used to be his
priority. He visited schools to give
lectures and spot financially weak,
but intelligent students and helped
them. Garnering knowledge and
spreading it were the most important
endeavors of his life. His wife tells
how he would get up in the middle
Ribbed Tava (Griddle) of the night and call up his 11-year
old grandson to answer his query,
the Silver Iodide (AgI3) on the Ravjibhai saves energy through after a whole day of searching in the
burning coal. Instead of copying a ribbed bottom. The surface Science encyclopedias. Once there
expensive experiments of Israel, area increases and the cooking was a loud, thunderous sound in the
he devised the economical is also done evenly. skies in Saurashtra. People connected
method of dispersing the silver XI. Permanent Magnet Direct it to some divine intervention;
iodide on the coal. Current (PMDC) Motor – A scientists took time to decipher it. It
brushless motor, as its name was Ravjibhai who connected that
IX. Agate Grinding Mill (2006)
suggests, is a motor without sound to the supersonic jets that had
- This machine has helped
brushes, slip rings or mechanical just been introduced.
thousands of workers who used
to suffer with fatal silicosis commutater, such as are required Ravjibhai used to call himself
in conventional D.C. motors.
disease in the Agate (akik - a Eklavya, the epical Mahabharata
Outer Rotor Brushless P.M.D.C.
type of chalcedonic quartz hero who pursued training in
looms motor is believed to have
that has irregular or curved archery, in spite of lack of resources
high efficiency, which minimizes
bands of color.) industry, in the and rendered his most important art
the electricity bills, besides
Khambat region of Gujarat, bringing down the fabric cost. to his teacher as obeisance. This
famous for the gems industry. It gives much higher torque than modern Eklavya gave to the society
While polishing the gems, the other devices, which is a prior much more than he received. His
workers used to inhale the dust requirement for power loom. last wish to construct a ‘Science
of the stones, causing silicosis It does not heat up much and Temple’ still remains a dream. His
and death in a few months. hence the need for lubrication, son Vinay Savaliya told that the
The Agate Grinding Mill has a replacement of ball bearings, concept of Science Temple was
vacuum pump that pulls the dust windings, and maintenance cost, to attract millions of people, who
in the opposite direction. etc., is reduced. The outer rotor would visit temples, not Science
also works as cooling fan. Museums. He wanted to keep
X. Ribbed Tawa (Griddle) (2007) at least 1000 prototypes of his
The Indian traditional iron Domestic floor mill (1990),
inspiration. q
tawas are very poor in thermal oil free compressor (2005),
efficiency and also cause wastage battery bicycle, water generated (Email :campaign@nifindia.org/
of fuel. The tawa innovated by engine, wind mill, etc., are all the www.nifindia.org )
YOJANA July 2009 33

infrastructure
challenges
Irrigation in India
Surinder Sud
I
ndia has been expanding 81 million hectares through minor
its irrigation infrastructure irrigation projects where the bulk
ever since the beginning of the of the investment comes from the
era of planned development private sources.
though the pace of such
Till now, the country has
expansion has been rather
managed to create a substantial
unsteady. The emphasis laid on the
infrastructure of various kinds of
promotion of irrigation as a means
dams, barrages, canal networks
of boosting agricultural production
and is like to put in place a total
in the first few five-year plans
capacity to store about 200 billion
somehow got diluted subsequently,
cubic metres of water which can be
especially after the worries about
used for irrigation and various other
food insufficiency were over.
The flagship Annual budgetary allocations by
purposes, including production of
hydro power.
states for irrigation either declined,
programme or stagnated in some cases, in real The actual irrigation potential
Bharat Nirman terms, resulting in deceleration
in the rate of growth of irrigation
created till now has risen from 22.6
million hectares in 1950-51 to around
resulted in actual infrastructure. This trend is now
sought to be reversed.
102.8 million hectares. Of this, about
42.4 million hectares of irrigation
creation of The country’s total irrigation
potential has been created through
major and medium irrigation projects
irrigation capacity potential from all available sources
of water, earlier believed to be
and over 60.4 million hectares
through minor irrigation projects.
of 1.68 million about 113.5 million hectares, is
Thus, around 73.5 per cent of the
now reckoned at 139.89 million
hectares in 2005-06 hectares. Of this, about 58 million
total exploitable irrigation potential
has actually been harnessed.
hectares of irrigation potential can
and another 1.94 be created through the major and However, a sizable part of the
million hectares medium irrigation projects which
are taken up largely through public
created potential remains unutilized
or underutilized for various reasons,
in 2006-07 investment, and as much as about the most significant of which
The author is a veteran agricultural journalist currently working as Consulting Editor of the Business Standard.
34 YOJANA July 2009

are inadequate down-the-line irrigation potential resulting in the was actually utilised as well.
water conveyance system in the cumulative utilisation witnessing
irrigation command areas and continuous erosion. This not only Resource crunch has, indeed,
poor maintenance and operation of amounts to an inefficient utilisation been the bane of the irrigation sector.
irrigation works. of funds, but also a foregone income Water being a state subject and the
from irrigated lands.” fiscal health of most states being
Official estimates put the actual often far from satisfactory, the state
utilisation of the created irrigation It is, therefore, clear that the gap governments have usually been
potential at around 87.2 million in the creation and actual gainful unable to allocate as much funds for
hectares – 34.4 million hectares in utilisation of the irrigation potential irrigation as are needed for timely
the major and medium irrigation has steadily been rising rather than completion of the projects under
sector and 52.8 million hectares narrowing, thus turning part of this implementation and the smooth
in the minor irrigation sector. massive investment unproductive. maintenance and operation of those
This means that less than 85 per Concern was expressed over already commissioned.
cent of the irrigation potential this trend by even the National
created through heavy investment Development Council’s (NDC) In recent years, the irrigation
is actually been gainfully utilised; sub-committee on agriculture and sector has been adversely affected
the rest is lying idle. related issues in its report submitted by environmental issues as well as
in May 2007. It said: “Utilisation those concerning the rehabilitation
Indeed, the deceleration in the of displaced populations. The
of irrigation potential created over
expansion of irrigation infrastructure, controversies over these issues,
the different plan periods through
especially since the 1980s, has been accompanied often by prolonged
major and medium projects shows
a matter of real concern. The rate agitations and litigation by
of increase in gross irrigated area a decreasing trend. The utilisation
gap (6.04 million hectares) at the environment activists and voluntary
dropped from over 2 million hectares organisations, have negatively
a year earlier to below 0.5 million end of the IX plan is of the order
of 16.30 per cent which is a matter affected the implementation of
hectares a year by the late 1980s and various projects, delaying them
early 1990s. This slowdown in the of concern as the cost of creation of
irrigation potential through major for years, sometimes even decades.
creation of fresh irrigation capacity This results in substantial escalation
was, in fact, acknowledged by the and medium projects is of the order
of Rs 1.2 lakh per hectare during the in cost, further slowing down
government in the Economic Survey project implementation.
2007-08 which said: “The pace IX plan and thus an amount of Rs
of creation of additional irrigation 72,000 crore remains blocked.” Numerous river valley projects,
potential came down sharply from However, the capacity utilisation including multi-purpose and
an average of about 3 per cent per has been relatively better in the irrigation projects, have been
annum during 1950-51 to 1989-90 to minor irrigation works (all Ground lingering on for years, spilling
1.2 per cent, 1.7 per cent and 1.8 per Water and Surface Water Schemes over from one plan to another. As
cent per annum, respectively, during having a Cultural Command Area many as 171 major projects, 259
the eighth, ninth and tenth five-year (CCA) of up to 2,000 hectares). medium projects and 72 extension,
plan periods.” Such works are taken up mostly renovation and modernisation
by individuals and cooperatives schemes were reported to have
A similar deceleration was spilled over from the 8th plan to
witnessed in the rate of utilisation of of the farmers, with the help of
institutional finance and through the 9th plan. Of these, five projects
created irrigation potential, though were pending since the 1st plan,
there has been some improvement own savings. Till the beginning of
the 6th plan, the utilisation of the seven projects from the 2nd plan,
on this front in the 9th and 10th 12 projects from the 3rd plan, 18
plans. Capturing these trends, the created potential (estimated at about
30 million hectares) was almost 100 from the 4th plan and 20 from the
Economic Survey 2007-08 said: 8th plan. The spillover cost of these
“The rate of growth of utilisation per cent. Subsequently, however,
it began slipping but the lag was pending projects was estimated
of the potential created declined at a whopping Rs 75,690 crores
to 1 per cent per annum during the seldom as large as in the case of
the major and medium irrigation (Economic Survey 2005-06).
9th plan period and improved to
1.5 per cent per annum during the projects. Till the end of the 9th plan, To expedite completion of
10th plan period. The average rate a total irrigation capacity of 56.9 the on-going irrigation projects,
of utilisation remained lower than million hectares had been created especially those which have been
the average annual addition to the and over 49 million hectares of it lagging behind schedule for want
YOJANA July 2009 35

of adequate funds, the government launched and

Accelerated Irrigation Benefit Programme (AIBP)
from 1996-97. Under this scheme, the Centre extends
financial assistance to the states to facilitate the
completion of the long pending projects on which
substantial work has already been done. The norms of
providing such assistance, which used to be entirely
in the form of a loan from the Union government to
the state government in the beginning, were modified
in 2004-05 to make part of it as grant and the rest as
loan.
Under the AIBP, a total sum of Rs 24,867.40 crores
was provided to the states as Central grant and loans
for the completion of infrastructure of 229 major and
medium irrigation projects and as many as 6,205 minor
irrigation schemes using surface water till January
2008. This has facilitated completion of 91 major
and medium projects and 4,605 minor projects. An
addition sum of Rs 3,127.5 crores was released by the
Centre for the AIBP in 2008-09.
Apart from this, another national project for ‘repair,
renovation and restoration of water bodies’ was
launched by the government in 2005 to rehabilitate
the irrigation infrastructure that has gone into disuse
for lack of maintenance. Its cost, estimated at around
Rs 300 crores, was stipulated to be shared by the
Centre and the states in the ratio of 3:1. This scheme
was meant to renovate water bodies having cultivated
command area of up to 2000 hectares in 26 districts of
15 states. The Centre had released Rs 179.3 crores as its
share of expenditure under the scheme up to November
2007 to facilitate the repair of 1,098 water bodies.
Significantly, irrigation was made one of the six
components of the government’s flagship programme
Bharat Nirman in 2004. The objective was to create
irrigation potential of 10 million hectares in four years
(2005-06 to 2008-09). Of this, an additional irrigation
potential of 4.2 million hectares was proposed to be
created by completing the identified irrigation projects
which were at the last stages of construction. Another
1 million hectare capacity was mooted to be created
through extension, renovation and modernisation
of existing schemes and also by introducing more
efficient water management practices. The remaining
target was to be achieved through measures such as
expanding and expediting on-going minor irrigation
projects and tapping the available groundwater
for irrigation in the areas where this source had
not been adequately exploited. This programme
resulted in actual creation of irrigation capacity of
1.68 million hectares in 2005-06 and another 1.94
YE-7/09/03
million hectares in 2006-07. q

(E-mail : surinder.sud@gmail.com)
36 YOJANA July 2009

do you know?
What Are Internet Search Engines?
G
oogle, Yahoo, Khoj, Lycos the pages they encounter, while web, finding pages for potential
… all internet users make others like AltaVista store every inclusion by following the links in
extensive use of these and word from each page they find. In the pages they already have in their
other such search engines. At the the third stage of Searching, the database. If a web page is never
click of a mouse, you have the user enters a query in the form linked from any other page, search
latest information available on of keywords. The search engine engine spiders cannot find it. So
virtually anything and everything matches this query with its indexed in order to make a page available
you want to know. What exactly pages and provides a list of best for search by a search engine, it
are these search engines and how matching web pages according to needs to be linked to other pages.
do they work ? the requirement of the searcher. Alternatively, somebody will have
to submit its URL for inclusion.
What are internet search How did the search engines All major search engines offer
engines? develop ? ways to do this.
An internet or web search Before web searches became How relevant are the search
engine is a tool that helps you possible, there was a time when all results ?
to search for information on web servers would be listed on a
the World Wide Web. These central server. As the numbers of When a user enters a query/
are special web sites that use web servers increased, it was not keyword, the search engine may
automatic tools called spiders possible to list them all. The earliest find millions of sites where the said
or robots to index web pages search tools of early 1990s (Archie, keywords appear. The usefulness
of registered sites, looking for Jughead and Veronica) involved of a search engine depends on
and identifying keywords. Users downloading of the directory how effectively it sorts out the hits
can search the index created by listings of all the files located on and Ranks them so that the most
typing in keywords to specify their File Transfer Protocol) sites, and important and relevant sources /
interest. The Hits or the results of creating a searchable database of web sites get listed first. The basis
the search may consist of web file names. Probably the first web for such ranking may vary between
pages, images, information and robot was the World Wide Web engines, and also over time, but the
other types of files. Wanderer which came in 1993. search engine that best understands
Another search engine, the Aliweb the need of its users is obviously the
Web Crawler that came in most useful.
1994 was the first full text crawler came in 1993. It was not based
based search engine. on a web robot, but depended on What is a Metasearch Engine ?
web administrators to notify the
How do search engines work ? existence of index files in particular A meta-search engine is a
formats. Jump Station released in search tool that allows you to
A search engine works in 1993 was the first web search that search several search engines
three stages. Stage one or Web combined the three stages of web simultaneously. Your are required
Crawling involves an automated crawling, indexing and searching as to enter your query only once
web browser or crawler (often – the meta search engine then
referred to as a spider), “crawling” we know today, but its search was
limited to titles and headings. Now sends it across to various search
through every available web link engines and aggregates the results
and accessing the data available in there are a host of search engines
available, like Google, Yahoo, Live into a single list or displays
various websites/ files/databases. them according to their source.
The second stage involves Search, Exalead Altavista, Lycos,
GoPubMed (for medical subjects), Metasearch engines operate on the
analyses of the information and its premise that the Web is too large
Indexing. The indexing program Guruji, Khoj (India specific)
for any one search engine to index
identifies the text, links, and other How can a website / page be made it all and that more comprehensive
content in the page and stores it in available for search by a search search results can be obtained by
the search engine database's files. engine ? combining the results from several
Words may be picked up from search engines. q
titles, headings or other fields for Linking of pages is very
this indexing. Some engines, like important in the search operations. (Compiled by
Google, may store all or part of The web spiders"crawl" the Vivekanand Jain)
YOJANA July 2009 37

infrastructure
power for all
Ultra Mega Power Projects
Umesh Kumar Shukla
E
lectricity is a critical The National Electricity Policy
infrastructure for socio- notified in 2005 under provisions of
economic development the Electricity Act, aims to fulfil the
of the country. The level increasing demand for electricity.
of per capita electricity The main objectives of the policy
supply is a good indicator of the are to supply reliable and quality
level of economic development. power at reasonable rates, make
Although per capita consumption electricity available to all household
of electricity in India has increased within the next five years, power to
over the years from 16 units in 1947 all by 2012, per capita availability to
to 665 units in 2006-07, it is far over 1000 units by 2012, minimum
below that in other developed and lifeline consumption of 1 unit per
developing countries, being about household per day by 2012 and
1/4th of world average, 1/14th protection of consumer Interest.
Thus setting up of of OECD countries and 1/3rd of
To achieve the mission of ‘Power
China .
UMPPs is a step in for All’ by 2012, development
The installed generation capacity of Ultra Mega Power Projects
the right direction in India has increased from 1362 (UMPPs) has been identified as a
to improve the MW in December, 1947 to 147965 major thrust area. UMPPs are very
MW in March 2009, representing large sized, approximately 4000
power situation compounded annual growth rate MW, integrated power projects
and help the of about 8%. However, the growth with dedicated captive coal blocks
has not been sufficient to meet the for pithead projects and use of
power sector to increasing demand in the country imported coal for coastal projects.
achieve the mission and substantial peak and energy Nine UMPPs have been identified
shortages to the extent of 12% and (four at pithead and five at coastal
of ‘Affordable 11% respectively prevailed in the locations) by the Central Electricity
Power to All’ country during the year 2008-09. Authority (CEA) in consultation
The author is Director (Cost), Ministry of Finance, New Delhi.
38 YOJANA July 2009

with the States. Table below gives as its 100% owned subsidiaries, Bidding (ICB), preparation of Rapid
a snapshot of the UMPPs. for each of the UMPPs. Boards Environment Impact Assessment
Table 1: Status of Proposed UMPPs

Project
Cost Tariff
UMPP Power Procurer States Company MW Status
(Rs. (Rs./ kWh)
Billion)
Pithead UMPPs
Sasan, Delhi, Haryana, UP, Reliance 3960 200 1.20 PPA signed.
Madhya Pradesh Rajasthan, Punjab, MP and Power (6x660) Commissioning
Uttarakhand expected in 11th /12th
Plan.
Tilaiyadam, Delhi, Punjab, UP, MP, Reliance 4000 160 1.77 PPA signed.
Jharkhand Haryana, Rajasthan, Power (5x800) Commissioning
Gujarat, Maharashtra, Bihar expected in 11th /12th
and Jharkhand Plan.
Akaltara, - - 4000 150 - Held up for land and
Chhattisgarh (5x800) water issues.
Sundergarh, Orissa - - 4000 160 - Coal block allocated,
(5x800) Land under evaluation
Coastal UMPPs
Mundra, Gujarat, Maharashtra, Tata Power 4000 160 2.26 PPA signed.
Gujarat Rajasthan, Punjab and (5x800) Commissioning
Haryana expected in 11th /12th
Plan
Krishnapatnam, Andhra Pradesh, Karnataka, Reliance 4000 200 2.33 PPA signed.
Madhya Pradesh MP and Tamil Nadu Power (5x800) Commissioning
expected in 11th /12th
Plan.
Girye, Maharashtra, MP, - 4000 160 - Land issues stalled the
Maharashtra Rajasthan, Karnataka and (5x800) project.
Chhattisgarh
Tadri, Maharashtra, Kerala, - 4000 160 - Land issues stalled the
Karnataka Rajasthan, Tamil Nadu, and (5x800) project.
Karnataka
Cheyyur, - - 4000 150 - Land issues stalled the
Tamil Nadu (5x800) project.
Total 35960 1500
Source: Power Finance Corporation Limited website
Regarding tariffs, the Section of SPVs are chaired by a Director Report, finalisation of tender
63 of the Electricity Act provides of PFC; their other members are documents in consultation with
that the Electricity Regulatory PFC officials, and representatives states and carrying out tendering
Commissions can adopt tariffs on of the distribution companies of process and award of project,
the basis of transparent, two stage major power procuring states. After acquisition of land, obtaining coal
bidding. selection of the project developer, blocks for pit-head projects, getting
SPVs are transferred to the selected clearance for water allocation for
Operational Framework of
bidders. SPVs are responsible for pithead projects, approval for use
UMPPs
a number of activities on behalf of sea water for coastal locations,
Power Finance Corporation of the procurers which include obtaining clearance from State
(PFC) is the nodal agency for initial appointment of consultants for Pollution Control Board for the
work. PFC has set up separate preparation of Project Report and project and coal mines followed by
Special Purpose Vehicles (SPVs), for International Competitive environment and forest clearances
YOJANA July 2009 39

from the Central Government, 100% of equity shares of SPV are not completed within the specified
obtaining geological reports/ other transferred to the successful bidder time. For example PPA of Mundra
related data for the coal blocks, tie by PFC after payment of an amount UMPP provides for payment of
up the off-take/ sale of power for acquiring shares and taking over performance guarantee of Rs.3000
its assets and liabilities. million by the seller in case of non-
Apart from this the Ministry performance, within the stipulated
of Power and the power procuring Concession
time, for certain activities such as
states are playing a crucial role award of EPC contract for boiler,
Government of India has granted
for the development of UMPPs turbine and generator, completion
various tax exemptions for UMPPs
by coordinating between various of financing agreements/ financial
such as full exemption from central
concerned Ministries/ agencies of closure, possession of land and
excise duty to goods procured for
the central government and with payment of price to state government
setting up UMPPs, deemed export
various state governments and
benefits for supplies to Mega Power authority, providing irrevocable letter
their agencies in the areas of coal
Projects etc. acknowledging the rights provided
and water linkage, environment
to the lenders, execution of fuel
and forest clearances, allocation of Contractual Framework supply agreement etc. In case of non-
power from UMPPs, facilitating
After acquisition of SPVs fulfilment of these conditions, the seller
PPA, proper payment security
formed for UMPP, share purchase would be liable to furnish additional
mechanisms and in implementation
agreement, escrow agreement, weekly performance guarantee of
of rehabilitation and resettlement
hypothecation agreement, and Rs.150 million. If seller or procurers
plans, providing authorization to
port service agreements are signed elect to terminate the agreement due
PFC/SPVs to carry out bidding
between with the bankers, procurers to non-fulfilment of these activities,
process on behalf of distribution
utilities, participating in various and project developer. the seller would be liable to pay to
committees for undertaking the the procurers Rs.4000 million as
Lower Emission Level liquidated damages to be recovered by
competitive bidding process, etc.
Rather than continuing with sub- invoking the performance guarantee.
Analysis of UMPPs Framework critical technology, UMPP would The agreement also provides payment
utilise supercritical technology, of liquidated damages to the procurers,
Characteristics and Structure
which would result in lower if the unit is not commissioned by
UMPPs are very large projects of emission levels and higher fuel-to- scheduled date.
about 4000 MW, each requiring an electricity conversion efficiency as
investment of approximately Rs.150- Risk Mitigation
shown in the following Table:
200 billion. The project is awarded on Some of the risks mitigation used
the basis of International Competitive Performance Guarantee in UMPPs are:
Bidding (ICB) based on levelized
PPA of UMPPs provides for Fuel Risk
tariff for 25 years. The projects are
payment of performance guarantee
either being set up at coastal sites As per PPA of UMPPs at
and liquidated damages by the project
to have the benefits of shipyards in coastal sites, the dollar price of
company, if certain activities are
importing coal or near the pithead for
easy access to the coal. UMPPs are Table 2: Emission Levels in UMPP
structured on BOO basis.
Parameter Sulphur Nitrogen Oxide Suspended
Special Purpose Vehicle Dioxide (SO2) (NOx) Particulate
(in TPD) (in mg/Nm3) Matter (SPM)
SPVs have been incorporated (mg/Nm3)
under the Companies Act, 1956 Indian Emission limit 700 No Applicable 100
as a wholly owned subsidiary of Standard
PFC for each of the UMPP. After World Bank Norm 450 750 50
the bid evaluation by the Expert Expected UMPP emission 400 687.6 50
Committee and its acceptance by TPD = Ton per day, mg/Nm3= milligram per normal cubic meter
the Apex Evaluation Committee, Source: Asian Development Bank (2007)
40 YOJANA July 2009

coal would be indexed to multiple must be made whether or not take care of events outside the
international coal price indices. the output is deliverable. The control of the parties. (Article 12
To meet the requirement of coal demand risk in UMPPs has of PPA for Mundra UMPP)
for power generation and mitigate been controlled by take or pay
Total installed electricity
the fuel supply risk, Tata Power provision in PPA providing for
generation capacity addition since
has acquired 30% equity stakes minimum off-take guarantee independence has been 146603
in two major Indonesian thermal of 65% of the total contracted MW out of which 77377 MW was
coal producers and Reliance Power capacity( Article 1.1 of PPA for from coal. Nine UMPPs would add
has acquired three coal mines in Mundra UMPP) thermal capacity addition of 35960
Indonesia. Reliance Power and MW in next 5-7 years, which is
Tata Power are considering a foray Foreign Exchange Risks
25% of total capacity addition and
into shipping business to mitigate While UMPPs would earn 46% of capacity addition from coal
fuel transport risk and to cut the the revenue in Indian currency in last 61 yrs. The levelised tariff
transport cost through sale of electricity to of UMPP ranges from Rs.1.20-
Payment Risk distribution companies, it would 2,33, which is much lower than
require payment in foreign present generation tariff of around
To mitigate the payment risk, currency for EPC contracts to Rs.3-4 per kWh and unscheduled
PPA provides for adequate payment foreign suppliers. Tata Power interchange (UI) charges of Rs.10/
security to the project company by has tied up loan from multilateral KWh. UI for a generating station
letter of credit and escrow mechanism. funding agencies like IFC and is equal to its actual generation
For example PPA of Mundra UMPP ADP requiring payment of minus scheduled generation. UI
provides that procurers would provide principal amount of loan and for a beneficiary is equal to its total
to the seller a monthly unconditional, interest payment. This tie-up of actual drawl minus total scheduled
revolving and irrevocable letter of foreign loan would manage the drawl. UI Charges are worked out
credit for a term of twelve months for each 15 minute time block
requirement of foreign currency
renewed annually for an amount equal based on the average frequency of
for payment to foreign suppliers/
to 1.1 times the estimated average the time block and applicable rates
contractor. Reliance Power has
monthly billing based on normative at that frequency. The maximum
raised the equity to finance the
availability for the first contract year UI charges of Rs.10.00/kWh are
UMPPs to avoid the foreign
and for each subsequent year, equal to applicable, when average frequency
currency risk arising out of
1.1 times the average monthly tariff of time block is below 49.02 Hz
foreign currency loan.
payments of the previous contract
The levellised tariff of UMPPs
year plus estimated average monthly Political Risks is based on escalable and non-
billing during the current year based
Political risks refer to the escalable tariff quoted in the
on normative availability. PPA further
possibility that political decisions bids, which are denominated in
provides for operation of default
or events in a particular country Rupee and US$ based on the base
escrow account in favour of seller.
would cause foreign investors exchange rate and inflation rate.
Failure to realize payment through
either to lose money or fail to Even after considering the inflation
payment security mechanism would
capture their expected returns. In and appreciation of US$, the tariff
entitle project company to sell up of UMPPs would still be lower than
to 25% of the contracted power to some of the UMPPs, the ADB/
Rs.3/kWh and remain affordable.
other parties without losing claim IFC are providing part of the loan/
Thus setting up of UMPPs is a step
on the capacity charges due from the equity to finance the project. The
in the right direction to improve the
procurer support provided by the Central
power situation and help the power
and State Governments reduces
Demand Risks sector to tide over energy and peak
the uncertainty in the minds of shortages to achieve the mission of
Take or pay contract specifies these institutions, which reduces
‘Affordable Power to All’. q
that in the event, the project’s the political risks. Force major
output is not taken; payment clauses are provided in PPAs to (Email : umeshk07iimb@gmail.com)
YOJANA July 2009 41

best practices
Watershed for Integrated Rural

Development
Soubhagya Ranjan Padhi
Biswajita Padhy
I
n India millions of rural Watershed is a hydrological
poor and marginal farmers unit where runoff empties through
rely on degraded land and a single point. It is an area from
tainted water resources. which all water drains to a common
Often they struggle to point, making it an attractive unit
manage with a diverse for technical efforts to manage water
array of agro-climatic conditions, and soil resources for production and
various production and market conservation. The literal meaning
risks. Claims are being made that of watershed is a “geo-hydrological
watershed management would unit draining at a common point by
ensure supply of water to every a system of streams”. Watershed
field, remove hunger and poverty is regarded as “Natural hydrologic
There is a need from underdeveloped rural areas,
provide green cover over denuded
entity that covers a specific area
from which the rainfall runoff flows
is to convert areas, improve crop productivity, to a defined drain, channel, stream or
river at any particular point”.
bring in more rains and improve
weaknesses environment. Over the past three
Malakarbandha village is
decades, our country has bluntly
into strengths addressed these challenges and
situated in Koraput district of Orissa.
Potangi block of Koraput was
made major investments in the
and threats into area of watershed management
selected on priority basis for an
integrated and holistic watershed
through an appropriate mix of
opportunities by technical innovations, participatory
management with the objective to
set up an equitable, productive and
involving people approaches and an enabling policy
environment. There is certainly
sustainable people development unit.
The Malkarbandha watershed was
in all management evidence of positive impacts in
terms of improved soil and water
earmarked as priority-I as per Orissa
Remote Sensing Application Centre
aspects related conservation and agricultural
productivity in normal rainfall
(ORSAC) in Potangi block. The
project was designed and executed
to conservation years in regions that have been
ignored in the conventional
as a government programme with
measures green-revolution- based rural
financial assistance from central
government under Employment
development.
Assurance Scheme (EAS)
The authors are Faculty in Sociology and Faculty in Economics, Aeronautics College, Sunabeda, Koraput, Orissa respectively.
42 YOJANA July 2009

programme. In Malakarbandh
watershed development programme,
as per the common guidelines,
the people’s participation in
developmental activities has been
given highest importance. One of
the facts observed in the watershed
area is that the people’s participation
through formation of SHG is good.
70% of the people are organized
into SHGs.
Non-Farm Activities for
sustainable livelihood
As Watershed Development
Programme is an integrated
approach towards sustainable
development of rural poor, non-
farm activities like fishery, duckery,
pisiculture, goatery, etc., are also
Banana plantation by the villagers encouraged in the project.
Women empowerment has
programme. It had been selected erosion. Before the intervention of been given highest importance
during 1998-99 and envisaged watershed programme, inadequate in this Watershed Development
measures for 470 hectares of land management of land caused Programme. Women have been
with an estimated cost of Rs.17.25 inexorable soil erosion in the area. taken as member in watershed
lakhs in a span of four years. But real Forest areas were also rapidly committee, which is the decision
development activities were started deteriorating because of massive making body in the watershed.
during the month of May, 2000. forest destruction. However, after Further, they have brought into the
Since then, the project has effectively the intervention of watershed, mainstream of income generation
managed to strengthen, up-grade various soil conservation measures through SHG groups. The SHG
and consume the natural resources and plantation work are being carried groups are earning income by
base in a sustainable manner out in the watershed areas. Due to engaging themselves in different
through engineering methods and lack of awareness, the villagers activities like duckery/ fishery,
catalyzing direct community action were not interested in creating vegetable cultivation, broom
besides stabilizing the fragile rural forest; rather they were cutting the binding etc., which has synergetic
economy. trees for fuel and fodder. But now, effect for the economic development
watershed development programme of the households.
Success Stories of Malkarbandha has motivated them immensely to
Watershed take up new plantation. Establishment of nursery is
another important achievement of
Prior to the intervention of One of the major objectives of this watershed. A Nursery has been
watershed programme, the villagers this watershed project is to provide developed in Malkarbandha village.
were growing Finger-millet and employment to the needy job seekers In the Nursery along with fuel and
Niger during monsoon and to a in the project area. The economic fodder, saplings of fruit bearing
small extent Paddy in sub-merged condition of the labour forces in the vegetable, Neem and other species
lands. Vegetable growing was watershed area was extremely poor. have been raised. An amount of
insufficient even for domestic These landless or marginal farmers Rs. 0.45 lakh has been spent towards
consumption need. With the depended heavily on wage labour.After intensifying of Nursery with an
construction of field channel a implementation of watershed project, objective that it can provide ample
large extent of land were put into 14234 man-days (approximately) saplings through out the year for
assured irrigation through out the have been generated. Out of this Sc/ mass plantation in the area.
year. The villagers were taught St people have availed 10727 man-
and mobilized to adopt vegetable days. Women availed 5694 man-days Improvement in the Overall
growing for economic up gradation. and landless availed 12241 man- quality of Life
Most of the soils in the watershed days. Community’s participation
area are red non-calcareous Wa t e r s h e d p r o j e c t h a s
is essential for the success of any improved the overall quality of
sandy loam, which are prone to
YOJANA July 2009 43

address the need of the vulnerable

sections. They are storing mostly
paddy and finger millet in the
grain bank during the harvest
season and use the same during
the lean season.
Although sustainable livelihood
is the major concern of this
watershed project, its efforts have
also led to substantial increase
in the production of food grains,
expansion of plantation areas,
spreading out forest coverage,
effective management of natural
resources and empowerment
of weaker sections of the area.
However there is a need to convert
weaknesses into strengths and
threats into opportunities by
involving people in all management
A Field Channel of Malkarbandha Watershed aspects related to conservation
measures and repair of structures in
post watershed development period.
life of the rural people through them food security on a sustained The government is looking forward
employment generation activities basis. At present many other to create conducive environment
like Mushroom cultivation, development activities through for providing optimum benefit to
Goatery, Poultry, Duckery and watershed are also going on all stakeholders of this project in
Vegetable cultivation, which has in this village for the holistic future. q
provided additional benefit to development. One “Grain Bank”
the villagers besides ensuring has formed in the village to (E-mail : butu_11@yahoo.co.in)
Priority Areas for Government
l Universalize secondary education.

l Eradicate all urban slums in 5 yrs.
l 50% reservation for women in panchayats and urban local bodies.
l Add 13,000MW power each year.
l Broadband coverage to reach every panchayat in 3years, 40% rural teledensity in 5 years.
l Enact Communal Violence Prevention Bill for special action against communal violence.
l Unique ID card for all citizens in 3yrs.
l 500 million skilled people by 2022.
l FDI flows to be in banking and insurance. PSU banks to be recapitalized and regulator for pension
sector.
l Reach banks, schools and credit to minorities. Wakf reforms.
l Enlarge NREGA, converge other programmes, consolidate flagship programmes
l National Counter-terrorism Centre to be set up to counter Naxalites and Insurgents.
l Police reforms for participation of citizenry, community policing
(Courtesy : Newspapers)
44 YOJANA July 2009

infrastructure
growth plans
Airports Sector Taking Off
Gp Capt. D C Mehta
P
ost independence, by The International Civil Aviation
the Directorate General Organization (ICAO). Another Act
of Civil Aviation (DGCA) in 1985 saw the formation of the
came to inherit most National Airports Authority(NAA),
aerodromes in the country, with the responsibility to maintain
barring a few reserved for military and develop all other civil airports
aviation under control of the Indian in the country. IAAI and NAA were
Air Force. Civil aviation in those later merged in 1994, to form the
days meant a few small or medium Airports Authority of India (AAI),
sized piston engine aircrafts with which is the mainstay of civil
minimum navigation and landing aviation in the country today.
aids. The war torn airports that As in other sectors in the Indian
The growth DGCA had inherited left immense economy, Public Private Partnership
in investment as also scope for improvement. (PPP) has also been experimented
As India advanced along the with in the aviation sector. The
the inauguration growth path in the decades that Cochin International Airport
of a record number followed, the demand for air Limited was the first private airport
to come up in the year 2000. The
as a means of transport grew,
of terminals in the and upgradation of aviation Greenfield airports at Hyderabad
and Bengaluru, and the Delhi and
recent past can infrastructure became imminent.
Mumbai airports followed were
This saw the carving out of an
rightfully raise one’s International Airports Authority taken up thereafter.
hopes regarding the of India (IAAI) from the erstwhile

DGCA in 1972 through an Act of
Infrastructure at Airports
future of airport the Parliament, with the mandate to The infrastructure at an airport
develop four international airports has many constituents. Some, like
infrastructure in at Delhi, Bombay, Madras and the terminal buildings and cargo
the country Calcutta, as per standards laid down complexes, runways, aprons and
The author is Adviser (PR), Airports Authority of India, New Delhi.
YOJANA July 2009 45

taxiways are obviously visible. planning and programming of airports. As regards increasing
Others, like the Communication, various capacity constraints. capacity at major airports, we
Navigation and Surveillance (CNS) already have surplus capacity at
Passenger and Cargo Terminals
infrastructure or the Air Traffic Kolkata, and on completion of
Management (ATM) , may not For development under this Phase-III, we would have ensured
be as visible, but are of critical head, 35 non-metro and 23 other surplus capacity at Chennai too.
importance nonetheless. airports have been identified, and
CNS ATM
work is being taken up under
Functions of AAI
two phases. The identified non The AAI has been entrusted
AAI is responsible for the metro airports where the work has with the responsibility of providing
construction and management been completed include Amritsar, CNS/ATM services that extend
of airport infrastructure, which Aurangabad, Agra, Dehradun, beyond the territorial limits of the
includes planning, designing, Jaipur, Nagpur, Trichy , Udaipur, and country. There have always been
developing, operating and Vishakhapatman. Work is at various efforts to modernize on this front
maintaining passenger/cargo stages in the non-metro airports in order to keep pace with the
terminals, and operational areas of Ahmedabad, Agatti, Agartala, ever changing technology. AAI
like runways, aprons and taxiways. Baroda, Bhopal, Bhubaneswar, is gradually shifting from ground
It is also responsible for Air Traffic Chandigarh, Coimbatore, Dimapur, based CNS to satellite-based CNS.
Management and Communication, Goa ( Dabolim), Guwahati, Imphal, The development of GPS-aided
Navigation and Surveillance Indore, Jammu, Khajuraho, Lucknow, Geo Augmented Navigation System
infrastructure, that is, the control Madurai, Mangalore, Patna, Portblair, (GAGAN) is part of this plan.
and management of the Indian Pune, Rajkot, Ranchi, Raipur, Accordingly, an outlay of more
airspace and air traffic over a total Trivandrum, and Varanasi. than Rs.1,700 crore for CNS/ATM
area of 2.8 million Nautical Miles has been earmarked during the
Among airports other than non-
(NM), over both land and sea and Eleventh Plan period. For the year
metro, work has been completed in
planning , providing, operating 2008-09, it is about Rs.380/- crore,
Dibrugarh, Srinagar, Calicut, Kullu,
and maintaining communication, which is more than five times the
Surat, Hubli, Belgaon, Cooch Behar,
navigational and surveillance aids. outlay for 2006-07.
Akola, Gondia and Pant Nagar.
AAI manages 124 airports in Work remains to be completed in The road map to develop CNS/
the country, of which there are 12 Rajahmundry, Vijayawada, Mysore, ATM infrastructure has been drawn
international airports, 81 domestic Jodhpur, Cuddapah, Shillong, Tezu, up. This includes implementation
airports, 8 custom airports, 23 civil Jaisalmer, Puducherry, Leh, Jorhat of GAGAN, which is being jointly
enclaves. In addition to this it also and Bhavnagar. Cargo terminals too developed by the AAI and the Indian
provides CNS and ATM services demand continuous monitoring for Space Research Organisation. The
in the privatized airports at Delhi, appropriate upgrades. Accordingly demonstration has been successful.
Mumbai, Bangalore, Hyderabad all efforts are being made to improve Once fully developed, the overall
and Cochin. AAI provides air our cargo-handling capabilities. In capability of the GAGAN system
navigation infrastructure and air keeping with the modern times, would include the equatorial
traffic services in the designated Kolkata airport has been provided ionosphere spatial and temporal
airspace. with a full-fledged, modern cargo variability.
handling facility equipped with
Infrastructure Development ASRS (Automatic Storage Retrieval GAGAN will be capable of
Storage). Similar plans in respect meeting the International Civil
In order to meet the demands Aviation Organization’s GNSS
of cargo modernization at the
arising out of a rapidly increasing (Global Navigation Satellite
upcoming terminal building at
air traffic, a scientific, “ gate to System) SARPs (Standards and
Chennai airport are on the anvil.
gate” approach has been adopted, Recommended Practices) and it
so as to ensure safety, regularity Electronic Data Exchange (EDI) is scheduled to be in operation by
and efficiency through strategic has been introduced at all the metro 2011/12.
46 YOJANA July 2009

Other initiatives include aspirations of the increasing air Plan) is Rs.124,340 million,
integration of 11 Area Control travelling population, we should which in fact is 300% more
Centres into four or two main take a look at the quantum increase than the 10th Five Year Plan.
enroute control centres, networking in the number of passengers. This During the period 2004-09, AAI
of radars, networking of VHF can be gauged from the overall has undertaken projects valuing
(very high frequency) and HF, passenger handling capacity of more than Rs.100 million each
establishment of integrated ATS (air AAI airports. During the year at 51 airports. Further, during
traffic service) automation system, 2003-04 it was 71.4 million the same period, expenditure on
and in 2008-09 it rose to 101.2 Communication, Navigation and
and Advanced Surface Movement
million. It is on the anvil to Surveillance Equipment was to the
Guidance and Control System
further increase the capacity to tune of Rs.8000 million.
(ASMGCS).
178.3 million once the ongoing The growth in investment as
As part of the Performance-based projects are commissioned by also the inauguration of a record
Navigation (PBN) programme of 2010. It would indeed be apt for number of terminals in the country
the AAI, RNAV (area navigation) one to visualise the magnitude in the recent past during the months
and RNAV Procedures (RNP) have of resources required, be it men, of February & March, can rightfully
since been implemented at Delhi, material or finance. It may be raise one’s hopes regarding the
Mumbai and Ahmedabad airports. prudent to restrict ourselves for future of airports infrastructure in
the time being to the finance the country. q
For a better comprehension of the aspect only and highlight that
challenges involved in developing the envisaged capital outlay for (E-mail : aaiadv@aai.aero &
airport infrastructure to meet the the 11th Five Year Plan (XI deecee369@hotmail.com
Telecom Sector : Ringing in a new Era
T
he telecom sector in India Tele density : 36.98 % - Rural – 3G & Broadband Wireless
has shown tremendous 15.11 %, Urban 88.84 % Services (BWA)
growth in the last few years.
The Indian Telecommunications The government has set a target The government has decided
network with 430 million for providing mobile coverage to to auction 3G & BWA spectrum.
connections (as on March 2009) 90 % geographical area and setting Allotment of spectrum has been
is the third largest in the world. up 500 million connections by the planned through simultaneously
The sector is growing at a speed year 2010 ascending e-auction process
of 46-50% during the recent by a specialized agency. New
Rural Telephony players would also be able to
years Following are some of the
milestones achieved and targets The fixed and WLL connections bid thus leading to technology
set : in rural areas reached 123.51million innovation, more competition,
in March 2009. 85% of the villages faster roll out and ultimately
Expansion of Network in India have been covered by the greater choice for customers
Village Public Telephones (VPTs). at competitive tariffs. The 3G
Number of telephones : from will allow telecom companies
54.63 million on 31.03.2003 to This is in addition to more than 3
lakh PCOs in villages and 2772 to offer additional value added
429.72 million on 31.03.2009. services. BWA will become
Mobile Gramin Sanchar Sewak
Wireless subscribers : from 13.3 Scheme (GSS) – a mobile Public a predominant platform for
million on 31.03.2003 to 391.76 Call Office (PCO) service- in broadband roll out services.
million on 31.03.2009. 12043 villages. Internet service is It is also an effective tool for
being provided by Sanchar Dhabas undertaking social initiatives
Fixed line subscribers: from of the Government such as
41.33 million on 31.03.2003 to (Internet Kiosks) in more than 3500
Block Headquarters out of the e-education, telemedicine,
37.96 million on 31.03.2009. e-health and e-Governance.
total 6337 Blocks in the country.
Broadband subscribers : from The target of 80 million rural BSNL & MTNL have
0.18 million to 6.22 million connections by 2010 has already already launched their 3G
during the last 5 years. been met during year 2008 itself. services. q
YOJANA July 2009 47

infrastructure
student speaks
Health Infrastructure in Rural India
Urmilesh Singh
I
nfrastructure desired. Despite improvements in
assets are the physical maternal, infant child mortality
structures and networks and morbidity rates over the years,
used to provide essential the burden of disease among the
services to a society. Indian population remains high.
These tangible assets, and the Gastrointestinal diseases, malaria
businesses set up to manage them, and TB are taking huge tolls on
can be viewed as the backbone of the population, and there is the
an economy. growing spectre of HIV/AIDS to
Broadly speaking, infrastructure be reckoned with. This is despite
can be split into two categories – an extensive primary healthcare
economic, such as transport, utilities infrastructure provided by the
Making policies and communications, which can be government, that operates in three
tiers of Sub Centres, Primary Health
provided efficiently by private
and putting agents, and social, which consists Centres (PHC) and Community
Health Centres (CHC). The number
programmes in of assets and services like health
and education, which have strong of SCc /PHCs/CHCs have all grown
place is indeed a positive externalities and are either over the years. As compared to the
provided free or subsidised. 6th Plan Period when there were
welcome step, but in 84376, 9115 and 761 SC, PHCs
Health is a vital social
order to ensure that infrastructure for any society, as
and CHCs respectively, there are
145272, 22370 and 4045 SCs,
the desired results it directly affects the well being
of its people. Primary health is
PHCs and CHCs as in March
are achieved, each an important element of health
2007. Yet, the health infrastructure
continues to remain inadequate in
infrastructure.
one of us has to terms of coverage of the population,
India’s achievements in the especially in rural areas, and grossly
play our role field of health leave much to be underutilized because of the dismal
The autor is currently pursuing, MBA,University of Lucknow.
48 YOJANA July 2009

quality of healthcare being provided. without lab technicians and 17 of medical consultancy not only
In most public health centres, drugs % without pharmacists. Same is lowers the efficacy of the health
and equipments are missing or in the case with CHCs, where there system, but can endanger people’s
short supply, there is shortage of is a huge shortage of 64.8 % in health.
staff and the system is characterized the deployment of specialists like
There is a great deal of
by endemic absenteeism on the part surgeons, physicians, gynaecologists
variation in the performance of
of medical personnel. and paediatricians.
different states with regard to
Under the three-tier primary The situation is further worsened health care infrastructure. Health
health service, each Sub Centre is by large scale absenteeism and transition has three components:
required to cover a population of lack of efficiency among the demographic, which involves
5000 in a plain area, and has one health providers at these centres, lowering of mortality and fertility
Female Health Worker/Auxiliary and the lack of uninterrupted rates and an aging population;
Nurse Midwife and one Male and adequate supply of essential epidemiological wherein the
Health Worker. Thus, just two drugs. Absenteeism and lack of pattern of diseases prevalent in
persons are expected to provide efficiency result from a system the population changes from
primary healthcare to a population of non-accountability, lack of communicable diseases to non-
of 5000. Each PHC, that acts punitive pressures and ineffective communicable diseases such as
as a referral unit for six SC, is monitoring or periodic evaluation the chronic diseases of adulthood;
supposed to be manned by one of the skills and performance of the and social whereby people develop
medical officer and 14 paramedical health providers. better ability to self-manage
and other staff, and 4-6 beds for their health and have better
As a result, most people in India,
patients. A CHC on the other knowledge and expectations from
even the poor, choose expensive
hand, serves as a referral point the health system. While Kerala,
healthcare services provided by
for 4 PHCs and is supposed to Maharashtra and Tamil Nadu have
the largely unregulated private
be manned by four specialists- advanced greatly along the health
sector. Not only do the poor face
surgeon, physician, gynaecologist, transition trajectory, the densely
the double burden of poverty and
paediatrician, and supported by 21 populated states of Orissa, West
ill-health, the financial burden of ill
paramedical staff. It is required Bengal, Bihar, Rajasthan, Madhya
health can push even the non-poor
to have 30 indoor beds, operation Pradesh and Uttar Pradesh are still
into poverty. People’s perceptions
theatre, lab and X-ray facilities. in the early part, with the other
of ‘free’ care is that of it being
states falling in between.
Ground realities show that of low quality, and therefore,
most health centres do not have even the available infrastructure The rural healthcare structure is
the required number of personnel, is grossly underutilized. Even the extremely rigid making it unable
medicines and other basic facilities private sector, which provides to respond effectively to local
required for them to run smoothly. most of the health services in realities and needs. For instance,
In terms of personnel, according India, is largely unregulated and the number of auxiliary nurse
to statistics of the Ministry of there is no gate-keeping on the midwives (ANMs) per primary
Health and Family Welfare, there standards of clinical practices healthcare center (PHC) is the same
is a shortfall of 12.6 % in the adopted. Healthcare requires not throughout the country despite the
deployment of ANMs and 55.4 % only physical infrastructure and fact that some states have twice the
in case of Male Health Workers at equipment, but also skilled and fertility level of others. Moreover,
SCs, and 7.8 % in case of doctors specialized human capital in the political interference in the location
at PHCs. About 4.7 % SCs run form of medical training and of health facilities often results
without either an ANM or a Male qualifications. Given the asymmetry in an irrational distribution of
Health Worker. In case of PHCs, of information between a doctor PHCs and sub-centers. Government
5.3 % run without doctors, 41 % and his/her patient, low quality health departments are focused
YOJANA July 2009 49

on implementing government launched the National Rural Health CHCs, and provision of 30-50
norms, paying salaries, ensuring Mission (NRHM) bedded CHC per lakh population
the minimum facilities are available for improved curative care to a
National Rural Health Mission
rather than measuring health system normative standard (Indian Public
(NRHM)
performance or health outcomes. Health Standards), integrating
Further, the public health system The National Rural Health vertical Health and Family Welfare
is managed and overseen by Mission (NRHM) was launched by programmes at National,State,
District Health Officers. Although the Government of India in April Block, and District levels,
they are qualified doctors, they 2005. It seeks to provide effective technical support to National,
have barely any training in public healthcare to rural population State and District Health Missions,
health management. Strengthening throughout the country with special for Public Health Management,
the capacity for public health focus on 18 states, which have strengthening capacities for data
weak public health indicators and/ collection, assessment and review
management at the district and taluk
or weak infrastructure. The NRHM for evidence based planning,
level is crucial for improving public
will raise approximately 2.5 lakh monitoring and supervision,
sector performance. Also, there is
village-based ‘Accredited Social formulation of transparent policies
lack of accountability, which stems
Health Activists’ (ASHA) who will for deployment and career
from the fact that there is no formal act as a link between the health development of human resources
feedback mechanism. centres and the villagers. One for health.
In India, public spending on ASHA is to be raised from every
village, or cluster of villages, across The goals of the NRHM include
health is less than one percent of its reduction in Infant Mortality Rate
GDP, which is grossly inadequate. eighteen states. The ASHA will be
trained to advise village populations (IMR) and Maternal Mortality
In the year 2003-04, the per capita Ratio (MMR); Universal access to
about sanitation, hygiene,
spending on health came to about integrated comprehensive public
contraception, and immunization
Rs 120/-, which is much lower health services; Child health, Water,
to provide primary medical care
than the level recommended for Sanitation and Hygiene; Prevention
for diarrhoea, minor injuries, and
low income countries. Public fevers; and to escort patients to and control of communicable
investment in health, and in medical centers. Other components and non-communicable diseases,
particular in primary healthcare of the programme include a village including locally endemic diseases;
needs to be much higher to achieve health plan prepared through a Population stabilization, gender, and
health targets, to reduce poverty local team headed by the Health demographic balance; Revitalization
and to raise the rate of economic & Sanitation Committee of the of local health traditions and main-
growth. Panchayat; strengthening of the stream Ayurvedic, Yoga, Unani,
rural hospital for effective curative Siddha, and Homeopathy Systems
Of late, the government of Health (AYUSH); Promotion of
care and made measurable and
has taken some positive steps healthy lifestyles.
accountable to the community
towards improving the health through Indian Public Health
infrastructure and services in the Making policies and putting
Standards, effective integration of programmes in place is indeed a
country. Since the Seventh Plan health concerns with determinants welcome step, but in order to ensure
Period, the allocation for health is of health like sanitation & hygiene, that the desired results are achieved,
continuously on the rise, and the nutrition, and safe drinking water each one of us have to play our role
government has committed itself to through a District Plan for Health, either as doctors, ANMs, political
raise public spending on health to strengthening sub-centre through leaders, medical personnel, or a
two% of GDP. In order to address an untied fund to enable local general human being. q
the inefficiencies and inadequacies planning and action and more
of health infrastructure and services Multi Purpose Workers (MPWs), (Email : urmileshs@gmail.com)
in rural areas, the government has strengthening existing PHCs and urmilesh_singh@yahoo.co.in)
50 YOJANA July 2009

book review
Urbanization and
Social Transformation
U
rbani z ation the nature of present day urban
offers b o t h governance in Indian mega-
opportunities as well cities, decentralization, financial,
as difficulties for local management and partnership in
governments. urban environmental services
carried by a team of Indian and Dutch
Large scale migration of people
researcher. The contribution in this
seeking work has changed the face
volume dealt with specific aspects of
of cities as informal settlements
new forms of urban governance in
with high-density habitations have
Indian mega-cities, with the social
become prominent across many
transformation to which they lead in
cities. There has been a steady
the backdrop of a national economy
rise in the number of local and
opening up to outside influence,
international non-governmental
especially deal with two major
organizations (NGOs) working in
process: the movement to bring
various domains of governance,
the government closer to citizens
such as poverty, environment, citizen
through decentralization and the
participation and corruption.
movement out from government
Recent debates on changing by which the government works
relationship between the State, with the private sector, civil society
Private sector and Civil Society have groups and local participation in
focused on the reducing role of the providing services to its citizens.
State and the increasing importance
tITLE : NEW FORMS OF URBAN
The edited book under review
of the market in providing goods
GOVERNANCE IN INDIA: consists of thirteen scholarly
and services to citizens, and the
SHIFTS, MODELS, articles including edited article
NETWORKS AND shifting importance of different
by Baud and Wit attempts to
CONTESTATIONS levels of government, with the
provide wide perception of scope
Author : I.S.A. BAUD & role of the national government
and significance of governance,
J. DE WIT being reduced vis-à-vis that of local
Price : Rs.850/-
d e c e n t r a l i z a t i o n , p e o p l e ’s
government on the one hand and
Page : 402 participation, management, policies
international governing institutions
ISBN : 978-81-7829-905-1 and role of intermediaries, new
on the other.
forms of governance, contestations
Publisher : Sage Publications,
New Delhi, 2008
This book is the outcome of and cooperation in urban governance
a research programme exploring and intervention of the Judiciary.
YOJANA July 2009 51

The edited book is an excellent The section also described of provision of infrastructure to
informative compilation, having its administrative setup, public various actors who considered it
twelve chapters divided into three policies, planning process, land an erosion of their space when
parts and contributed by eminent policy, conflicting issues, slums, entry and exit conditions are open
Indian and foreign scholars are NGOs, middle income group and unregulated. It also analyzed
worth reading. networks, lobbies and interest the institutional contestation in
groups, the intermediate level of urban infrastructure provision in
The edited book starts with
administration, role of Judiciary, urban India that has been created
excellent overview of urbanization
political network etc. in Delhi. by the State through the 74th
with its pro and cons and tried to
It is also explained about new Constitutional Amendment Act.
explore the nature of present day
management tools for Mumbai’s By analyzing various case studies
urban governance in Indian mega-
solid waste management (SWM) such as Kolkata, Kerala and Delhi
cities as a result of both globalization
programme, advanced locality resulted that how various forms of
and internal transformation management (ALM) programme, cooperation and/or contestation are
processes. It also attempts to analyze slum adoption programme and emerging in urban India.
whether new forms of governance highway sweeping programme.
for improved services delivery The section also seeks to highlight The section analyzed that
and innovative methods of urban key to urban governance in global evolving role of the judiciary
financing had positive implications world, the role of governance and through court judgments shows the
for the poor and vulnerable sections partnership, housing realities of contradictions that emerged between
in Indian cities. the poor and rehabilitation for the the agendas of different players on
poorer of Mumbai. the scene of urban governance. The
Part I of the edited volume focuses
chapter also discovered that recent
on decentralization which explained The section has made a good court judgments contributions to
the models and instruments in urban efforts to answer that how urban reinforcing the perception of slum
decentralization and highlighted reforms are redefining actors dwellers as squatters, culprits of
the urban governance in India in the city? With providing an the failure of housing policy and
especially in the case of Mumbai. in-depth analysis of the various urban development. Finally it gives
The section also revealed the role initiatives aimed at implementing a brief history of Mumbai that how
of decentralization in Indian cities new forms of urban governance industrialization has been taken
in which the author assessed the in capital of Andhra Pradesh and place in the city and it emerged as
performance of ward committees, the various state actors such as a major economic centre.
especially an inter-city perspective municipal reforms, property tax
of the committees in West Bengal reforms, privatizing social waste The edited volume is a welcome
through institutionalizing people’s management services, poverty edition and a good source of
participation in urban governance. alleviation and non-state actors like information on different major cities
civil society organizations (NGOs) of India to the limited literature
Part II of the volume discusses
and corporate sector is influencing available in the area of new forms
the multi-holder arrangements in
the planning and development of urban governance in which India
public services which described
process. is still lagging behind. It will be
the accountability and performance
a rich source of information for
in multi-stakeholder arrangement Part III of the edited volume, students and academicians, NGOs,
for providing specific services contestations and urban governance policy makers, corporate and
such as sanitation or underground in which the authors seeks to describe consultancy organizations for better
sewerage systems via urban the new forms of contestations understanding of various urban,
environmental management and and cooperation in Indian urban economic, development and local
analyzed two contrasting cases governance. The section tried issues of governance. q
which are used to bring about to present that how in multi-
factors influencing the effectiveness stakeholder arrangement (MSA) Krishna Dev
of such arrangements. the State shifts its responsibility kd.krishnadev@gmail.com
52 YOJANA July 2009

Yojana ENG July 2009 Om

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July 2009 Vol 53

Chief Editor : Neeta Prasad Production Officer : J.K. Chandra

Let noble thoughts come to us from every side

Agenda for Inclusive Growth................................... 5 shodh yatra A 'Dropout’ Innovator.................... 31

Sustaining Urban Infrastructure........................ 28 book review Urbanization and

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About the Issue

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Private Participation in Infrastructure

The author is Adviser (Infrastructure), Planning Commission, New Delhi.

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Yojana August 2009

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Bamboo sector to get boost

(Courtesy : The Greater Kashmir)

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Sea Ports : Harbouring Growth

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North east diary

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Self-help groups enabling women to earn in Tripura

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National Highways : The Path Ahead

active support rapid expansion and strengthening The Central Government is

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Growth in the Infrastructure Sector

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