Home > Cement, Coal, Crude Oil & Petroleum, Data Bank, Infrastructure, Power, Six Core Infra > Infrastructure Gets A Firm Push

Infrastructure Gets A Firm Push

Infrastructure development in India faces both financing as well as non-financing constraints. In the Economic Survey for 2010-11, the government has highlighted the need to address the following non-financing constraints that are leading to time and cost over-runs:

  • tendering of unviable projects
  • poor quality of  engineering and planning
  • lack of standardised and sub-optimal contracts
  • delays in land acquisition
  • slow pace of environmental and other regulatory clearances

To ease the availability of finance for infrastructure projects, the government has proposed the following measures in the Union Budget 2011-12:

  • setting up of an infrastructure debt fund
  • increase in the limit of foreign institutional investors (FIIs) in corporate bonds
  • issuance of tax-free bonds worth Rs 30,000 crore

While a look at the six core infrastructure industries reflects a 5.6% year-on-year growth, coal production has been a laggard. Going forward, this will have a ripple effect on the related industries (such as, steel and power generation which use coal as a feedstock).

Sector-wise % YoY Growth in Core Infrastructure Production
Sector   Weight (%) Jan 2011 Jan 2010 Apr-Jan 2010-11 Apr-Jan 2009-10
Crude Oil 4.17 10.8 9.8 11.9 -0.1
Petroleum Refinery 2.00 8.7 3.8 2.4 -0.5
Coal 3.22 -1.2 5.4 0.8 8
Electricity 10.17 9.3 6.4 5 5.9
Cement 1.99 1.8 12.4 4.1 11.1
Finished steel 5.13 8.2 16.8 7.8 5.7
Overall 26.68 7.1 9.8 5.6 5.5
Source: MOSPI

Pace of infrastructure development has been very slow. Of the 559 projects monitored by the Centre, 77% were delayed, and only a fourth of them were on or ahead of schedule. Government has allocated Rs 2.14 lakh crore for development of this sector, however, removal of non-financing bottlenecks that are ingrained in to the system will be difficult to eradicate.

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