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Transport and Communications

Transport and Communications are vitalelements of infrastructure and key elementsnot only for global competitiveness, but alsofor creating an integrated national market. Hightransactions costs arising from an inefficienttransport sector and poor communications canprevent the economy from realizing its fullgrowth potential regardless of progress on otherfronts. Telecommunications and Information& Communication Technology are also vitalfor connectivity. The Tenth Plan hademphasized the importance of all these sectors.The strategy for developing each of these sectorswill necessarily have to be differentiated on thebasis of sector specific circumstances. In generalin view of fiscal constraints the strategy foreach sector was expected to leverage privateparticipation as much as possible.

TRANSPORT

9.1.1 Improvement in the quality of transportinfrastructure is an essential pre-requisite forhigh economic growth. The Tenth Five-YearPlan, therefore, seeks to ensure the growth ofthe transport sector in a manner that all regionsof the country can participate in the process ofeconomic development, paying special attentionto integrating remote regions into the economicmainstream. Other focus areas are: augmentingthe capacity, quality and productivity of thetransport infrastructure and services throughtechnology upgradation and modernisation;overcoming the problem of resource constraintsthrough higher generation of internal resourcesand increased participation by the private sector;improving overall economic efficiency bybringing in competition into the sector; higheremphasis on safety, energy efficiency,environmental conservation and social impact;and developing an optimal inter-modal mix,

where each mode of transport not onlyleverages its comparative advantage and operatesefficiently but also complements the servicesprovided by the other modes.

9.1.2 The transport sector presents a mixedbag of achievements in the first three years ofthe Tenth Plan. The growth of rail and porttraffic in the first three years, for example,indicate that the Plan targets are likely to beachieved or even exceeded in some cases. TheRailways has recorded some improvement infinancial performance, but the generation ofinternal and extra budgetary resources (IEBR)is not in line with the Plan targets. In the caseof the roads sector, the four-laning and six-laning of the Golden Quadrilateral (GQ) hasbeen behind schedule, but work relating tostrengthening of weak pavements andimproving the riding quality of roads has beenahead of target.

9.1.3 Annexure 9.1.1 provides details of theTenth Plan outlay and expenditure on varioussub-sectors in the first three years of the Planperiod and the budget estimates in the UnionBudget for 2005-06.

RAILWAYS

9.1.4 The Tenth Plan identified certain thrustareas in the railways sector. These are: capacityexpansion through modernisation andtechnological upgradation, improvement in thequality of service, rationalisation of tariff inorder to improve the share of rail freight inthe total traffic and to improve the safety andreliability of rail services. While the Railwayshave been able to achieve the targets for freightmovement in the first three years, there arequestions about the pace at which the

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modernisation programme is proceeding andthe progress regarding tariff rationalisation hasalso been very limited. A comparison withChinese Railways indicate some interestingdifferences ( Box 9.1.1)

PROGRESS IN THE TENTH PLAN

PHYSICAL TARGETS

9.1.5 The Tenth Plan had targeted a relativelow growth rate of 5 per cent in freight. Theaverage annual growth rate of freight(originating tonnage) in the first three years ofthe Tenth Plan is likely to be 6.8 per cent.This is commendable and it is necessary tocontinue to maintain this growth rate in futureand ideally also step it up in view of the needfor increasing the share of Railways in freighttraffic and ensuring a cost-efficient mode oftransport, which will benefit the economy inthe long run. This will require augmentingcapacity, particularly on the main routes whichare currently over-stretched. The rate of growthof passenger traffic (in terms of number ofpassengers) is only around 2.02 per cent, against4.93 per cent in case of passenger kms,

indicating an increase in the average lead ofpassenger traffic, is a welcome development onthe whole. It is expected that the Railways willbe able to achieve its targets for passengertraffic of Tenth Plan.

9.1.6 The physical targets for various capacityindicators during the Tenth Plan andachievements in the first two years andprojections for the third year are detailed inAnnexure 9.1.2. The Railways is behindschedule in achieving targets, set for the firstthree years of the Plan, in respect of new lines,doubling and acquisition of Electrical MultipleUnit (EMU) coaches. Problems relating to landacquisition, environmental/ forest clearances,among several others, are the major reasons forthe slow progress in case of new lines anddoubling. The shortfalls in wagon procurementare mainly the result of lower production bythe wagon Industry.

FINANCIAL PERFORMANCE

9 .1.7 The approved outlay for the Railwaysin the Tenth Plan is Rs.60,600 crore. Of this,

Box 9.1.1Comparative assessment of Indian Railways and Chinese Railways

� In the early 1990s, the Indian Railways was bigger in terms of total route km, as well asroute km/sq.km.

� In the period 1992 - 2002, the Chinese Railways extended its route km by 13,797 km (24per cent), double track by 9,400 km and electrified track by 8,975 km.

� During the same period, the Indian Railways network grew by only 682 route km. (1 percent), double track by 1519 km and electrified track by 5,192 km.

� Investment outlays for the Indian Railways over the 1992-2002 decade totalled $17.3billion, in contrast to $85 billion in the case of the Chinese Railways.

� While the two networks are roughly comparable in size, the Chinese Railways� output intraffic units (TU = pkm+tkm) is 2.5 times that of Indian Railways.

� Between 1992 and 2002, the two railways carried almost exactly the same volume ofpassenger-km, but the Chinese Railways carried four and half times the freight tkm carriedby Indian Railways.

� Average employee output on Chinese Railways is 2.1 times that of Indian Railways. Staffcosts (excluding pensions) for Indian Railways is about 40 per cent while it is just 25 percent of ordinary working expenses in the case of Chinese Railways.

� The average passenger tariff in India is 55 per cent lower than in China.

� The average freight tariff in India is almost 66 per cent higher than in China.

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gross budgetary support (GBS) accounts forRs.27,600 crore (46 per cent) and IEBR forRs.33,000 crore (54 per cent). There has been atrend of increasing reliance on GBS and adeclining contribution of IEBR since the NinthPlan and this appears to have continued in theTenth Plan. The Railways was provided withabout 70 per cent of total Tenth Plan GBS inthe first three years of the Plan period, thecontribution of IEBR was only 55 per cent oftotal Tenth Plan IEBR.

9.1.8 The requirement of funds during theremaining two years of the Tenth Plan hasbeen estimated at Rs.39,765 crore. Since thecurrent level of GBS of about Rs.7,231 crorecan be raised only marginally because of fiscalconstraints, mobilisation of additional resourcesthrough various other measures is unavoidable.

NATIONAL RAIL VIKAS YOJANA

9.1.9 The Government announced theNational Rail Vikas Yojana (NRVY) in August,2002 in order to remove capacity bottlenecksin the critical sections of the Indian RailwayNetwork. It comprises of three components:

� Strengthening of the GoldenQuadrilateral (GQ) and its diagonals.

� Strengthening of rail connectivity toports and development of multi - modalcorridors to the hinterland.

� Construction of four mega bridges �Bogibeel Rail-cum-Road bridge acrossriver Brahmaputra , Munger Rail cumRoad bridge across river Ganga, PatnaGanga bridge and a bridge over riverKosi.

9.1.10 The NRVY projects, except for themega bridges, are targeted to be completed infive years (2002-07). The Rail Vikas NigamLimited (RVNL) was set up as a special purposevehicle (SPV) to execute the first twocomponents of NRVY. The RVNL is toundertake project development andmobilisation of resources along with executionof projects on a commercial format, usinglargely non-budgetary funds. The Ministry ofRailways has assigned 53 capacity enhancementprojects to RVNL. Of these, 32 projects lie on

the GQ and 21 projects relate to connectingports and strengthening hinterland connectivity.The RVNL projects involve doubling of 1911km, gauge conversion of 1640 km, new lines of522 km, railway electrification of 1916 km.and strengthening of about 10,000 km. of GQand its diagonals for running of freight trainsat 100 km. per hour (kmph) . The total routekms. under various types of developmentalworks is about 16,019 kms.

9.1.11 The Union government has envisageda budgetary support of Rs.3,000 crore forRVNL, including Rs.1,500 crore as externalaid from the Asian Development Bank (ADB),which shall be available to RVNL asGovernment of India�s equity. The rest of thefunding requirements will have to be arrangedby RVNL by devising various financing models.

9.1.12 The initiative of implementingfinancially viable projects through RVNL needsto be reinforced. Three such SPVs have alreadybeen formed and more are being developedspecially in the port connectivity projects.RVNL also intends to execute identifiedprojects through BOT and market borrowings.Project-specific SPVs may raise resources fromthe market or from external resources againstidentified incremental revenues from theproject. Some of the SPVs could be in theform of joint ventures with stake holders.Others could be based on BOT/Build-Operate-Lease-Transfer (BOLT) mode.

PUBLIC-PRIVATE PARTNERSHIP IN RUNNING

OF TRAINS

9.1.13 Indian Railways have already set upIndian Railways Catering and TourismCorporation for taking all steps to boost uprail based tourism, including running of touristtrains. In fact �Village on wheels� and �Hilltrains are being run. In addition, Railways aretying up with different state governments forrunning tourist trains on the pattern of �Palaceon wheels� and �Deccan Odyssy�. Railway mayexplore the possibility of Public PrivatePartnerships in running tourist trains. Theoperational part relating to traffic managementand use of railway tracks may continue to vestin the Railways.

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9.1.14 Railways have taken steps recently forprivate participation in goods traffic, such asallowing competition in movement of containertraffic and wagon investment schemes.However, Railways may explore the possibilityof public-private partnership in running goodstrains between specified destinations assuggested for tourist trains. This would help inadding modern rolling stock that would add tothe traffic and revenues of the Railways.

MAJOR POLICY ISSUES

9.1.15 Increased share in freight traffic:Railways have taken a number of steps duringTenth Plan period to improve Railway�s sharein freight Traffic. These include rationalisationof freight tariff structure, user benefit measuressuch as trainload benefit for all block rakes andcommodities, flexible rating policy for specificpairs of stations, incentive to premier customersgenerating high freight earnings for trafficoriginating from sidings, computerisation offreight movements, provision of in-housefacilities etc. Other measures taken by theRailways include provision of linkages to ports,introduction of more high speed wagons andrefrigerated parcel vans. The Railway Budgetfor 2005-06 has also announced a number ofinitiatives aimed at increasing the freight traffic.

9.1.16 While the above measures have resultedin higher freight loadings, there is stillconsiderable scope for regaining the traffic lostby the Railways. Therefore, the Railways needto continue their efforts to win back morebulk traffic from the road sector. Apart fromthis Railways would need to attract non-bulkhigh rated traffic also. There is a need fordedicated freight corridors on selected high-density corridors. This would help in meetinglong term requirements of movement of freighttraffic more efficiently. An acceleratedprogramme of containerization could alsocontribute towards increasing the share ofRailways in non - bulk traffic.

9.1.17 Investment Strategy: Despite theRailways having a large portfolio of ongoingprojects most of which have been sanctionedon socio-economic considerations, theaspirations of the people for rail connectivity

do not recede. The Investment strategy ofIndian Railways needs a reorientation in thewake of surging growth of the economy. Inthe current year Railways have embarked upona corridor-wise approach for augmentation ofthe capacity in their investment planning for2005-06. This needs to be carried forward withvigour and timely completion of the worksmonitored. Railways have put in position aprioritisation exercise of the ongoing projectswith Cabinet approval, as per the followingpriority :

(i) Ongoing new lines and gaugeconversion projects where progress ismore than 60 per cent and throwforwards is less than Rs. 100 crore.

(ii) Viable/ operationally required projects

(iii) National projects, projects in theNortheast, defence funded projects, andthose with public-private partnership;and

(iv) Other ongoing projects of new linesand gauge conversion not covered inabove categories (i, ii & iii)

The Railways, however, need to observecaution, while sanctioning new projects,keeping in view financial viability andoperational essentiality in order to avoid furtherstress on scarce resources.

9.1.18 Rebalancing of tariffs: There is anurgent need to rebalance tariffs. Passengertraffic contributes 58 per cent of total traffic,but accounts for only 33 per cent of totalrevenue. On the other hand, freight trafficaccounts for 42 per cent of total traffic butcontributes as much as 67 per cent to thetotal revenue. The present fare-freight rationeeds to be reworked through rebalancingtariffs. The system of automatically indexingrailways tariffs to increases in fuel cost andthe wage cost adjusted for an actualproductivity increases on both counts needsto be adopted in order to do this.

9.1.19 Technological upgradation andmodernisation: Technological upgradation andmodernisation is one of the thrust areas in theTenth Plan. Upgrading technology becomesmore important given the magnitude of the

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task and also to improve reliability, reducemaintenance cost and increased customersatisfaction. Although modernisation is requiredin all areas of railway operations, technologicalimprovement of tracks and acquisition ofrolling stock for heavy haul and high speedoperations supported by modern signalling andimproved maintenance system may commandhigher priority. Railways have alreadyintroduced State of Art diesel and electriclocomotives, coaches as well as high speedwagons in recent past. The modernisationprogramme for 2005-10 formulated by theRailways provides investment towardstechnological upgradation as well as investmentplans for capacity enhancement as well increasein speed of trains on corridor based approach.Such an approach needs to be adopted inmodernisation process with a clear indicationof individual component and how they areexpected to improve average speed andthroughput.

9.1.20 Safety: Recognising the significance ofimproving railway safety, a Special RailwaySafety Fund (SRSF) was set up in 2001 whichenvisages an investment of Rs.17,000 crore.The objective of the Fund is to help inclearing the arrears of track renewal andreplacement of over-aged railway assetsbetween 2001 to 2007. The work to becovered includes renewal and replacement ofover-aged tracks, bridges, rolling stock andsignalling gear, including communication andsafety enhancement works. Out of a totaltarget of 16,538 km. of track renewal workup to 31st March, 2007, 12,138 km. of tracksare likely to be renewed up to 31st March2005. The work of replacing over-agedsignalling systems is in progress at 881stations. Track circuiting works have beencompleted in about 2585 locations and thework of rehabilitation/rebuilding has beencompleted in respect of 1,717 bridges out ofa total of 2,700 bridges to be rehabilitated.The achievements of Railways with respectto various works under SRSF have beensatisfactory so far and it is expected that thefinancial and physical targets will be achieved.

9.1.21 A Corporate Safety Plan for ten yearsi.e. from 2003 to 2013 has been drawn up and

is being implemented by Ministry of Railways.The main objectives of the Corporate SafetyPlan are to achieve reduction in rate of accidentsper million train kilometers, implementmeasures to reduce chances of passenger fatalitysubstantially in consequential train accidents,focus on development of manpower throughmajor improvements in working environment,training to reduce the accidents attributable tohuman failure, achieve safety culture on allfronts including maintenance depots, worksites,stations, controls etc.

9.1.22 Container Movement : Containertraffic in India has grown at over 15 percent per year in the 1990s and is likely togrow at a much higher rate in the comingyears in view of the projected growth rate ofthe economy and trends in foreign trade.Despite the higher growth in container traffic,the share of total container traffic in trafficthat can be containerised continues to below in India as compared to internationaltrends. One of the reasons for this is theproblem of evacuation of containers fromIndian ports, currently an activity that is themonopoly of the Container Corporation ofIndia (CONCOR). Therefore, along withincreasing the capacity of CONCOR, it isalso necessary to allow competition in themovement of container traffic. The RailwayMinister has indicated in the Rail Budget for2005-06 that this will be considered. This isa welcome move and steps should be takento implement the new approach. Allowing acompeting alternative will both augment totalcapacity and increase efficiency. There is alsoa case for dedicated freight corridors forcontainer movement, particularly for themovement of bulk commodities. Minister ofRailways have recently announced theRailways intention of connecting the fourmetro cities viz. Delhi, Mumbai, Chennaiand Kolkata with dedicated freight corridorswhich will include running of both freightand double stack container trains with 25 to30 tonnes axle loads.

9.1.23 Organisational restructuring: Thepresent structure of Indian Railways has evolvedon the basis of the Acworth Committee�srecommendations, calling for consolidation and

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nationalisation in 1924. The Indian Railwaysformulates policy and provides services andalso acts as a regulator. These three functionsneed to be separated. The objective of puttinga regulatory mechanism in place is to rationalisethe fares and freight rates structure. Heavycross subsidisation introduces distortions inthe inter-modal mix of transport as a whole aswell as in the operation of Railways. Railwayswould, prepare a paper in consultation withPlanning Commission on tariff settingmechanism including the need for a Rail TariffAuthority.

9.1.24 The Tenth Plan emphasised that thenon-core sector and peripheral activities suchas manufacturing may be spun off toindividual corporations, which should operatelike other public sector units usingcommercial accounting principles withinternationally accepted accounting practices.The Railways have already initiatedpreliminary steps towards accounting reforms,outsourcing of non-core activities,concessioning of branch lines, makingproduction units into cost and profit centresetc. This process needs to be accelerated.

9.1.25 Resource generation through non-conventional sources: The Railways have setup PSUs like Railtel, IRCTC which undertakemarketing of non-core activities to generateadditional revenues. These efforts need to besupplemented by the commercial exploitationof large tracks of land and other assets ownedby Railways especially in the cities. With thesetting up of the proposed Rail LandDevelopment Authority (RLDA), it is expectedthat the Railways will be able to developsurplus land adjoining railway stations, developmetro stations into world class model stationsand extend passenger amenities throughconstruction of food plazas, shopping mallsetc. on vacant land. This Authority may alsodevelop goods sheds for constructingwarehouses and other logistic parks.

ROADS

9.1.26 The Tenth Plan envisages balanceddevelopment of the total road network in the

country. This includes phased removal ofdeficiencies in the existing network, widening,improvement, strengthening, rehabilitation andreconstruction of weak/dilapidated bridges,adequate maintenance of roads, road safetymeasures and providing wayside amenities tocater to the growing demands for road services.Apart from this, the Plan also lays emphasison improving the riding quality of existingNational Highways. Yet another priorityobjective is improvement in rural connectivitywith all-weather roads and development ofroads in the North-Eastern region. Inter-modalissues like road connectivity with airports,railways, ports etc. is another issue that it hashighlighted.

9.1.27 The Tenth Plan has stressed the needfor improving mobility and accessibility. Whilethe National Highway DevelopmentProgramme (NHDP) is expected to improvemobility, the Pradhan Mantri Gram SadakYojana (PMGSY) is aimed at providingaccessibility, especially to villages.


PHYSICAL PERFORMANCE (OTHER THAN

NHDP)

9.1.28 Annexure 9.1.3 is a statement showingthe physical targets/achievements for the TenthPlan and Annual Plans. The statement showsthat achievement in the case of widening tofour-lane/two-lane and construction of bypassesduring the first two years of the Plan has beenbelow target. Achievements relating tostrengthening of weak pavements andimprovement of riding quality have surpassedtargets.


9.1.29 Central sector: An outlay of Rs.59,490crore (GBS Rs.34790 crore) has been providedfor the development of roads in the TenthPlan. The bulk of this outlay is meant for thedevelopment of National Highways and relatedprogrammes. An expenditure of Rs.20505 croreis likely to be incurred in the first three yearsof the Plan period. At constant prices, theexpenditure works out to 34.5 per cent . Detailsof the outlay/ expenditure (GBS at current

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Box 9.1.2Prime Minister�s Committee on Infrastructure: National Highways

For a country of India�s size and magnitude, an efficient road network is necessary both fornational integration as well as socio- economic development. The National Highways (NH),with a total length of 65,569 km, serves as the arterial network connecting metropolitancentres and major cities. The development of NH has, therefore, been accorded high priorityin the planning process and an ambitious road building plan has been drawn up. Resources,however, remain the main constraint and this necessitates prioritisation of projects andparticipation of the private sector through public-private partnership (PPP).

The National Highway Development Programme (NHDP) has been taken up with theobjective of improving the NH network in a phased manner. The 5846 km GoldenQuadrilateral (GQ) connecting Delhi, Mumbai, Chennai and Kolkata was the first project tobe taken up and is expected to be completed by December 2006. The 7300 km North-SouthEast-West (NSEW) Corridor is next on the schedule and is to be completed by December 2007.

Keeping in view the need for nationwide connectivity and mobility, the Committee onInfrastructure chaired by the Prime Minister proposed an expanded programme for highwaydevelopment on the 13 January 2005. The proposed programme for the next seven years (2005-12) includes completion of:

� GQ and NSEW corridors

� Four-laning of 10,000 km under NHDP Phase III

� Two-laning of 20,000 km of national highways under NHDP IV

� Augmenting highways in the North East

� Six-laning of selected stretches, and

� Development of 1,000 km of expressways.

Targets are to be achieved through restructuring and strengthening of National HighwayAuthority of India (NHAI), the main implementing agency for the expanded programme;developing Modal Concession Agreements for BOT projects and for operation, maintenanceand tolling of completed NHDP stretches; addressing bottlenecks in ongoing projects arisingfrom State level constraints, delays in environmental clearance, problems in land acquisition;focus on traffic management and safety related issues etc.

The four-laning of 10,000 km of National Highways by March 2010 under NHDP III wouldbe done entirely through the BOT route. A Special Accelerated Road Development Programmefor the North Eastern Region (also called NHDP-NE) is envisaged for improving connectivityin the north-eastern sta tes. This would include a road length of 7639 km comprising 3251 kmof NH and 4388 km of other roads. The network is expected to act as catalyst for thedevelopment of the region.

prices) for the Tenth Plan and Annual Plans2002-03, 2003-04 and 2004-05 are given inAnnexure 9.1.4

9.1.30 State sector: Against the Tenth Planoutlay of Rs.50,320.82 crore under the Statesector, an expenditure of Rs.27,316.11 crore islikely to be incurred up to the end of 2004-05.This works out to 54.28 per cent of the Tenth

Plan outlay. During the first three years of theTenth Plan, expenditure has been lower thanthe outlay provided.

NATIONAL HIGHWAY DEVELOPMENT

PROJECT

9.1.31 Golden Quadrilateral � (NHDPPhase I): The target for completing the GQ

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was originally set for December 2003 but waslater revised to December 2004. All works onthe GQ have now been awarded but the projectis behind schedule. Out of the total length of5,846 km of GQ, only 4,611 km (78.9 per centof the total length) had been completed byFebruary, 2005. While 92 per cent of the GQwill be completed by December 2005, fullcompletion is likely only by December 2006because of some problem projects.

9.1.32 The shortfall in the achievement oforiginal targets are due to:

� Delay in land acquisition.

� Delay in obtaining environment andforest clearances.

� Delay in obtaining clearances fromRailways regarding design of road overbridges/road under bridges.

� Law and order problems in certainStates.

� Poor performance of some contractors.

9.1.33 North South and East WestCorridors� (NHDP Phase II): Till 28th

February, 2005, only 9.5 per cent of the NS-EW corridor project had been completed.Implementation of the project has been takenup under two phases. The status of the projectas on 28th February, 2005 is as follows:

� 692 km. has been completed (NS 544km. + EW 148 km.)

� 886 km. is under implementation (NS240 km. + EW 646 km.)

� By September, 2005, most of thecontracts are expected to be awarded.

9.1.34 The project is targeted to be completedby December 2007.

ROAD TRANSPORT

9.1.35 Road transport programmes areimplemented both under Central and Statesectors. In the Central sector, major schemesrelate to road safety programmes, training ofdrivers and instructors, introduction of newtechnology and pollution control. Against theTenth Plan outlay of Rs.210 crore for theCentral sector, an expenditure of Rs.100.65

crore is likely to be incurred during the firstthree years of the Plan, which amounts to 47.9per cent of outlay at constant prices. In theState sector, the expenditure during thecorresponding period is 49.9 per cent at constantprices.

PORT CONNECTIVITY

9.1.36 The port connectivity project envisagesfour laning of 356 km of National Highwaysconnecting ten major ports. The works onconnecting Kandla Port and Mormugao Porthave already been completed. Works are inprogress for connecting five major ports whilecontracts have been finalised for the remainingthree ports and these are targeted to becompleted by December 2007. All the portconnectivity projects are being funded throughthe SPV route and are on BOT basis.

NEW INITIATIVES

9.1.37 NHDP Phase-III: This programme,being implemented by the National HighwaysAuthority of India (NHAI) envisages four-laning of about 10,000 km of existing NationalHighways (other than NHDP) Phase-I&II i.e.GQ and the NS-EW Corridor sections) and isproposed to be undertaken on BOT basis.NHDP phase-III will provide connectivity toimportant places not covered under NHDPPhase-I&II. This includes connectivity ofnumber of State Capitals with NHDP Phase-I&II, high-density corridors, places of touristand economic importance, etc. TheGovernment has approved implementation of4/6 laning of 4000 km of National Highwayson BOT basis as a first phase and preparationof the Detailed Project Report (DPRs) of thebalance 6000 km as a second phase. The firstphase of NHDP-III is proposed to be completedby December 2009. BOT bids for 6 projectscovering 507 km have been awarded. BOTbids for another 10 projects covering 554 kmslength have been invited.

9.1.38 (NHDP Phase � IV) Upgradation of41,000 km of existing National Highways:Against the 65,569 km length of NationalHighways, 24,000 km. have been scheduled forfour-laning under NHDP (Phases I and II) andthe proposed NHDP (Phase III). The balance

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Box 9.1.3Financing the national highway network

Funds have been the main constraint in implementing the Extended Highway DevelopmentProgramme that envisages four/six-laning of the National Highway network. To overcomethis hurdle, work on National Highways is being prioritised and private investment encouragedthrough public-private partnerships.

Cess on petrol and diesel has been the most important means of generating public resourcesfor highway development. The cess could be leveraged several times to increase the availabilityof resources in the near future. For example, cess receipts can be used to service debt liabilitiesincurred when borrowing from the market.

Tolls are another method of raising finances, with road maintenance work making the firstclaim on toll money. The surplus money however could be used for upgrading network. Thefunds could also be leveraged through borrowing against future receivables.

The main instruments of PPP are BOT based on toll earnings plus a competitively bid capitalsubsidy if needed and BOT based on a competitively bid annuity payment. In case of annuitybased projects, the concessionaire builds the road and maintains it during the concessionperiod. The government pays for the project through an annuity stream. Tolling is not anintegral part of BOT (annuity) projects and it is, therefore, essentially a road construction andmaintenance arrangement that involves deferred payment by the government.

The stake of private sector is greater in pure BOT schemes. The concessionaire builds the roadand maintains it during the concession period and also charges toll to recover the costs ofconstruction and maintenance. Therefore, such projects involve private sector taking a marketrisk, unlike BOT (annuity) projects. Since there is uncertainty about future traffic flows and,consequently toll receipts, and in every case toll earnings may not cover capital costs fully, thegovernment allows viability gap funding up to 40 per cent of the project cost based on acompetitive bid for the lowest subsidy.

There are other ways to ensure minimum traffic receipts and encourage private initiative. Thisinvolves Government reimbursing the concessionaire to the extent of the traffic falling belowa stipulated minimum. Similarly, if the traffic is above a maximum level, the concessionairewould pay the Government. This financial engineering arrangement, called �collar�, couldhave various alternatives. One advantage of the instrument is that the concessionaire is assureda minimum traffic flow, which enables it to plan investment. Borrowing from banks is alsoeasier against a predictable revenue stream.

41,000 km is proposed to be developed in twophases.

9.1.39 Special Accelerated RoadDevelopment Programme for the NorthEastern Region: A total of 7639 km of roadlength, including National Highways, has beenproposed for development under the �SpecialAccelerated Development Road Programme forNorth Eastern Region�. The programmeinvolves: widening of 3251 km of NationalHighways connecting state capitals of the

North-East and improvement of 4388 km ofstate roads.

PRADHAN MANTRI GRAM SADAK YOJANA

9.1.40 PMGSY aims at providing all-weatherconnectivity to all 500+ unconnectedhabitations. For Hill and North Eastern States,Desert and Tribal Areas, the population criteriais 250+. Annexure 9.1.5 shows that 41,765habitations with population of 1,000 and aboveare yet to be connected. The main problem is

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would be to create a SPV specifically for thePMGSY.

POLICY ISSUES

9.1.45 There is need for improved highwayconnectivity to industrial and economic growthcentres, ports, airports and places of touristimportance and heritage sites. While the NHDPis the over-riding priority, non-NHDP NationalHighway projects need to be prioritised sothat resources are not spread thinly amongcompeting projects, which leads to delay inproject completion.

9.1.46 The substantial addition made to theNational Highways network during the NinthPlan and in the Tenth Plan increased the gapbetween availability of resources andrequirements and thus contributed to the poormaintenance and riding quality of the non-NHDP National Highway network.

9.1.47 Working out PPP arrangements to themaximum extent possible is inevitable foraugmenting resources and for improvingefficiency in implementation of projects. Inthe past, uncertainty about revenue from tollshas discouraged investors from coming forwardwith BOT proposals. Undue emphasis wasalso placed on BOT (annuity), which is distinctfrom BOT projects. In BOT (annuity), theexpenditure incurred by the concessionaireduring construction and maintenance phaseare repaid through annuity instalments. Themodal, therefore, is not BOT in real sense of

Box 9.1.4Improving Mobility of National Highways

The four/six-laning of National Highways would considerably improve mobility and,consequently, boost trade and development by connecting remote areas to major commercialcentres. However, a major constraint to this is the absence of appropriate access facilities tothe highways, which often nullifies the gains of having a high mobility network.

To overcome the bottlenecks, the Expanded Road Development Programme envisages providingring roads, bypasses, grade separators and service roads to facilitate congestion-free travel. Theproposals include providing access-controlled ring roads to all state capitals and major cities;constructing service roads along the National Highways to cater to slow-moving traffic andenhance road safety; constructing bypasses on National Highways to avoid congestion ofcities/towns and building grade separators to allow uninterrupted traffic flows.

in the states of West Bengal, Uttar Pradesh,Orissa, Bihar, Madhya Pradesh, Jharkhand,Assam and Chhattisgarh. The connectivity ofhabitations with population of 500 and aboveis also not satisfactory.

9.1.41 The projected requirement of thePMGSY has been now estimated at Rs.1,33,000crore. Annual inflows from the diesel cess arelikely to be of the order of Rs.3,800 crore.

9.1.42 Unlike the NHDP, the PMGSY,despite being in its fourth year of operation,has not taken off as per expectations. Themismatch between the target date of completionand the availability of funds remains unsolved,which is undermining the viability of thescheme.

9.1.43 For successful implementation ofPMGSY, it is necessary to address the issuesrelating to capacity development at the statelevel, maintenance funding, management andintegration of rural roads with higher category,particularly major district roads. There is alsoneed to develop an appropriate role for districtpanchayats in the management of rural roads.

9.1.44 In order to generate additional resourcesfor the programme, negotiations withmultilateral agencies like the World Bank andADB would be held. Despite the availability ofproposed external assistance from these agencies,there would still be a gap between availableresources and the requirement. A viablealternative that could address these problems

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the term. Other constraints were: inadequate/unreliable availability of information; high priceelasticity of demand; and absence of asatisfactory dispute resolution mechanism. Anumber of steps need to be taken to make theenvironment conducive to PPP. These includeproper project planning, formulation,prioritisation by the government/roaddevelopment agencies, identifying and removingdeficiencies in fiscal incentives, improvementin the availability of information, establishmentof a highway regulatory authority, designing asatisfactory dispute resolution mechanism, andaffordable toll rates. The sharing of downsiderisk by the government would also encourageprivate sector participation. The ModelConcession Agreement approved earlier has tobe revised in light of experience so far.

9.1.48 A number of National Highwaystretches are now being tolled. Past experiencesuggests that the development and maintenanceof toll roads through BOT are carried outmore efficiently and effectively. Theinvolvement of the private sector in theoperation, maintenance and tolling of thecompleted high density stretches may lead tosubstantial efficiency gains. So far, about 1730km. out of 4611 kms. of completed NHDPstretches are being tolled and by September2006, most of the completed stretches of GQ isexpected to be tolled.

9.1.49 Four-laning of National Highways maynot be the ultimate answer on high trafficdensity stretches in the long run. There is,therefore, need to take up six lanes andexpressways projects, where necessary. Theseprojects would have to be implemented on thebasis of PPP.

9.1.50 The NHDP has experienced problemsrelating to land acquisition and environmentalclearance. Formats prescribed for landacquisition need to be standardised andprocedures streamlined. A suitable mechanismneeds to be evolved for speedy environmentclearance.

9.1.51 Indian highways are highly accident-prone and the accident rate may well go up,with the augmentation of capacity and

consequent increase in speed of vehicles.Overloading is another serious problem, whichis not only hazardous but also damages roads.It may, therefore, be desirable to set up adedicated organisation for road safety and trafficmanagement.

9.1.52 Another obstacle to the free flow oftraffic is inadequate provision of under-passesand over-passes and, in some cases, service-lanes. The provision of these facilities needs tobe given priority in future development ofhigh-density corridors.

9.1.53 Adequate provision for waysideamenities would have to be made in all futuredevelopment of National Highways.

PORTS

9.1.54 In the ports sector, the main thrust inthe Tenth Plan is on the creation of generaland bulk cargo handling facilities with focuson container traffic. Efficiency and productivityare to be improved through corporatisation,private sector participation and rationalisationof manning scales.



9.1.55 In the first three years of the TenthPlan, a total Rs.1,936 crore is likely to bespent, which is 35.7 per cent of the approvedTenth Plan outlays. There are various reasonsfor this: the review and consequent pruning ofoutlays in view of the decision to hand oversome projects to the private sector; reductionin outlays for on-going schemes as well as newschemes based on more realistic estimates; delayin sanctioning of projects and award of contractsand deferment of schemes. Details of port-wiseoutlay and expenditure are given in Annexure9.1.6.

PHYSICAL PERFORMANCE

9.1.56 The Tenth Plan has projected a trafficof 415 million tonnes in the 12 major ports bythe terminal year of the Plan. The first twoyears of the Plan witnessed impressive traffic

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growth of 7 per cent at the major ports. Therewill be no problem in achieving the TenthPlan targets if the existing rate of growthcontinues. Details of traffic handled at majorports, commodity-wise and port-wise, are givenin Annexure 9.1.7 and 9.1.8.

9.1.57 The aggregate capacity of the portssector, as on 31st March, 2004 was 390.00million tonne per annum (MTPA), animpressive addition of 46.05 MTPA in the firsttwo years of the Plan. Going by presentindications, the capacity at the end of theTenth Plan is expected to exceed the projectedtarget of 470.60 MTPA.

PRODUCTIVITY AT MAJOR PORTS

9.1.58 Average pre-berthing waiting timedecreased from 11.5 hours in 2001-02 to 5.1hours in 2003-04 and average turnaround timedecreased from 4.2 days to 3.6 days during thesame period. The improvement has been acrossthe spectrum of port operations in handlingvarious commodities. Privately operatedcontainer terminals have substantiallycontributed to this improvement. This can beseen from the example of the Jawaharlal NehruPort. While the turnaround time achieved bythe port authorities at the Jawaharlal NehruPort Trust (JNPT) terminal is 1.16 days, it is0.79 days in case of a container terminaloperated by a private operator.

PRIVATE SECTOR PARTICIPATION

9.1.59 The Tenth Plan envisages the privatesector/captive users playing a crucial role inaugmenting capacity at various ports. Against

the projected private sector investment ofRs.11,257 crore during the Tenth Plan, projectsinvolving investment of Rs.3,118 crore havebeen approved. Project-wise details are givenin Annexure 9.1.9.

9.1.60 The progress in private sectorparticipation in ports projects has been ratherslow and a number of steps need to be takento promote such involvement. As a first step,it is necessary to review the existing guidelinesand instructions with a view to removing anyrestrictive clauses. Certain port projects involveheavy capital investment and long gestationperiod. In such cases, it may be necessary tomake the concession period flexible. Thegovernment should not see the concessions asan opportunity for maximising revenue. Theyshould be formulated in such a way that theyresult in lower port charges. The main objectiveshould be to promote both inter-port andintra-port competition. Intra-port competitionshould be encouraged by multiple concessionsat single port and inter-port competition canbe promoted by improving surface transportlinkages. The modalities for private sectorparticipation should be laid down in a clearand comprehensive manner.

PERSPECTIVE PLAN FOR DEVELOPMENT OF

MAJOR PORTS

9.1.61 Keeping in view the need for meetingthe requirement of traffic efficiently and atminimum cost to the users, there is a need toformulate a Perspective Plan for long-termdevelopment of each major port. Theaugmentation of berth capacity may be

Box 9.1.5Private sector participation in ports

A container terminal, the International Container Transhipment Terminal (ICTT), is being setup at Vellarpadam near Kochi Port, which is to be developed on BOT basis. The governmentwould only provide common-user facilities like rail-road connectivity, adequate depth fornavigation etc. The terminal would facilitate shipment of container cargo directly to thedestination and is expected to give further boost to international trade.

The Nhava Sheva International Container Terminal (NSICT), a privately owned berth at theJawaharlal Nehru Port Trust (JNPT), has been doing exceedingly well in terms of turn overand productivity.

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preferably through private investment orpublic-private partnership.

IMPORTANT PROJECTS

9.1.62 To augment physical infrastructure,some port projects like the SethusamudramShip Canal Project and International ContainerTranshipment Terminal, Vellarpadam, Kochiwill be taken up on priority basis.

POLICY ISSUES

9.1.63 Hub ports: A hub port needs to beclose to the main shipping lines and adequatelyserviced by feeder ports. These ports need tohave deep drafted berths to attract large sizedmain line vessels, container handling facilitiesand storage space etc. JNPT on the west coastand Chennai Port on the east coast are beingdeveloped as hub ports. While these two areexpected to cater mainly to cargo originatingfrom or bound for India, the ICTT beingdeveloped at Kochi Port is expected to facilitateshipment of container cargo.

9.1.64 Corporatisation of major ports: Inorder to expedite the process of corporatisationof existing ports, the Major Port Trusts (MPT)(Amendment), Bill, 2005 will be introduced inParliament after Cabinet approval. TheDepartment of Shipping is in the process offinalising the Cabinet note.

9.1.65 Rationalisation of manning scales: Inorder to rationalise productivity norms, themanpower in the major ports will bereorganised in line with the recommendationsof the Labour Tribunal.

9.1.66 Introduction of Electronic DataInterchange: In order to improve efficiency/productivity of port operations, in the firstphase, the electronic data interchange (EDI)has been operationalised between containerhandling ports, customs, banks and port users.It is presently functioning at the Chennai,JNPT, Mumbai and Kochi Ports. In the secondphase, EDI will be implemented in all theremaining ports and for all the remaining cargosi.e. liquid and dry bulk.

9.1.67 Role of Tariff Authority for MajorPorts: The functioning/role of the TariffAuthority for Major Ports (TAMP) needs tobe revised so that uniform and transparentnorms prevail in matters relating to fixingtariffs as well as prescribing the quality ofservice for port authorities/terminal operators.This is necessary to ensure that the needs ofthe users of the facility are met and the facilityproviders are able to earn profits.

9.1.68 Central government funding ofcapital dredging: Indian ports lack adequatedepth in their entrance/approach channels andberths and are, therefore, not in a position toreceive and berth mainline/large size vessels.Indian industry is, therefore, denied the benefitsof economies of scale and reduction intransportation cost. Capital dredging in thevarious ports is, therefore, an inherent part oftheir development. Since such projects requirelarge investment, and may serve more thanone operator, they should be funded throughbudgetary support from the CentralGovernment.

9.1.69 Rail/road connectivity/improvementat ports: Adequate rail/road connectivity withports with the hinterlands is of crucialimportance and needs to be improved on apriority basis.

SHIPPING

9.1.70 Against the Tenth Plan outlay ofRs.6273.84 crore for shipping, an expenditureof Rs.1692 crore has been incurred during thefirst two years of the Plan. The Tenth Plantarget for tonnage acquisition programme is3.26 million gross tonnage (GT) with theacquisition of 156 vessels. However, there hasbeen slow progress on this front during thelast two years, mainly due to lack of fiscalincentives, difficulty in raising externalcommercial borrowings and prevailingdepressed market conditions. During 2002-03and 2003-04, the Shipping Corporation of India(SCI) could not achieve the acquisition targetsdue to the Union Government�s decision todisinvest its equity in the Corporation.

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9.1.71 The Government has introducedTonnage Tax for the Indian Shipping Industrywith an option for the shipping companies toopt for either Tonnage Tax or Corporate Taxfrom the year 2004-05. The introduction ofTonnage Tax will provide a level playing fieldto the Indian Shipping Industry with itsinternational counterparts. This will help toadd more tonnage to the Indian ShippingIndustry. The Indian Shipping Industry hasalready shown a path of recovery with increasein tonnage from 7.05 million GT on 1st June,2004 to 8.01 million GT on 1st April, 2005.

9.1.72 In order to meet the internationallyprevalent norms in Europe and elsewhere i.e.inspection of 25 per cent under Port StateControl flag ships and at least 50 per cent stateflag ships, the Director-General (Shipping)Office needs to be strengthened so that itperforms its functions properly.

INLAND WATER TRANSPORT

9.1.73 The Tenth Plan has laid emphasis onthe development of infrastructure facilities witha focus on the North-East region and privatesector participation so that the movement ofdomestic cargo is gradually shifted from therail and road modes to inland water transport(IWT). In addition, priority has to be given tothe development of existing national waterwaysand new national waterways will be declaredon a selective basis.

9.1.74 An outlay of Rs.864.73 crore (Rs.636.73crore as GBS and Rs.228 crore as IEBR) hasbeen approved for the Inland WaterwayAuthority of India (IWAI). The expenditureduring the first three years of the Plan isestimated at Rs.239.76 crore.

9.1.75 During the first two years of the Plan,Least Assured Depth (LAD) of 2 meters hasbeen provided between Haldia and Patna,Dhubri and Neamati in Assam and Kochi andAlapuzha. Night navigational facilities havebeen provided between Kolkata and Farakkaand between Dhubri and Jogighopa in Assam.In order to generate traffic, a fortnightly fixedschedule service has been started between Haldiaand Patna and between Dhubri and Pandu

(Guwahati). Terminals have been set up onthree national waterways and hardware formaintenance of navigational channels as wellas transport of cargo has been acquired.

CENTRALLY SPONSORED SCHEME FOR IWT

9.1.76 Under this scheme, states get Centralassistance for providing infrastructure facilitiesfor the development of waterways. The projectstaken up under this scheme includeconstruction of terminal facilities, capitaldredging, hydrographic survey etc. The fundingpattern of this scheme has been changed from5th November, 2002 and now 100 per centgrant is given to the north-eastern states,including Sikkim, and 90 per cent grant isprovided to other states. In the two years(2003-04 and 2004-05) 22 projects of 9 States atthe cost of Rs.73 crore has been sanctioned andRs.25.83 crore has been released to variousStates (Assam, Bihar, Himachal Pradesh, Kerala,Karnataka, Maharashtra, Madhya Pradesh,Orissa and West Bengal). The idea behindchanging the funding pattern was to engageStates in a big way for development of inlandwaterways other than National Waterways.

CIVIL AVIATION

9.1.77 The Tenth Plan has laid stress on theprovision of world-class infrastructure facilitiesfor efficient, safe and reliable air services. Makingprovisions for air services to remote andinaccessible areas has also been identified as apriority. Recognising that air transport is a fieldfor competitive development, the Tenth Planlays emphasis on private sector participation inthe development of air transport.


9.1.78 The bulk of expenditure in both AirIndia and Indian Airlines is due to repayment ofloans taken for acquiring aircraft. However, bothairlines have not acquired aircrafts for some timeand both are planning to do so. Indian Airlinesnow plans to acquire capacity equivalent to 43Airbus aircrafts. The Government has decidedto provide Rs.325 crores as additional equityinfusion in Indian Airlines during 2005-06 as amargin money for purchase of aircraft.

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9.1.79 There are considerable time and costoverruns in several projects taken up by theAirports Authority of India (AAI). This ispartly due to the unsatisfactory formulation ofprojects and partly due to projects being takenup without completing pre-constructionactivities such as land acquisition. Certain majorprojects and associated works at Delhi andMumbai airports were deferred because of plansto restructure airports by involving the privatesector and this also resulted in shortfall inexpenditure. There is a need for strengtheningof the monitoring system in order to reducetime and cost overruns.

OUTLAY AND EXPENDITURE

9.1.80 An outlay of Rs.12,928 crore � Rs.400crore as GBS and Rs.12,528 crore as IEBR �was provided in the Tenth Plan. However,only 31.6 per cent of this (Rs.3955 crore) isestimated to have been spent so far. Annexure9.1.10 indicates the organisation-wise details ofoutlay and expenditure (at current prices) forthe first three years of the Tenth Plan.

Box 9.1.6Committee on Infrastructure: Reinvigorating Civil Aviation Sector

The Committee on Infrastructure chaired by the Prime Minister is taking measures to addressthe various infrastructure constraints that the country faces. The Committee had a detaileddiscussion on various aspects of civil aviation sector on 10 December 2004 and it was agreedthat the Government should initiate policies that ensure time-bound creation of world-classairports and evolve a policy and regulatory framework for PPPs in order to maximise capitalinflows and efficiencies.

Keeping these requirements in view, the following major decisions were taken at the meeting:

� Draw up a civil aviation policy, keeping in mind the inter-modal role of the sector andthe long-term requirements of trade and tourism.

� Speed up modernisation of Delhi and Mumbai airports to enable them to handle growingpassenger and cargo traffic.

� Restructure Chennai and Kolkata airports on the lines of proposed restructuring of Delhiand Mumbai airports. Other airports need to be developed using the PPP approach.

� Prepare Model Concession Agreements to promote PPP in the development of airports.

� Revamp the Airport Authority of India with multi-disciplinary staff to meet the long-termgoals of the civil aviation sector.

� Set up a statutory regulatory body for economic regulation and dispute resolution.

The Committee on Infrastructure has set targets for meeting various objectives, which arebeing closely monitored.

GREENFIELD AIRPORTS

9.1.81 Two greenfield international airports,one each at Bangalore and Hyderabad, areproposed to be developed at a cost of Rs.1,328crore and Rs.1,394 crore respectively. Whilethe concerned state governments and the AAIwould contribute 13 per cent each towards theequity capital, the private sector will contribute74 per cent.

9.1.82 It is proposed to explore the possibilityof development of other airports, particularlythose with tourist potential, through the public-private partnership route.

POLICY ISSUES

9.1.83 Restructuring of metro airports:Restructuring of the metro airports is one ofthe major initiatives to be taken in the TenthPlan. A Bill for comprehensive amendments ofthe Airports Authority of India Act, 1994, hasalready been passed. With this, it would bepossible to involve the private sector in thedevelopment of metro airports. The

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modernisation of Delhi and Mumbai airportsis proposed to be taken up first.

9.1.84 Performance of regulatory agencies:The performance of India�s internationalairports compares poorly with world standards.With the restructuring of Delhi and Mumbaiairports, which handle the bulk of internationaltraffic, the infrastructure at these airports wouldimprove, leading to better performance. Theprocedures and unsatisfactory performance ofvarious regulatory agencies such as immigrationand customs is another reason for the poorperformance of Indian airports. Steps need tobe taken to streamline the procedures andimprove the efficiency of these regulatoryagencies through mechanisation/computerisation, particularly at theimmigration counters, and training of staff inorder to improve the overall performance ofairport users.

9.1.85 Civil Aviation Policy: The past policyhas stifled the growth of the civil aviationsector. The new policy needs to be formulatedkeeping in mind the role of the sector inpromoting tourism and trade as well as inter-modal considerations. Past policy of landingrights leaned heavily on Air India. However,since the airline lacked resources, thisconstricted the growth in capacity of traffic.The policy relating to provision of air servicesin the North-Eastern region, Jammu andKashmir, Andaman and Nicobar Islands andLakshadweep Islands through route dispersalguidelines also needs to be reviewed. A moreappropriate way to ensure reliable air servicesin these areas would be to provide direct subsidythrough minimum subsidy bidding process.

9.1.86 The Ministry of Civil Aviation hadconstituted a Committee under the

Chairmanship of Shri Naresh Chandra, formerCabinet Secretary, to prepare a roadmap forCivil Aviation Sector that will provide thebasis for a new National Civil Aviation Policy.The Committee had submitted its report intwo parts. The recommendations made in thesereports are being examined so as to formulatea comprehensive �National Civil AviationPolicy� which is likely to be finalised shortly.

9.1.87 Foreign direct investment: Foreigndirect investment (FDI) in airlines has beenraised to 49 per cent. However, foreign airlinesare still debarred from equity participation indomestic air transport operations. There is acase for reviewing this policy as operation ofairlines requires expertise as much as it doescapital.

9.1.88 Regulatory framework: Therestructuring of the Delhi and Mumbai airportsand establishment of two greenfield airports inthe private sector necessitates the setting up ofa regulatory authority, as airports are a naturalmonopoly. There is a need to establish astatutory regulator for economic regulationand dispute resolution.

9.1.89 Privatisation/disinvestments in AirIndia and Indian Airlines: In order to improvethe operational efficiency and financialperformance of Indian Airlines and Air India,a decision was taken to disinvest governmentequity in both these organisations. However,the process of disinvestment could not becompleted since the qualified bidders withdrewat the final stage due to a number of factors.The process of disinvestments could not beresumed in view of the unfavourablecircumstances prevailing in the global aviationindustry. A fresh exercise for restructuringIndian Airlines and Air India to make themcompetitive could be considered.

THE WAY FORWARD

RAILWAYS

� Implement an integrated modernisationplan by following a corridor approach.The Railways is saddled with old

technology and this is a major reasonfor freight traffic throughput being fourtimes lower than the Chinese railwaysystem. There is a need to modernisethe rolling stock, tracks, signallingsystem apart from introduction of

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information technology for increasingcustomer satisfaction. Themodernisation, particularly of theGolden Quadrilateral and its diagonals,would lead to 100 per cent increase inthe average speed of freight trainswhich, at present, is as low as 28 km.per hour.

� Rationalise the investment strategy.Future investment must be linked upwith augmentation of capacity andimprovement in the quality of services.An exercise for prioritisation of railwayprojects, particularly ongoing newrailway lines, should be taken up onyearly basis. The Railways, however,need to observe caution, whilesanctioning new projects, keeping inview financial viability and operationalessentiality in order to avoid furtherstress on scarce resources.

� Ministry of Railways may prepare apaper in consultation with the PlanningCommission on tariff settingmechanism including the need for aRail Tariff Authority. Meanwhile,Railways would move towards evolvinga fare structure, even if gradually, linkedto a rational indexing of the line-haulcost to the tariff.

� Carry out organisational reforms. Theelements could be:

Ø setting up a fully computerisedaccounting system to ensureconformity with internationallyaccepted accounting practices;

Ø making production units as profitcentres;

Ø giving uneconomic lines to theprivate sector on concession basis;and

Ø outsourcing non-core activities

� Encourage public-private partnership inthe development of high densitycorridors, introduction of tourist trains,additional goods trains between majorcommercial and industrial centres andbetween collieries and power stations.

� Allow competition in containermovement. Allowing more playersother than CONCOR is necessary forsmooth movement of container traffic.As the Ministry of Railways has alreadyannounced that organisations otherthan CONCOR will be considered forthe movement of container traffic, it isimportant that the Ministry evolvesthe policy framework expeditiously.

� Formulate a plan indicating a specifictime frame for augmenting capacity inspecific saturated routes to meet thegrowing requirements keeping in viewthe expected traffic growth . Some ofthese projects may be implemented byRVNL independently or through jointventures/PPP.

ROADS

� The Ministry of Shipping, RoadTransport & Highways (MoSRTH)should prepare a detailed programmefor the next two years keeping in viewthe level of budgetary support availableand the need for leveraging this to themaximum extent by adopting a propermix of engineering, procurement andconstruction (EPC) and BOT projects.

� MoSRT&H should preparemonitorable milestones and targets forthe proposed programme that includesSpecial Accelerated Road DevelopmentProgramme for North-East (NHDP-NE), NHDP- III (10,000 km on BOTbasis), NHDP-IV (for 20,000 km),NHDP-V (6-laning of 5,000 km),NHDP-VI (1,000 km expressways) andNHDP-VII (for ROBs, bypasses etc.).

� Evolve a Model Concession Agreementfor BOT project.

� Enhance the institutional capacity ofthe NHAI by making it a multi-disciplinary professional body with highquality financial management andcontract management expertise.

� A Committee of Secretaries (CoS) mustaddress inter-ministerial issues includingbottlenecks in ongoing projects.

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� Develop a system to collect and analyseinformation on traffic and inventoryassets condition etc.

� Draw up a Model ConcessionAgreement on the operation,maintenance and tolling of thecompleted stretches of the NHDP.

� Set up a dedicated organisation for roadsafety and traffic management.

� Enact a law for economic regulationand dispute resolution for public-privatepartnerships.

� Leverage the cess amount from CentralRoad Fund available for the PMGSYfor raising resources.

PORTS

� Increase the scope of private sectorparticipation in the development ofports. This would require revision ofguidelines and delegation of morepowers to the ports to increaseoperational efficiency. Thegovernment/public sector would needto step in to provide common userfacilities like capital dredging, wherenecessary.

� Implement organisational changes likecorporatisation in order to achieveefficient management, get institutionalfunding and attract private investment.

� Review the role of TAMP. This isnecessary since more private operatorsare coming up in ports.

� Improve productivity of major portsthrough upgrading technology.

� Rationalise manning scales to improvethe productivity.

� Preparing Perspective Plan for longterm development of each major port.

CIVIL AVIATION

� Formulate a civil aviation policykeeping in view the role of the sectorin the inter-modal context and thepromotion of trade and tourism.

� Speed up the modernisation of Delhiand Mumbai airports, as they handlethe bulk of air traffic.

� Draw up plans for the development ofall airports. Chennai and Kolkata mustbe restructured on the lines of theproposed restructuring of Delhi andMumbai airports.

� Prepare Model Concession Agreementsfor developments of airports in orderto promote PPP.

� Revamp the Airports Authority ofIndia with multi-disciplinary staff tomeet the long-term goals of the civilaviation sector.

� Set up a statutory regulatory body foreconomic regulation and disputeresolution.

� Consider permitting equityparticipation by foreign airlines in thedomestic air transport operations inorder to get the necessary expertise.

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