Strangling entrepreneurs at birth

Ever since the 1970’s when MSMEs began to slowly gain heft in the Indian economy, the biggest constrictor of manufacturing and growth, apart from the infamous Licence Permit Raj, was the lack of simple infrastructure.

So, every second day, Industry Associations would be at the doors, either of the State Electricity Board literally begging for uninterrupted power connections or before the State Industrial Corporations begging for uninterrupted water supply. Monsoon found the Associations begging the Industrial Development Corporations and Municipalities to repair the humongous pot-holed roads or beg BSNL or MTNL to restore telephone and internet connections.

Costly delay was so in-built into the system that often, the Associations simply went through the motions, utterly without hope and lacking any belief that things would ever change.

Actually, Industry Associations were so fooled into belief that this was the norm, that they were reduced to asking for concessions in power tariffs or sales tax rates or some sop for being left bereft in some D Zone area, which had even worse infrastructure, than the ones in or near the major urban centres. 

It is a tremendous testimony to the grit and patience of Indian entrepreneurs that they often survived and grew their industries in conditions which would have destroyed any other.

Change or revolution 

A 26th May 2018 article by Jyotika Sood and Utpal Bhaskar in livemint assesses some of the changes in 4 years of the Modi Government.

  • It has set in play a new integrated infrastructure programme, which involves building of roads, railways, waterways and airports.
  • India has been grappling with high logistics costs of 14% (as a percentage of cost of the product), which make exports uncompetitive vis-à-vis those of China, where logistics costs add up to just about 8-10%. The Centre is trying to leverage roads, railways and waterways to bring India’s logistics costs down to 8% to make the economy competitive. 
  • The road ministry under Nitin Gadkari took a raft of measures, including terminating projects, de-risking them and introducing the hybrid annuity model (HAM), wherein the Government provides 40% of the project cost to the developer to start work, while the remaining investment has to be made by the developer.
  • Ambitious projects such as Bharatmala for Roads pegged at a Rs. 10 trillion of investment and Sagarmala (Ports) at Rs.8 trillion of investment till 2015
  • India’s civil aviation market is growing at 19% over the last four years, and projected to be the third largest in the world by 2025, after the US and China. Over 70 un-served or under-served regional airports are being developed under the regional connectivity scheme with various concessions to airlines.

An article appearing in Business Today of June 13, 2018 says:

  • So far, the incumbent government has constructed a total of 28,531 km national highways since FY 2014-15, contrasting with 16,505 km by the previous government up to FY 2013-14, a clear gain of an astounding 12,026 kms, the Financial Express reported. That’s a whopping 73% increase.
  • Until May 2014, the construction rate of highways stood at 11.67 km per day. The current regime has steadily raised the construction rate to the present 26.9 km per day in FY 2017-18. For FY 2018-19, the MoRTH is set out to achieve a target of 45 km per day.  

The size and scale of what is happening in India is nothing short of spectacular. What is equally stunning is the near complete absence of hype and its calm acceptance by the general public, as if the scale and sweep of the changes is perfectly natural and normal.

MSMEs, business and industry in general are going to be the principal beneficiaries of this massive transformation in infrastructure.


Bharatmala Pariyojana is a centrally-sponsored and funded road and highways project of the Government of India. Speaking to the Lok Sabha on February 7, 2019 Road Transport Minister Nitin Gadkari spelt it out:

  • Bharatmala Pariyojanais an umbrella programme comprising 65,000 km of highways, out of which 24,800 km highways fall along economic corridors, inter corridors, feeder routes and border roads.
  • All these highways, along with 10,000 km residual National Highway Development Projects stretches have been envisaged for construction under Phase-I of thePariyojana over a period of five years from 2017-18 to 2021-22 for which  5,35,000 crores have been earmarked.
  • Already, 137 road projects having an aggregate length of about 6,530 kms have been awarded and are in various stages of implementation

The identification of the project stretches under the various components of Bharatmala has been done based on detailed O-D(Origin-Destination) study, freight flow projections and verification of the identified infrastructure gaps through geo mapping, using data from Bhaskaracharya Institute for Space Applications and Geo-Informatics (BISAG) as well as from other sources. This O-D study has also taken into account integration of economic corridors with the ongoing projects under NHDP and infrastructure asymmetry in major corridors.

The project will build highways from Gujarat, Rajasthan, Punjab, Haryana and then cover the entire string of Himalayan states – Jammu and Kashmir, Himachal Pradesh, Uttarakhand – and then portions of borders of Uttar Pradesh and Bihar alongside Terai, and move to West Bengal , Sikkim, Assam, Arunachal Pradesh, and right up to the Indo-Myanmar border in Manipur and Mizoram.

It is both enabler and beneficiary of other key Government of India schemes, such as Sagarmala, Dedicated Freight Corridors, Industrial corridors, UDAN-RCS, BharatNet, Digital India and Make in India.


  • The dedicated freight-only lines are being built by the Dedicated Freight Corridor Corporation of India Limited along the four key transportation routes – known as the Golden Quadrilateral and connecting Delhi, Mumbai, Chennai, Howrah and its two diagonals (Delhi – Chennai and Mumbai – Howrah). Covering a total of 10,122 km, these corridors carry the heaviest traffic and are highly congested.

The route carries 52% of passenger traffic and 58% of freight traffic, according to the Make-in-India report of 2017. 

  • Covering a distance of 1,856 km, Eastern Dedicated Freight Corridor will be divided into two segments: An electrified double-track segment of 1,409 km between Dankuni in West Bengal and Khurja in Uttar Pradesh and a single line segment of 447 km between Ludhiana – Khurja – Dadri.

The corridor will pass through Punjab, Haryana, Uttar Pradesh, Bihar, Jharkhand and West Bengal. This project is expected to benefit the transportation of coal for power plants, steel, food grains, finished steel and cement.

Along with the freight lines, logistics parks have also been planned in Kanpur and Ludhiana.

  • Western Dedicated Freight Corridor is a 1,504-km-long route — from JNPT to Dadri via Vadodara-Ahmedabad- Palanpur-Phulera- Rewari — Western DFC will pass through Haryana, Rajasthan, Gujarat, Maharashtra and Uttar Pradesh. It is proposed to join the Eastern Corridor at Dadri.

This corridor also facilitates transportation of fertilisers, food grains, iron and steel and cement, among other commodities. There are plans to set up Logistics Parks on the outskirts of Mumbai, especially near Kalyan-Ulhasnagar area or Vashi-Belapur.

Additionally, other parks have been proposed in Vapi, Ahmedabad and Gandhidham in Gujarat, Jaipur and Delhi-National Capital Region.

  • These lines are being built to maximise speeds up to 100 km an hour, up from the current average freight speed of 20 km an hour. 
  • The dedicated Freight corridor envisages long-haul operations with trailing loadsincreasing from 5,000 to 15,000 tonnes and container capacity will go up to 400 per train. The DFCs are likely to slash transit time from freight source to destination by 50% or more in some cases.
  • The work on the mega project having two — eastern and western —dedicated freight corridors is going on and 99 per cent of land acquisition has been completed according to Anurag Sachan, MD of the Dedicated Freight Corridor Corporation of India.
  • Freight traffic from Gujarat ports will be shifted to dedicated freight corridor after September 2019, with the completion of works on the Dadri (Uttar Pradesh) to Palanpur stretch. When the work till Palanpur will be completed by September 2019, freight from ports like Mundra will be shifted to the dedicated corridor and the entire traffic of ports will move through the corridor.
  • Trial runs have already been completed on the 194 Km section from Bhadan to Khurja (Uttar Pradesh) of the Eastern Dedicated Freight Corridor (EDFC) in November 2018 and on 306-km long section in the first phase of the western corridor on Madar – New Rewari – Krishnagar Balawas (Haryana) stretch. This section is provided with 9 newly built freight stations consisting of six crossing stations and three Junction stations. 
  • After the commissioning of the project by 2020, nearly 400 million tons of goods will move through the corridor which will reduce the time of transportation and enhance the punctuality of passenger trains as the goods train will run on the dedicated lines.
  • Not only the Railway’s goods trains, private operators would also be allowed to operate their rolling stock on the paths in the dedicated freight corridor.


Reviving our maritime legacy

The concept of Sagarmala was approved by the Union Cabinet on 25th March 2015 to   harness India’s 7,500 km long coastline, 14,500 km of potentially navigable waterways and strategic location on key international maritime trade routes, to promote port-led development in the country.

Sagarmala is a very evocative name because the string of ports on the coast of Peninsular India if knit together would make a very fine Ocean Necklace.

Exploiting coastal & inland waterways for economic transportation

India is one of the fastest growing large economies in the world with a GDP growth rate upwards of 7% and ports play an important role in the overall economic development of the country. Approximately 95 % of India’s merchandise trade (by volume) passes through sea ports.

Many ports in India are evolving into specialized centres of economic activities and services and are vital to sustain future economic growth of the country such as JNPT, Mundra Port, Sikka Port, Hazira Port etc.

Secondly, last mile connectivity to the ports is one of the major constraints in smooth movement of cargo to/from the hinterland. Around 87% of Indian freight uses either road or rail for transportation of goods. 

Although water-borne transport is much safer, cheaper and cleaner, compared to other modes of transportation, it accounts for less than 6% of India’s modal split.

By comparison, coastal and inland water transportation contribute to 47% of China’s freight modal mix, while in Japan and US, this share is 34% and 12.4% respectively. Significant savings can be achieved by shifting movement of industrial commodities like coal, iron ore, cement and steel to coastal and inland waterways.

Mode of



Cost (Rs/Ton-Km

Road 2.00 – 3.00
Rail 1.20 – 1.50
Waterways 0.20 – 0.30
Pipeline 0.10 – 0.15

It will be clear from the above table that significant savings can be achieved by shifting movement of industrial commodities like coal, iron ore, cement and steel to coastal and inland waterways.However, more than 90% of coal currently moves via railways

Where does it stand?

According to the Business Standard of 18-9-2018 about 20% of the Sagarmala Projects have been completed since it was launched on March 25, 2015.

It envisaged projects worth Rs 8.7 trillion that would connect 600 ports. The 80-odd projects completed till now are already valued at Rs 140 billion. Another 212 projects worth Rs 2.5 trillion are still under way.

There are 12 major ports in India: Kandla, Mumbai, Jawaharlal Nehru Port Trust, Mormugao, New Mangalore, Cochin, Chennai, Ennore, V O Chidambaranar, Visakhapatnam, Paradip, and Kolkata (including Haldia). The project has also identified 1,208 islands for development.

The 12 government-owned ports can handle 1,359 million tonnes (MT) cargo per year. They handled only 679.35 MT until March 2018, which meant a capacity utilisation rate of just 50 per cent. Cargo capacity in India rose to 2,493.1 MT in 2016/17 from 1,806.8 MT in 2014/15. The target is 3,130 MT by 2020.

Experts say more than creating new capacities, the need of the hour is to establish multimodal connectivity and increase capacities at existing ports. Though many ports have added new terminals, global trade is languishing and the private sector’s is not showing much interest in PPP projects.

 Indian vessels are 39 per cent more expensive than the non-Indian vessels. Shipping industry and coastal shipping need to be incentivised through lower cargo tariffs. One option could be ensuring better rail-road-sea connectivity as the model of unified cargo movement is an emerging trend worldwide.

That is why the Sagarmala plan includes 39 road projects to improve connectivity between major ports and highways. Once dedicated freight corridors start, cargo volumes are bound to rise, say experts. In the meantime, once can’t expect a dramatic turnaround. The 2018/19 budgetary support for the project is a mere Rs.600 crore, peanuts!


The scene at the end of the flight 2040!

India may have 190-200 operational airports, of which three each will be in Delhi and Mumbai, and air passenger traffic is expected to grow six-fold to 1.1 billion per year by 2040, says the ‘Vision 2040’ report released at the Global Aviation Summit 2019.

The Indian commercial air fleet is expected to be 2,359 by March 2040, says the report prepared by consultancy firm KPMG and industry body Federation of Indian Chambers of Commerce and Industry.

To get there India may need to investup to $2 billion for low traffic airports, excluding land acquisition costs. The reportalso recommends a strong leasing industry for financing of aircraft and maintenance, repair and overhaul to be established in India to prevent domestic airlines from going abroad for the facilities.

The report was prepared in consultation with the Government though not commissioned by it. The Government will deliberate on the suggestions and take a call on which ones to implement.

Cut to the present

India’s aviation sector is something of a paradox. It is the fastest growing aviation market in the world, with domestic passenger numbers clocking 18 percent growth in 2018. On the other, there is the perennially loss-making nature of airline companies, the colossal failure of a regional connectivity scheme and massive debts of airport operators. 

Passengertraffic grew at 16.52 per cent year on year to reach 308.75 million in FY18. It grew at a CAGR of 12.72 per cent during FY06-FY18.

Domestic passenger traffic grew YoY by 18.28 per cent to reach 243 million in FY18 and is expected to become 293.28 million in FY20E. International passenger traffic grew YoY by 10.43 per cent to reach 65.48 million in FY18 and traffic is expected to become 76 million in FY20.

In FY18, domestic freight traffic stood at 1,213.06 million tonnes, while international freight traffic was at 2,143.97 million tonnes.

Some major initiatives undertaken by the Government are:

  • In February 2018, the Prime Minister of India launched the construction of Navi Mumbai airport which is expected to be built at a cost of US$ 2.58 billion. The first phase of the airport will be completed by end of 2019.
  • The Government of Andhra Pradesh is to develop Greenfield airports in six cities-Nizamabad, Nellore, Kurnool, Ramagundam, Tadepalligudem and Kothagudem under the PPP model.
  • Regional Connectivity Scheme (RCS) has been launched under the policy
  • In September 2018, Jharsuguda Airport in Odisha and Pakyong Airport in Sikkim were inaugurated. Pakyong airport is Sikkim’s first ever airport and AAI’s first Greenfield airport construction.
  • In December 2018, Kannur International Airport was inaugurated making Kerala the only state in India to have four international airports.

India’s aviation industry is largely untapped with huge growth opportunities, considering that air transport is still expensive for majority of the country’s population, of which nearly 40 per cent is the upwardly mobile middle class. 

Currently at seventh position in the aviation market, India is all set to be among top three aviation market by 2024 according to International Air Transport Association (IATA).


The utility electricity sector in India has one National Grid with an installed capacity of 350.162 GW as on 28 February 2019.Renewable power plants constituted 15.3% of total installed capacity. India is the world’s third largest producer and third largest consumer of electricity.

Total Installed Capacity (As on 28.02.2019) – Source: Central Electricity Authority (CEA)     

Sector MW % of Total
State Sector 84,637 24.2%
Central Sector 104,039 29.7%
Private Sector 161,487 46.1%
Total 3,50,162
Fuel MW % of Total
Total Thermal 2,22,927 63.7%
                                             Coal 1,91,093 54.6%
                                             Lignite 6,260 1.8%
                                             Gas 24,937 7.1%
                                             Oil 638 0.2%
Hydro (Renewable) 45,399 13.0%
Nuclear 6,780 1.9%
RES* (MNRE) 74,082 21.2%
Total 350,162


* Installed capacity in respect of RES (MNRE) as on 31.01.2019.

RES (Renewable Energy Sources) include Small Hydro Project, Biomass Gasifier, Biomass Power, Urban & Industrial Waste Power, Solar and Wind Energy.

What’s happened in the last 4 years

  • India’s rank jumped to 24 in 2018 from 137 in 2014 on World Bank’s Ease of doing business – “Getting Electricity” ranking.
  • Energy deficit reduced to 0.6 per cent in FY19 from 4.2 per cent in FY14.
  • As of April 28, 2018, 100 per cent village electrification achieved under Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY).

Power supply position in the country during 2009-10 to 2018-19

  Energy Peak
Year Requirement Availability Surplus(+)/Deficts(-) Peak Demand Peak Met Surplus(+) / Deficts(-)
(MU) (MU) (MU) (%) (MW) (MW) (MW) (%)
2009-10 8,30,594 7,46,644 -83,950 -10.1 1,19,166 1,04,009 -15,157 -12.7
2010-11 8,61,591 7,88,355 -73,236 -8.5 1,22,287 1,10,256 -12,031 -9.8
2011-12 9,37,199 8,57,886 -79,313 -8.5 1,30,006 1,16,191 -13,815 -10.6
2012-13 9,95,557 9,08,652 -86,905 -8.7 1,35,453 1,23,294 -12,159 -9.0
2013-14 10,02,257 9,59,829 -42,428 -4.2 1,35,918 1,29,815 -6,103 -4.5
2014-15 10,68,923 10,30,785 -38,138 -3.6 1,48,166 1,41,160 -7,006 -4.7
2015-16 11,14,408 10,90,850 -23,558 -2.1 1,53,366 1,48,463 -4,903 -3.2
2016-17  11,42,929 11,35,334 -7,595 -0.7 1,59,542 1,56,934 -2,608 -1.6
2017-18 12,12,134 12,03,567 -8,567 -0.7 1,64,066 1,60,752 -3,314 -2.0
2018-19* 10,65,900 11,59,014 -6,886 -0.6 1,77,022 1,75,528 -1,494 -0.8

 The Road Ahead

The Government of India has released its roadmap to achieve 175 GW capacity in renewable energy by 2022, which includes 100 GW of solar power and 60 GW of wind power. The Union Government of India is preparing a ‘rent a roof’ policy for supporting its target of generating 40 gigawatts (GW) of power through solar rooftop projects by 2022.Coal-based power generation capacity in India, which currently stands at 190.29GW is expected to reach 330-441 GW by 2040.

India could become the world’s first country to use LEDs for all lighting needs by 2019, thereby saving Rs 40,000 crore (US$ 6.23 billion) on an annual basis.

All the states and union territories of India are on board to fulfil the Government of India’s vision of ensuring 24×7 affordable and quality power for all by March 2019, as per the Ministry of Power and New & Renewable Energy, Government of India. (Source


On 25 October 2011 the Government of India approved the “National Optical Fibre Network” (NOFN) initiative, later renamed as BharatNet, to connect all 250,000 Gram panchayats in the country covering nearly 625,000 villages. 

To achieve this, Bharat Broadband Network was incorporated as a Special Purpose Vehicle(SPV) on 25 February 2012 under Companies Act of 1956. 

Between 2011 and 2014, project did not take off as planned, and only 350 km of optical fiber, out of 300,000 km optical fiber network needed for the phase-I, was laid. Between 2014 and 2017, the original phase-I target of laying 300,000 km of optical fibre was completed.

The Gameplan

The project picked up pace under the Digital India initiative of the Modi Government. It was not only re-named BharatNet but ambitious time-bound implementation guidelines were set. Several public sector organisations such as BSNL, RailTel and PowerGrid Corp were onboarded to monitor, implement and also enable the bypassing of right-of-way issues for laying fibre optical cable network on existing Government owned roads, rail lines and power lines. In effect the network rollout was parcelled out to them.

BharatNet also collaborated with C-DOT, Telecommunications Consultants India Limited and National Informatics Centre for the design and rollout plan.

Broadly the scheme was, the Union Government would provide broadband connectivity at sub-district Block level. The State Government would take it to gram panchayat level and private sector companies would provide last mile connectivity to all villagesby expanding the current national network of 38,000 Wi-Fi hotspots to 700,000 Wi-Fi hotspots to cover all 625,000 villages in India.

Both the optical fiber and the Gigabit-capable passive optical network broadband equipment, designed for dusty conditions and power outage issues in the rural areas, are made in India by C-DOT with no involvement of foreign companies

Commercial operators Reliance Jio, Bharti Airtel, Idea Cellular and Vodafone have already connected their 4G-based-broadband base towers to BharatNet at various locations to provide the high speed last mile wireless broadband connectivity.

What’s done and what remains to be done

BharatNet Phase-I, unrolled across 13 states and Union Territories [Andaman and Nicobar Islands, Chandigarh, Delhi, Goa, Haryana, Karnataka, Kerala, Lakshadweep, Manipur, Meghalaya, Puducherry, Sikkim and West Bengal]was completed in December 2017 with the Central Government funding share of  US$1.6 billion. It connected 100,000 Gram panchayat, covering 300,000 villages by laying 300,000 km of optical fiber network.

BharatNet Phase-II was slated for completion by 31 March 2019 to connect the remaining nearly 145,000-gram panchayats covering 325,000 villages through additional 1 million km of optical fibre. 

Phase-II commenced with the CentralGovernment funding share of US$5.0 billion, with the earlier 250 km per day pace of optical fiber network roll out needing to be raised to 500 km per day to achieve the completion target of March 2019. 

 Phase-II will double the total optical fiber network of the nation.

Overall Project Status as on 1st Apr. 2019

  • Length of Optical Fibre Cable laid: 3,20,648 Kms
  • No. of Gram Panchayats where Optical Fibre Cable Laid: 1,25,722 GPs
  • Gram Panchayats to which OFC connected & equipment installed: 1,17,903 GPs
  • No of Gram Panchayats Service commissioned on Satellite: 616 GPs


It is one of the features of this Government that while its achievements in virtually every field are being questioned and the debate is sharply polarised, in one area, at least, there is near unanimity. That is infrastructure, particularly roads and highways.

While credit for this must certainly go to Nitin Gadkari, who handles a connected but very unwieldy number of Ministries very capably, an equal or greater credit must go for the Government’s holistic vision which sees highways, dams, bridges, ports, inland water ways, roads, dedicated freight corridors, fishermen, smart cities, farmers and industries as part of one seamless whole to be knit together by a web of high- speed, low -cost transport and a digital communications spine.

The performance, as in Sagarmala may not be very re-assuring. There is great scope for the performance to be much closer to the promise. But no one can quarrel with the vision and the effort. Full marks for trying.

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