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'Infrastructure sector turns out a mixed performance' - Economic Survey - Views on News from Equitymaster
 
 
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  • Feb 29, 2000

    'Infrastructure sector turns out a mixed performance' - Economic Survey

    The Economic Survey states that ' provision of quality infrastructure services at reasonable cost, is a necessary condition for achieving sustained economic growth.'

    The performance of the domestic infrastructure sector speaks for itself:

      April - December YoY change
      Units 1998 1999 (%)
    Coal production m tonnes 207 206 (0.5)
    Electricity generation bn Kwh 331 355 7.4
      Hydro
    bn Kwh 65 63 (2.2)
      Thermal
    bn Kwh 266 292 9.7
    Petroleum        
      Crude
    m tonnes 24 24 (0.4)
      Refinery throughput
    m tonnes 47 57 21.9
    Cement m tonnes 63 73 16.0
    Railway revenue earning goods traffic m tonnes 306 331 8.0
    Cargo handled at major ports m tonnes 184 201 9.2
    New telephone connections provided 000 nos 1,650 2,200 33.4
    Finished steel* m tonnes 15 17 11.7
    * - April to November

    The above table clearly highlights that the performance of those sectors that are predominantly government owned has lagged that of those that are not. Take for example, cement and steel. Both these sectors have rebounded from the slump witnessed in FY98 and FY99. However, coal production and electricity generation continue to post sluggish rates of growth, if at all.

    While crude output, which is dominated by government control companies, declined during the first nine months of the current year, the refinery output surged. This was mainly due to the commissioning of Reliance Petroleum and the new expanded capacity at Mangalore refinery and Petrochemicals Limited (MRPL). The decline in crude output comes at a time when international crude prices have surged. This has created pressures on India's trade balance.

    With the economic activity picking up, both railways and ports have witnessed increased cargo traffic. However, it needs to be pointed out that the railways are infact likely to miss the annual freight target by a wide margin. Telephone connections have surged during the year. This is mainly due to the increasing popularity of cellular phones and the rolling out of private sector basic telephony services.

    The statement in the Economic Survey needs to be taken seriously. All efforts must be made to improve the quality of the domestic infrastructure. As a first step, the government must cease or limit its operations in areas where it has no competence. Increasingly, all sectors should be de-reserved so as to permit private sector participation. Such measures would raise resources for the government (as holdings are divested) and also help in improving the overall efficiency levels in the economy. Both these measures will go a long way in improving the domestic economic environment.

    Source: Economic Survey 2000, Ministry of Finance

     

     

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