1.

INTRODUCTION

1.1 MEANING OF INFRASTRUCTURE

India has a large and fairly well developed infrastructure framework extending to all parts of the country. However, certain areas like power, telecommunications, transport etc. need further expansion and modernization. And, the public sector alone can no longer fully finance the requirements. The 1998-99 Budget announced by the BJP government has given a major thrust to infrastructure development, particularly in energy and power, transport and communications, by stepping up public expenditure in these sectors. This increased government spending on infrastructure is expected to boost India's sluggish economy. The lack of a clear policy frame work for private sector participation has hampered the badly-needed infrastructure development, particularly in telecommunications, power, roads and ports. The public sector, which led the investment in infrastructure development until recently, has reduced its investments considerably, due primarily to its poor fiscal position. Government-owned capital goods that provide services to the public, usually with benefits to the community at large as well as to the direct user. Examples include schools, roads, bridges, dams, harbors, and public buildings. Typically, infrastructure in the urban context denotes two general groups of support systems: transportation modalities (roads, rail, etc.) and utilities. These typically compose both public and private systems, and some ambiguously held in common. Infrastructure may also refer to necessary municipal or public services, whether provided by the government or by private companies. If provided by nature, e.g. the flow of a river, they are called nature's services and are distinct (at least in economics) as the product of natural capital. This may be augmented or directed by infrastructural capital, e.g. a dam or canal or irrigation ditch. In general what is called infrastructure tends to be much embedded in the natural landscape and cannot be moved from place to place. Even municipal services rely necessarily on fixed locations, e.g. fire stations in central positions in a city, radio towers on tall buildings, etc. Infrastructure (in the civic sense) includes: Transport o Roads o Highways o Railroads o Public transport o Airports o Ship transport such as ferry and barge o Bike paths

o Sidewalks Public utilities o Electricity o Natural gas o Water supply o Radio and television bandwidth allocation

Public services o o o o o o o Fire service or fire department Flood protection Police protection Waste management National Services Defense Postal system

"Soft Infrastructure" is a term that denotes institutions that maintain the health and cultural standards of the population. Principally, this refers to o o o o o Public education Public health systems including public hospitals Health systems Public libraries Social welfare

In macro-economics the term "infrastructure" usually refers to the added-value of a nationstate relative to the raw natural capital of its eco regions, e.g. dams, roads, ports, canals, sewers, border posts, etc. - although it can also be used to describe firm-specific infrastructure such as factories, private roads, capital equipment, and other such assets.

1.2 RBIs Definition of 'infrastructure' for the purpose of financing

A sum total of all those activities undertaken in the financing of infrastructure development are known as infrastructure financing. According to RBI, infrastructure financing refers to any credit facility extended by banks and financial institutions for developing, operating & maintaining any infrastructure facility. Now as per RBI, definition of infrastructure would include sectors, such as, power, roads, highways, bridges, ports, airports, rail system, water supply, irrigation, sanitation and sewerage system, housing, telecommunication, industrial

park or any other public facility of a similar nature as may be notified by CBDT in the Gazette from time to time.