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Q1 Discuss 5 Infrastructure areas in which China is ahead of India.

A1:- As China is to manufacturing, India is to services. That’s an over-simplification


but it is the key conclusion .Manufacturing prowess is typically the yardstick that is
used to measure the prosperity of emerging nations. As seen from that standpoint,
there’s no comparison. China has plowed its huge reservoir of domestic saving —
about 40% of GDP — into some of the best infrastructure you will see anywhere in
the world. And it has been brilliant in attracting massive inflows of foreign direct
investment as the means to acquire technology, managerial expertise, and factories
on a scale and with scope that is hard to believe. China has, in fact, leapt to the fore
as the largest recipient of FDI in the world — some US$53 billion per year in 2002-03.
India suffers in comparison basically from having none of the above. That’s an
exaggeration but not all that wide of the mark. India has a 24% national saving rate,
only a little more than half that of China. As a result, it has far less in the way of
internally-generated funds available to plow back into infrastructure. And it doesn’t
take much traveling around in India to experience first-hand the seriousness of its
infrastructure constraint.

The India Infrastructure Report 2004, put out by the 3iNetwork of India’s best and
brightest engaged in this field, says it all, “…even relative to our income, our failure
in water, roads, sanitation, schooling, and electricity is woeful.” Nor can India hold a
candle to China on FDI. China’s inflows in 2003 were more than ten times the US$4
billion that went into India. But that’s not the lens through which India should be
viewed, in my opinion. India’s strength is elsewhere —namely, in an extraordinary
stock of human capital. And it has deployed that strength into the creation of world
class IT-enabled service companies such as Infosys and Wipro and the service
subsidiaries of large conglomerates such as Reliance and Tata. I spent time with each
of these companies and was staggered by what they had accomplished in the
relatively short time span of the past 10-20 years. The push into IT-enabled services
sidesteps what I believe are India’s greatest impediments on the road to
development — its infrastructure and FDI deficiencies. Self-sufficient in electrical
power — all big companies have back-up generating capacity — the only
infrastructure

Some Infrastructure comparative Facts.


The indicators of modernization are as follows: and how comparatively the two
countries score over each other.

(a) percentage of population with access to improved water sources (as defined by
the World Bank)
(b) percentage of urban population with access to improved sanitation
Fact
Water and sanitation facilities in India are being modernized at a satisfactory
rate. Access to modern water supply and urban sanitation facilities in India is better
than that in China and improving at a faster rate. The gap between India and the
developed countries in this sphere is also narrowing

(c) number of internet users


(d) personal computers per 1000 people
Fact
Despite the much heralded information technology boom in
India the rate of growth of computer infrastructure and computer literacy has lagged
behind the Chinese rate of growth in the last five years. Nevertheless, the gap
between India and the developed world has narrowed.
(e) commercial energy use per capita and
(f) electricity consumption per capita.
Fact
Mechanization shows a similar trend to computerization.
Thus, while India has done well in terms of modern infrastructure that affect living
conditions
the same cannot be said of productivity enhancing infrastructure.

India has total of 28 million cellular users as of the end of 2003 and 18 million new
users were added in 2003. China has total of 270 million cellular users as of the end
of 2003 and around 60 million new users were added in the same year.

Internet users in India: More than 16 million: see: Internet users in China: 78million.

Broadband users in China:17.4 million. see: Boroadband users in India: Quiet Low

Less than 28 million tons of iron and steel was used in 2003 in India (An important
index of infrastructure construction. This is the total India produced in 2003, and
India is a net iron & steel exporter)(This is even less than what China produced in
1978 when China began its reform)
China produced around 225 million tons of iron and steel and imported other 35
million tons in 2003 for the construction.

55% of the world cement (Another infrastructure construction index) was used in
China.

China's expressway (at least 4 lanes, speed limit 100KM/hour or 120KM/hour)


reaches 30, 000KM. Around 4, 600 KM is being added each year. India just began its
first expressway project in 2003:

India produced around 36 million tons of oil (A natural resource index) in 2003 and
will face the resource problem soon.
China produced 160 million tons of oil in 2003 and imported more than 100 million
tons in the same year.

Q2:- Can You Enumerate the Critical steps in making infrastructure


leadership a strategy for sustainable development of India

A2:- India initiated an ambitious reform programme, involving a shift from a


controlled to an open market economy showing signs of overheating because of
basic infrastructure constraints, both physical and human. So far, the bulk of
infrastructure was in the public sector. Public sector in India operating in a protected
set up has been largely subsidised by the Government. Since the launching of
reform, Government
is trying to reduce its borrowing which means that further subsidization will not be
possible. There is one area where there is a need for private sector and foreign
investment to come in. Because of the long gestation period, and many social
implications, the infrastructure sector compares unfavorably with manufacturing and
many other sectors. For this, specific policies in this area are need to make
infrastructure attractive. Clearly, there is a wide gap between the potential demand
for infrastructure for high growth and the available supply. This is the challenge
placed before the economy, i.e. before the public and private sector and foreign
investors. This can also be seen as an opportunity for a widening market and
enhanced production
The six core and infrastructure industries, viz., electricity, crude oil, petroleum
refinery products, coal, steel and cement, having a weight of 26.7 per cent in overall
Index of Industrial Production (IIP) achieved 6.8 per cent during 2000-01. Several
fiscal incentives were announced by the government for boosting investment in
infrastructure projects. Ten-year tax holiday offered to projects in core sectors like
roads, highways, waterways, water supply, sanitation and solid waste management
systems can now be availed of during the initial 20 years. Projects in airports, ports,
inland ports, industrial parks and generation and distribution of power can now avail
of 10-year tax holidays during the initial 15 years

The Critical Steps:-


A-A Strong Government with Clear direction
"Once committed to a focus on economic growth, some good policy decisions were
implemented quickly and efficiently While India's corporate leaders agree that this
could be true, they are emphatic that India's vibrant democracy is the only way for
the country to ensure that growth and development reaches all.
There is chaos in it and sometimes policy decisions tend to be reversed. But
ultimately India's democracy is essential for the country's welfare,

But come what may any party Govt. may come or go but the direction of
development of Infrastructure may not be altered.

B- A consistent and thoughtful marketing effort

We need to sell India. A USP is what is needed.

India's corporate leaders agree that the country's politicians have never sold the
country.

Much of the investment flowing into the country today is on the back of India's
reputation as a place for skilled people who have proven themselves in the
information technology services sector.

C-Bringing in the Money (FDI and Private Participation)


. The importance of infrastructure sector also follows from the fact that foreign
investors are now looking at infrastructural development as a yardstick for directing
their investments. In fact infrastructural development had taken precedence over
wage levels in assessing the investment potential in developing countries. In India
infrastructure sector itself is becoming an attractive investment area for FDIs.
Already there is a huge demand for funds from the manufacturing sector. On top of
that is the demand from the infrastructure sector. Both draw heavily from the savings
of the household sector. The growth of financial savings of household sector however
is not rising fast. In this context, the importance of increased obligation of domestic
saving needs underscoring.
According to the India infrastructure Report (IIR), currently 5.5 percent of the GDP is
invested in the infrastructure sector. This needs to be increased to 7 percent within
the next three years and 8 per cent by 2005-06, by which time the annual level of
investment in infrastructural facilities is projected to treble or rise even more, from
the current level of Rs. 6000 billion (US$52 billion) by 2005-2006.
The total infrastructure investment requirements for the next five years again have
been estimated in the report at about Rs. 4000-4500 billion (US$ 115-130 billion).

The task of finding such large amounts and thereafter deploying them productively
calls for a close partnership between the public and private sectors, with a vital role
reserved for foreign capital. To finance this large short fall, the domestic saving rate
needs to be increased by a minimum of 26.7%. besides this has to be supplemented
at the margin by FDI. However, this "margin is indeed very important since the role of
foreign investment has to be read not only as a gap

D- Creation of zones and infrastructure for businesses


India has tried to do this with its creation of export processing zones and software
technology parks.
But the problem lies in some key areas like creation of infrastructure and quick
approval of investment proposals.
More needs o be done
E-. The business-above-all attitude
"In India, trade and economic growth have never been paramount. That has to
change if we need to be a developed economy by 2020
India's economic growth has always given in to the sentiments of the local industry;
like in cases where foreign investments have been. curbed or restricted.
Provincial and local governments control the vast majority of capital-hungry
enterprises, and that creates an unsolvable collusion between regulators and the
state's ownership interests. This is arguably advantageous in the early, low-tech
stages of infrastructure and commercial development, but for the future its impact is
likely to be less positive

Indian Interests have always to be kept in mind while we do our interactions with the
other dwellings of mother earth.

Conclusion:- With this a belief that we can infact be business leaders and a
developed country of the world is what can lead us to a strong nation and lead us to
sustainable development.

Q3:- Project and identify 5 Policy Intervention strategies that can be put in
place in India. One in each for
A) Power
B) Transport
C) Fiscal
D) Communication
E) Agriculture
To make these a Robust & growth oriented

Ans-

 Power

Privatise Distribution
Privatisation of distribution has a couple of advantages. First, the company will invest
in some modern equipment. Second, they will ensure that 100 per cent metering is
done and everything is billed. They will also ensure revenue collection. These things
will be better taken care of by private parties.
But initially, there will be resistance. For example, in Delhi, they have got two
agencies operating. They were bold enough to come into the sector but it takes time
to come out of the age-old attitudes.
This way the Governments also would not be able to go for free power etc. and if they
will have they will have to pay it from their budget allocation.

 Transport

Total Policy focus on this with chalking up a plan (like the Golden
Quadrangle) in terms of the following:-
 Railways.
 Roads
 Ports
 Air
Four major problems that need to be addressed through policy and institutional
reforms: 1) Unclear or overlapping responsibilities; 2) Inadequate resource
mobilization; 3) poor asset/system management and 4) Inadequate accountability for
service outcomes. A suggested way forward is through improved public sector
performance and accountability, increased private sector participation and
investment, improving customer-responsiveness of the core rail business services,
focusing a much larger share of the capital budget on economic priority investments
etc.

 Communication

The telecom sector is going great guns. Not much has been done wrong on
that front
Internet In spite of frequent claims that the Internet will erode national sovereignty,
government interest and support is seen to be important both directly and indirectly
through its influence on the other factors. Both governments are now committed to
the Internet, and we examine changing government roles, primarily the adoption of
an ambitious Action Plan in India and the consolidation of two key ministries in China.
The Indian Action Plan addresses each of our six dimensions, and is designed to
elevate India to the level of information technology (IT) superpower. The impact of
Chinese consolidation is less clear, but will also be important in determining the
future of the Internet there. We conclude with a discussion of sources of uncertainty.
India has total of 28 million cellular users as of the end of 2003 and 18 million new
users were added in 2003. China has total of 270 million cellular users as of the end
of 2003 and around 60 million new users were added in the same year.

Internet users in India: More than 16 million: see: Internet users in China: 78million.

Broadband users in China:17.4 million. see: Boroadband users in India: Quiet Low
 Agriculture:-

Creation of strong markets for Agri produce


And creation of Processing/Transport/and Preservance.

The infrastructure requirements of the agriculture sector are many and varied. India
needs good roads that would allow sufficiently large trucks for speedy and bulk
movement of agricultural produce before it turns bad. It needs large cold storage
plants, modern drying facilities and communication facilities.

Traditionally, India has been an agricultural economy and even today agricultural
sector accounts for one third of GDP as well as one third of the work force. Successive
governments have realized the importance of agriculture to India and initiatives have
been taken for the growth of this sector.