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Resolving gas price issue, power crisis key focus of govt

February 27, 2015 13:15 IST

The Index of Industrial production (IIP) suggests that industrial sector is recovering slowly with a 2.1 per cent in April - December 2014-15 over the 0.1 per cent in the same period last year.

The Economic Survey presented by the Finance Minister Arun Jaitely in the Lok Sabha today says that the recovery is led by the infrastructure sectors namely electricity, coal and cement.

Mining sector growth has turned positive while manufacturing growth continues to remain tepid, registering growth of 1.2 % in April – December 2014-15.

The Survey observes that the low growth in manufacturing is mainly due to high rate of interest, infrastructure bottlenecks, and low domestic and external demand.

The Economic Survey 2014-15 points out that the latest Gross Domestic Products estimates, based on new methodology and with 2011-12 as a base year, points towards industrial recovery which is in contrast to earlier perception about slow industrial growth during the last three years.

To improve industrial growth, the Economic Survey says that the new Government has emphasized on rapidly improving ease of doing business, skill development and launching fresh initiatives like Make in India and Digital India, creating National Industrial Corridors Authority streamlining environment and forest clearances and labour reforms.

To overcome critical constraints, holding up use of land and natural resources, the Government has taken actions to remove regulatory uncertainty by passing Ordinances to streamline land acquisition, e-auction of coal blocks for private companies and auction of iron ore and other new coal mines.

In infrastructure, the Survey mentions that the focus of the Government has been on resolving long pending issues like pricing of gas, establishing processes and procedures for transparent auction of coal and minerals and improving power generation and distribution.

According to the Survey, during April–December 2014 – 15, the overall growth in the eight core industries has improved marginally to 4.4 per cent compared to 4.1 per cent in the same period last year. Electricity, coal and cement boosted the performance while natural gas, fertilizers, crude oil, refinery products and steel accounted for moderation in growth.

The improved performance in electricity is due to high growth in thermal generation, in coal mining due to higher production by Coal India Limited and captive mining and in cement due to capacity addition.

Natural gas and crude oil production have decline because of no major discoveries and problem with old oil fields. Domestic steel production is affected by slow down in domestic demand and cheaper imports. Fertilizer production has contracted mainly because of non-availability of gas and similar capacity addition in past few years, the Economic Survey observes.

The pre-budget Economic Survey notes that 3.61 crores MSMEs contributes 37.5% of the country’s GDP have a critical role in boosting industrial growth and ensuring the success of the Make in India programme. It further states that a number of schemes are being implemented for the establishment of new MSMEs and growth and development of the existing ones.

According to the Survey, an investor-friendly FDI policy has been put in place whereby FDI upto 100% is permitted under the automatic route in most sectors / activities. In 2014, FDI policy has been further liberalized. FDI upto 49% through the Government route have been permitted in the Defence industry.

Higher FDI has also been allowed on a case to case basis. FDI upto 100% through automatic route has been permitted in construction, operation and maintenance of identified railways transport infrastructure. Norms related to minimum land area, capitalization and repatriation of funds for FDI in construction, development projects have been further liberalized.

During April-November 2014, total FDI inflows (including equity inflow, reinvested earnings, and other capital) were US $27.4 billion, while FDI equity inflows were US $ 18.9 billion, the Economic Survey adds.

In the power sector, the Economic Survey describes that the government has taken several decisions to provide 24X7 power across the country by 2019 which includes steps for increasing power generation, strengthening of transmission and distribution, separation of feeder and metering of power to consumers.

To improve the distribution of power, two new schemes have been launched namely Integrated Power Development Schemes and Deendayal Upadhyaya Gram Jyoti Yojana.

The Electricity (Amendment) Bill 2014 has been introduced in the Lok Sabha to usher in reforms in the power sector, promote competition and efficiency in operation and improve the quality of supply of electricity, the Survey mentions. According to the Survey, to provide a big push to solar energy, that two new schemes namely, Scheme for Development of Solar Parks and Ultra Mega Solar Power Projects and Pilot-cum-Demonstration Projects for Development of Grid Connected Solar PV Power plants on Canal Banks and Canal Tops were rolled out in December 2014.

Regarding Railways, the Economic Survey listed out key focus areas which include creation of capacity, modernization of network, improvement in asset utilization and productivity, modernization of rolling stock and maintenance practices, and improvement in the quality of services.

Investments are being prioritized in important areas like Dedicated Freight Corridors (DFCs), high speed rail, high capacity rolling stock, last mile rail linkages, and port connectivity, the Survey adds.

In the road sector, efforts have been undertaken to resolve problems associated with projects which are yet to be completed and the setting up of National Highways and Infrastructure Development Corporation Ltd. for speedy implementation of highway projects in the north-east. In civil aviation sector, there has been healthy increase in international passengers and cargo handled at Indian airports during 2014-15.

The major initiatives are implementation of PPP projects at four airports of the AAI, setting up of greenfield airports and development of small airports in Tier II and Tier III cities.

Three new schemes viz., the Swachh Bharat Mission (SBM), Heritage City Development and Augmentation Yojana (HRIDAY), and Smart City Scheme have been announced for development of urban infrastructure, says the Economic Survey.

(Press Information Bureau)