Types Of Infrastructure

Transport Roadways, Railways, Waterways, Airways

Energy Generation, Distribution, Transmission

Water & Solid Waste Management (SWM), Sewage, Irrigation

Sanitation

Communication Telecom, Digital

Social Education,Health, Sports

Need of Infrastructure Sector

Society Employment opportunities (Emp. opportunities)

Connecting wide geographical regions

Inclusive growth

Ease of Living

Poverty reduction

Reducing the digital divide (Internet 2.0)

Government Efficient & effective delivery of services

Ease of Doing Business (EODB)

Disaster Management

Economy Improves peace & security: Naxalism/border area rehabilitation &

connectivity (BRD)

Delivering sustained high growth: Base for FDI (Foreign Direct

Investment)

Filling infrastructure (physical & digital) deficit

Logistics
 Infrastructure Financing

Public Private Partnership

YEAR QUESTION MARKS

2013 Adaptation of PPP model for infrastructure development of the 10
country has not been free from criticism. Critically discuss the
pros and cons of the model.

2014 Explain how private public partnership agreements, in longer 12.5

gestation infrastructure projects, can transfer unsuitable liabilities
to the future. What arrangements need to be put in place to
ensure that successive generations’ capacities are not
compromised?

2017 Examine the developments of Airports in India through Joint 10

Ventures under Public-Private Partnership(PPP) model. What are
the challenges faced by the authorities in this regard.

Explain the meaning of investment in an economy in terms of

2020 capital formation. Discuss the factors to be considered while 15
designing a concession agreement between a public entity and a
private entity.

Why is Public Private Partnership (PPP) required in infrastructural

2022 projects? Examine the role of PPP model in the redevelopment of 10
Railway Stations in India

Definition ● PPP is a contract between a government entity and a private

company to provide public assets or services. The private company
is granted the right ( "Concession") to invest, manage, and operate
the project for a specified period, with clearly defined risk-sharing.

Model ● It is a legal contract that forms the basis of public private partnership
Concession (PPP) projects in India.
Agreement ● It lays down the terms and conditions, policy and regulatory
framework for implementation of a PPP project.
Facts ● World Bank: India is one of the leading countries in terms of
readiness for PPPs with ~2000 PPP projects in various stages of
implementation.
● Infrascope 2018 Report of the Economist Intelligence Unit: India
ranked fourth in Asia with first rank in Investment and business
Climate and second rank in Finance parameters.
● National Infrastructure Pipeline (‘NIP’) 2020: Envisages an
investment of Rs. 111 lakh crores over 2020 to 2025 i.e., an annual
average investment of ~Rs. 22 lakh crores.

Characteristic ● Private Sector Role: Involvement in building and providing services

s of a PPP from infrastructure assets.
framework ● Quality and Accountability: Delivery of high-quality,
well-maintained assets with greater accountability.
● Focus on Service: Emphasis on long-term service delivery over
mere asset creation.
● Private Implementation: Typically implemented by an entity with
little or no public sector equity.
● Asset Reversion: Asset returns to the public authority at the end of
the concession.

Types of PPP Model

PPP Model Description Example in India

Build-Operate ● BOT (Toll): Private sector builds, Delhi-Gurgaon
-Transfer operates, and maintains infrastructure, Expressway
(BOT) recovering costs through tolls. Asset is
transferred back to government after the
concession period.
● BOT (Annuity): Private sector builds and National Highways
operates infrastructure, receiving annuity Development Project
payments from the government instead of (NHDP)
tolls during the concession period.
Design-Build- ● Private sector designs, builds, finances, Indore’s
Finance-Oper and operates infrastructure. Government Bio-methanation Plant
ate (DBFO) retains ownership and pays based on Set
performance metrics.
Build-Own-Op ● Private sector builds, owns, and operates Cochin International
erate-Transfer infrastructure for a specified period before Airport
(BOOT) transferring it to the public sector.
Lease-Develo ● Government leases an existing facility to Bengaluru Kempegowda
p-Operate the private sector, which upgrades, International Airport
(LDO) operates, and maintains it for a specified
period.
Engineering, ● Government covers all costs and most Pradhan Mantri Urja
Procurement, risks, while private developers design and Ganga Project (Natural
and build the roads. After construction, the Gas Pipeline Project)
Construction government handles maintenance,
(EPC) operations, and tolls.
Hybrid ● Combines BOT (Annuity) and EPC National Highways
Annuity models. Government provides part of the Authority of India (NHAI)
Model (HAM) project cost, with the private sector raising highway projects under
the rest and receiving annuity payments HAM
for operations and maintenance.
Swiss ● Government invites project proposals, Amritsar-Kolkata
Challenge makes them public, and allows others to Industrial Corridor
Method challenge with better offers. The original
proposer can match the best offer.

Brief Overview of Evolution of PPP in India

Early Beginnings ● Economic Reforms: Liberalization opened sectors to private

(1990s) investment, focusing on large-scale infrastructure projects like
roads, ports, and power.
● First Wave of PPPs: Addressed infrastructure needs in
transport and energy by supplementing public investment with
private sector involvement.

Expansion (2000s) ● Policy Frameworks : Formalization of PPPs with standardized

contracts and processes through government policies.
● Sectoral Growth: PPPs expanded into healthcare, education,
urban development, and water supply, supported by viability
gap funding (VGF).
● Infrastructure Focus: Major infrastructure projects like the
National Highways Development Project (NHDP) heavily
utilized PPP models, driving significant development.

Maturity and ● Increased Sophistication: PPPs evolved with a focus on

Challenges risk-sharing, performance-based contracts, and lifecycle costs,
(2010s) with an expanded role for the private sector in operations and
maintenance (O&M).
● Challenges: Projects faced delays, financial stress, and
 disputes, especially in highways and power, due to land
acquisition, regulatory hurdles, and contractual issues.
● Learning and Adaptation: These challenges prompted a
reassessment, leading to improved risk management, contract
design, and regulatory frameworks to refine the PPP model.

Current Trends ● Renewed Focus: This decade has seen a renewed emphasis
(2020s Onwards) on PPPs, driven by the National Infrastructure Pipeline (NIP)
and a push for investment in sectors like renewable energy,
urban, and digital infrastructure.
● Global Investment: Efforts are increasing to attract global
institutional investors to Indian infrastructure, leveraging the
country’s large market and the demand for stable, long-term
investments.
● Maturing Framework: India’s PPP framework is evolving
towards greater maturity by adopting global best practices and
addressing past challenges to enhance resilience and
effectiveness.
Institutional ● Government Initiatives: Bodies like the PPP Cell in the
Support Department of Economic Affairs were established to guide and
support PPPs, with model concession agreements (MCAs) and
sector-specific guidelines to streamline processes.
● Global Collaboration: India collaborated with global
institutions like the World Bank’s Public-Private Infrastructure
Advisory Facility (PPIAF) to build capacity and adopt best
practices in PPPs.

Why it is Urgent for India to get Infrastructure PPPs Right!

Infrastructure Deficit ● India's infrastructure deficit, including congested roads,

inadequate hospitals, and poor transportation, constraints
economic growth, reduces competitiveness, and slows job
creation.

Demographic ● India, now the world's most populous country, must

Transition achieve rapid economic growth to turn its demographic
transition into a demographic dividend by creating productive
jobs that enable young Indians to earn, save, and build
wealth.

Economic Urgency ● To achieve a 5 trillion-dollar economy by 2024-25 there is

a need to spend $ 1.5 trillion on infrastructure over these
years. PPPs are vital to raise monetary and technical
resource for same. (Eco Survey 2021-22).
Job Creation ● High-quality infrastructure investments are essential for
unlocking India's demographic dividend, supporting GDP
growth, and creating the productive jobs needed for the
world's largest young labor force.
● India needs to create 180 million jobs over the next 20
years, underscoring the need for sustained economic growth
through robust infrastructure investments.

Global Leadership in ● India is already the largest PPP market globally, leveraging
PPPs PPPs to improve construction efficiency, accelerate
infrastructure development, and attract private funding.
Moving the PPP model to the next level of maturity is crucial.

Global Funding ● Developed countries, with ageing populations and large

Opportunity pools of savings, are looking for stable, long-term
investments like infrastructure in India. Improving PPP
performance can attract significant global funding.

Manufacturing ● Expanding infrastructure will directly and indirectly boost the

Sector Growth manufacturing sector, which is critical for creating large
numbers of unskilled and semi-skilled jobs that the services
sector alone cannot provide.

Major Mechanisms for Fostering Public Private Partnership (PPP)

PPP Appraisal ● Apex body for appraisal of central sector PPP projects.
Committee (PPPAC)
Viability Gap Funding ● Assistance to financially unviable but socially/economically
(VGF) desirable PPP projects.
India Infrastructure ● Financial support for project development of PPP projects.
Project Development ● Notified in2022 with a total outlay of ₹150 crore for three
Fund Scheme years from FY23 to FY25.
National PPP ● Aims to strengthen the capacity of government officials,
Capacity Building particularly those in Group A and B categories across
Program central and state government departments, and urban local
bodies (ULBs), to effectively manage and implement PPP
projects.
Other Supportive ● Guides and toolkits for setting up state PPP units, project
Instruments appraisal, implementation, and post-award management
have been developed to support PPP structuring.
 Achievements of PPP Model in India
Global Leadership ● India has emerged as one of the largest PPP markets
and Recognition globally, recognized for its successful projects across various
sectors, and serving as a model for other economies.
Technological and ● PPPs in India have introduced cost-effective technologies
Managerial and managerial efficiencies, ensuring superior
Advancements infrastructure and high-quality public services.
Robust PPP ● India has developed industry-specific frameworks that
ecosystem focus on attracting PPPs and private capital in various
infrastructure sectors.
Contractual ● The well-defined contracts in PPP projects ensure that
Accountability private partners deliver quality services, with innovative
financing mechanisms like VGF facilitating effective
risk-sharing.
Infrastructure ● PPPs have significantly contributed to infrastructure
Development development across roads, highways, ports, airports, and
urban infrastructure, with projects like the National
Highways Development Project (NHDP) and the Delhi
Metro as key examples.
Energy Sector and ● PPPs have expanded power generation capacity, particularly
Renewable Growth in renewable energy, making India one of the major markets
for solar power.
Healthcare ● PPPs have played a crucial role in expanding healthcare
Expansion infrastructure, especially in underserved areas, improving
access to and delivery of healthcare services.
Employment ● The extensive implementation of PPP projects has created
Generation and significant employment opportunities across various sectors,
Economic Impact thereby boosting economic growth.
Capacity Building ● Initiatives like the PPP Cell and the National PPP Capacity
and Institutional Building Programme have enhanced the government’s
Strengthening capacity to manage and execute PPP projects efficiently.
Improved Service ● PPPs have improved service delivery by introducing
Delivery efficiency and innovation, while also attracting global
investors to India's infrastructure sector.
Resilience in the ● Despite challenges such as economic slowdowns, India’s
Face of PPP model continues to evolve, highlighting the need for
Challenges continuous refinement and adaptation.
 Challenges of PPP in India

External Global ● The global economic slowdown and credit

Sector Slowdown and crisis reduced demand for goods and
Low Income Trap services, significantly affecting the
infrastructure sector and PPP projects, and
pushing the economy into a low equilibrium
trap where investment and growth stagnate.

Judicial Judicial delays ● Judicial and statutory orders, like mining

Orders bans, delayed PPP project progress and
revenue. New projects are struggling to
attract sponsors and secure financing.

Legal and Regulatory ● Sectors like roads, airports, and ports lack
regulatory Challenges independent regulators or have multiple
framework regulators, causing regulatory overlap and
inefficiencies.
Dispute ● Dispute resolution mechanisms are slow and
Resolution underdeveloped, leading to project delays and
financial issues.
Land Acquisition ● Delays in land acquisition, clearances, and
and Clearances utility shifts cause time and cost overruns due
to a fragmented approach rather than holistic
risk assessment.

Financing Inadequate ● Bank appraisals often lack sufficient diligence

issues Project Appraisal due to inadequate skills, leading to poor
lending quality.
Underdeveloped ● The underdeveloped debt markets remain a
Debt Markets significant concern, limiting financing options
for projects.

Multiplicity Institutional ● Governments at all levels, including ULBs,

of Capacity departments, and state agencies, struggle to
institutions Constraints create a steady project pipeline due to limited
and institutional capacity, leading to aggressive
overlap in bidding by a few developers.
roles
Lack of Effective ● Poor coordination among government
Coordination agencies hampers the delivery of improved
citizen value and delays PPP projects.
Lack of Urban ● Poor urban planning, unclear laws, and
Planning and inadequate regulations have slowed down
Regulation urban infrastructure projects.
Private Over-Aggressive ● Over-aggressive bidding with inadequate due
sector Bidding diligence by bidders has led to unviable offers,
problems which were accepted but later failed due to
insufficient capital structuring.
Inadequate Risk ● The private sector failed to develop skills in risk
Assessment pricing, leading to a myopic assessment of risks
and a lack of mitigation measures, despite
engaging top consultants.
Inconsistent ● The quality of consultancy services in PPPs
Consultancy has not kept pace with growing needs, leading
Quality to inconsistent advisory services.

Contractual Inadequate Legal ● Inadequate provisions for addressing legal and

framework and Contractual contractual issues like exit clauses, defaults,
s Provisions and scope changes have led to delays and
projects failing to take off as anticipated.
Lack of ● Implementing agencies often use standard
Project-Specific bidding and contract templates with little
Customization customization, impacting project success.
Contract ● There is a lack of recognition for the need to
Restructuring restructure contracts based on long-term
Issues project revenues rather than short-term liquidity
issues.

Vijay Kelkar Committee

In the Union Budget 2015-16, the Finance Minister announced the need to revisit and
revitalise the PPP mode of infrastructure development. Following this, a 10-member
committee, chaired by Dr. Vijay Kelkar, was established to review and rejuvenate the PPP
model in India.

Terms of Reference

1. Review PPP Policy: Evaluate experiences with PPP contracts, noting variations
and challenges.
2. Risk Analysis: Examine sector-specific risks and current risk-sharing frameworks;
suggest better risk-sharing mechanisms.
3. Contract Improvements: Recommend contract modifications based on review,
global best practices, and the Indian context.
 4. Capacity Building: Suggest ways to enhance government capabilities for effective
PPP implementation.

Key Recommendations
1. Strengthening ● Core Pillars: Reinforce the core pillars of Governance,
the PPP Institutions, and Capacity within the PPP framework to ensure
Framework long-term sustainability.
● Establish a PPP Institute of Excellence (3PI): Support
institutional capacity building and enhance the overall
effectiveness of PPP projects through a dedicated institute.
● Formulate a national PPP policy endorsed by Parliament:
Consider enacting a PPP law to provide a clear, authoritative
framework for implementation and oversight.
● Promote principles of good governance within Special
Purpose Vehicles (SPVs): Limit government participation to
strategically essential cases, leveraging the private sector's
efficiency fully.

2. Legal and ● Amend the Prevention of Corruption Act, 1988: To clearly

Policy Reforms distinguish between genuine decision-making errors and corrupt
practices, offering protection to officials who act in good faith.
● Eliminate the Swiss Challenge Method: Discourage
Unsolicited Proposals to enhance transparency and fairness in
procurement, ensuring an equal opportunity for all bidders.
3. Financial ● Promote Deep Discount Bonds: Encourage financial
Innovation and institutions to issue Zero Coupon Bonds to secure long-term,
Management low-cost capital and reduce early-stage debt burdens.
● Offer Equity Stakes Post-Completion: After project
completion, offer equity to long-term investors and use
divestment proceeds to fund new infrastructure projects,
creating a sustainable investment cycle.
4. Risk ● Revisit the Model Concession Agreement (MCA): To ensure
Management and that risks are allocated rationally and equitably among
Project Viability stakeholders, moving away from a "one-size-fits-all" approach.
● Conduct Viability Assessments Before PPP Adoption: Apply
the PPP model only to projects where benefits outweigh costs,
avoiding its use in small-scale projects with high transaction
costs
5. Expanding ● Expand PPPs into New Sectors: Explore opportunities in
PPP Scope healthcare, social services, and urban transport to leverage
private sector expertise and investment.
● Promote PPPs in Railways: Encourage private investment by
establishing an independent tariff regulator to ensure fair pricing
and foster PPPs within the Railways sector.
6. Contract and ● Prioritize Service Delivery: Shift the focus from fiscal benefits
Dispute to ensuring tangible outcomes that benefit citizens.
Resolution ● Introduce Contract Flexibility: Allow for renegotiations in PPP
contracts to adapt to changing economic or policy conditions,
Mechanisms
ensuring long-term project viability.
● Establish an Infrastructure PPP Adjudication Tribunal
(IPAT): Create a specialized tribunal for efficient and fair dispute
resolution, with case-specific benches tailored to the needs of
each situation.
7. Institutional ● Create a National Infrastructure Investment Institution:
Development Establish a body to boost private investments, guide PPP policy,
and Capacity and build institutional capacity.
● Develop Sector-Specific Regulators: Form independent
Building
bodies for new PPP sectors to ensure cohesive regulation and
minimize delays.
● Establish an Infrastructure PPP Project Review Committee
(IPRC): Set up a committee for timely evaluations and
recommendations to resolve project issues and ensure
progress.
● Strengthen Stakeholder Capacity: Set up a PPP institute of
excellence to provide policy guidance, training, and capacity
building for all involved stakeholders.

Kelkar Committee Recommendations for the

Role of PPP in redevelopment of Railways

Commencement of ● Begin with relatively simpler PPP projects in the railways

Simpler PPP sector to build market credibility.
Projects

Focus on ● Monetize existing station premises by optimizing the use of

Brownfield Projects available floor space for commercial revenue.
● Utilize frameworks like “Adopt-a-monument” for heritage
station buildings.

Greenfield ● Explore greenfield development of stations.

Development ● Consider maintenance and operations of identified tracks on
Opportunities a track access charge basis.

Adaptation of ● Consider adapting various international PPP models in

Global PPP Models railways to the Indian context.

Establishment of an ● Establish an independent regulator to adjudicate technical

Independent issues such as track access charges.
Regulator
 Kelkar Committee Recommendations for the
Role of PPP in Airport Development

Selective PPP ● Use PPP frameworks selectively for airport expansion where
Utilization project economics are favorable.

Bidding Criteria ● Develop bidding criteria that consider non-aeronautical

Development revenues to assess project viability.

Design and Cost ● Establish norms for design and costs based on best practices,
Guidance including asset allocation and expenditure guidelines.

Financial ● Define financial structuring norms for accurate assessment of

Structuring revenues, costs, and funding sources.

Regulatory ● Ensure concession agreements clearly define key commercial

Certainty parameters to avoid regulatory issues.

Unified ● Consolidate regulation of airport services under a single body

Regulatory Body to ensure fair access and prevent monopolistic practices.

Civil Aviation ● Develop a policy that supports PPPs and unifies service
Policy delivery across stakeholders.

Learning from ● Design contracts and concessions by leveraging lessons from

Past PPPs past PPP projects for better planning.
 National Infrastructure Pipeline (NIP)

Launch and ● Launched: December 2019

Objective ● Objective: Provide world-class infrastructure, improve quality
of life, and make India a $5 trillion economy by 2025.

Coverage and ● Total Projects: Around 9,000 projects

Sectors ● Key Sectors: Energy, Roads, Railways, Urban Infrastructure,
Ports, Water Supply, Irrigation

Investment ● Total Investment: ₹111 lakh crore (2020-2025)

Plan ● Funding Sources:
○ Central Government: 39%
○ State Governments: 40%
○ Private Sector: 21%

Coordination ● Nodal Agency: Department of Economic Affairs (DEA),

and Monitoring Ministry of Finance

Key Features ● Sectoral Breakdown: Detailed project listings and sectoral

breakdowns
● PPP: Encourages Public-Private Partnerships for various
projects

Role of PPPs ● PPPs are a cornerstone of the NIP strategy, recognized as a

crucial mechanism for bridging the financing gap in infrastructure
development.
● By involving private players, the government aims to enhance
efficiency, introduce innovation, and share risks.
● The NIP provides a framework to attract both domestic and
international investors by ensuring a stable, transparent, and
investor-friendly environment.

Expected ● Economic Growth: Boost GDP growth

Outcomes ● Employment Generation: Create millions of jobs
● Ease of Living: Improve living standards
● Global Competitiveness: Enhance through better infrastructure

Implementation ● Land Acquisition: Delays in project implementation

Challenges ● Funding Gaps: Mobilizing funds from private sector and states
● Coordination Issues: Between central/state governments and
ministries

Recent ● Integration with Gati Shakti Plan

Developments
 PM Gati Shakti

Launch: ● Launched in 2021 for providing multimodal connectivity

infrastructure to various economic zones.
● The Gati Shakti scheme will subsume the Rs 110 lakh crore
National Infrastructure Pipeline that was launched in 2019.
● PM Gati Shakti is supposed to break departmental silos
and institutionalize holistic planning for stakeholders
across major infrastructure projects.

● National Master plan for Multi-modal connectivity

● Seeks to bring 16 Ministries together for integrated planning,
design and execution of infrastructure projects.
● Monitor projects worth Rs 100 lakh crores.
● Incorporate the infrastructure schemes of various Ministries
and State Governments like Bharatmala, Sagarmala, UDAN
etc.
● Economic Zones like manufacturing clusters, defence
corridors, electronic parks, industrial corridors, fishing
clusters, agri zones will be covered to improve connectivity &
make Indian businesses more competitive.
● Leverage technology including spatial planning tools with
ISRO imagery developed by BiSAG-N (Bhaskaracharya
National Institute for Space Applications and Geoinformatics).

6 pillars of PM ● Comprehensiveness,
Gati Shakti ● Prioritization
● Optimization
● Synchronization
● Analytical
● Dynamic
6 Pillars in detail ● Comprehensiveness: It will incorporate the existing
infrastructure schemes of different departments and state
governments like Bharatmala, Sagarmala, inland waterways,
UDAN etc.

● Analytical: It will offer 200 layers of geospatial data,

including on existing infrastructure as well as geographic
information about forests, rivers and district boundaries.

● Dynamic: The portal will allow various government

departments to track the progress of various projects in real
time and at one centralised place.

● Dynamic: The portal will allow various government

departments to track the progress of various projects in real
time and at one centralised place.

● Optimization: For the transportation of goods from one place

to another, the plan will help in selecting the most optimum
route in terms of time and cost.

● Synchronization: PM GatiShakti will help in synchronizing

the activities of each department in a holistic manner by
ensuring coordination of work between them.

Targets to be ● 11 industrial corridors and two new defence corridors in Tamil

achieved under Nadu and Uttar Pradesh
Gati Shakti ● Digital connectivity in all villages
● Increasing renewable energy capacity to 225 GW from 87.7
GW
● Expanding the national highway network to 2 lakh km
● Increasing length of transmission network to 4,54,200 circuit
km
● Creation of 220 new airports, heliports and water aerodromes
● Increasing cargo handling capacity of railways to 1,600
million tons from 1210 million tons
● Adding 17,000 km to gas pipeline network
● 202 fishing clusters/harbours/landing centres and more

How Is Gati ● Under the National Infrastructure Pipeline (NIP), the

Shakti Different Government has identified infrastructure projects worth Rs
From National 111 lakh crores which it will be constructing in the five years
Infrastructure between 2021-2025.
Pipeline? ● The Implementation of NIP requires coordination and
integrated planning between multiple ministries and
department.
 ● Such an integrated and holistic approach to infrastructure
creation would be provided through the Gati Shakti.

Significance ● Reviving the Economy Post-Pandemic: The COVID-19

pandemic severely impacted GDP, causing job losses, lower
wages, and reduced consumption. Infrastructure projects can
create jobs, boost demand, and attract investments. Swift
implementation of the Gati Shakti National Master Plan could
accelerate India's economic recovery.

● Logistics Improvement: India's logistics costs are 13-14%

of GDP, compared to 7-8% in developed nations. The Gati
Shakti plan aims to lower these costs, increase cargo
capacity, and reduce port turnaround times, enhancing trade
efficiency.

● Enhancing Economic Zones: Many economic zones and

industrial parks underperform due to poor connectivity. Gati
Shakti will integrate infrastructure projects across ministries
and states, improving last-mile connectivity.

● Reducing Implementation Overlaps: Current infrastructure

planning often leads to inefficiencies, such as roads being
dug up for water pipelines. The National Master Plan will
streamline coordination between ministries, preventing
overlaps and improving project efficiency.

● Saving Taxpayer Money: Poor coordination among

government departments leads to budget wastage and
delays. The Gati Shakti plan will optimize resource use,
cutting costs and time overruns, thus saving taxpayer money.

● Minimizing Human Intervention: Currently, inter-ministerial

issues are resolved through frequent meetings. The Gati
Shakti portal will facilitate constant communication between
ministries, reducing the need for human intervention.

Challenges ● State Investment Challenges: The 2020-21 Economic

Survey highlighted the need for strong Centre-State
partnerships in infrastructure development, with projected
investments of ₹8.5 lakh crore annually in key sectors like
energy, roads, and railways. However, the pandemic has
strained state finances, potentially delaying the master plan's
implementation.

● Low Credit Off-take: Credit growth has sharply declined to

5.8% in November 2020, down from 14.2% in 2013, which
may hinder private investment in infrastructure. Banks are
cautious about lending due to concerns over future NPAs,
further slowing investment.
 ● Unaddressed Infrastructure Challenges: The Gati Shakti
plan does not adequately address critical issues like land
acquisition, litigation, community alienation, and
environmental concerns, which often delay projects and
increase costs, leading to slower implementation by global
standards.

Way Forward ● Address Key Issues: To effectively implement PM Gati

Shakti, India must address structural and macroeconomic
stability concerns stemming from high public expenditure.

● Tackle Land Acquisition: Policymakers should focus on

reclaiming degraded lands using Geographic Information
Systems and remote sensing technologies, rather than
acquiring new, controversial parcels.

● Solve Credit Offtake Issues: The 2020-21 Economic Survey

highlights the need for ₹4.5 lakh crore in private sector
investments annually for NIP sectors. The government must
address low credit offtake to ensure successful private
investments.

● Incorporate Digital Solutions: Integrate digital features like

optical fibers along railway lines and gas pipelines.
Implement digital platforms for demand and supply
aggregation, similar to initiatives like Tata Projects' Dravyavati
River Rejuvenation and U.S. software platforms that achieve
significant savings.

● Improve Road Performance: Enhance road infrastructure

for better goods supply by incorporating smart technologies,
including automatic traffic monitoring and drone-based asset
maintenance

National Monetization Pipeline (NMP)

About ● The government has launched the National Monetization

Pipeline (NMP) to raise around INR 6 lakh crore over the next
four years (2022-2025). This initiative aims to support
investment requirements under the National Infrastructure
Pipeline (NIP). A critical factor for the success of NMP is
attracting a diverse range of investors, both domestic and
international.
● It was announced in Budget 2021-22.
Three-pronged ● The Budget 2021-22 introduced a three-pronged approach for
approach for infrastructure financing in India, which includes:
infrastructure ○ Establishing institutional frameworks, such as the
financing
Development Bank (National Bank for Financing
Infrastructure and Development - NaBFID).
○ Increasing capital expenditure allocations.
○ Implementing the National Monetization Pipeline
(NMP).

Concept of the ● Asset Monetization involves transferring core

National government-owned assets to the private sector for a limited
Monetization duration. Core infrastructure assets include roads, ports,
Pipeline (NMP) airports, telecommunications, railways, warehousing, energy
pipelines, power generation and transmission, hospitality, and
sports stadiums. NMP focuses exclusively on these core
assets, excluding non-core assets like land and buildings.
● It is important to note that NMP is not privatization. The
government retains ownership of the assets, while the private
sector is granted operational rights for a specified period
under contractual agreements.
● Core Assets are defined as assets central to the government's
business objectives and are earmarked for monetization.

Asset
Monetization
Direct Contractual Models Structured Financing Models:
Models
Operate-Maintain-Transfer Real Estate Investment Trusts
(OMT) Model: Applied as the (REITs): Investment vehicles
Toll-Operate-Transfer (ToT) that own, operate, or finance
model in national highways. income-generating real estate.
Operate-Maintain-Develop Infrastructure Investment
(OMD) Model: Implemented as Trusts (InVITs): Investment
the Operation, Management, instruments that allow investors
and Development Agreement to hold a stake in infrastructure
(OMDA) in airports. projects, such as roads and
Long-Term Lease power transmission lines.
Agreements: Used for leasing
assets such as telecom towers,
bus terminals, and stadiums

Asset Asset monetization under the NMP can be categorized into two main
Monetization models:
Models Direct Contractual Models:
○ Operate-Maintain-Transfer (OMT) Model: Applied as
the Toll-Operate-Transfer (ToT) model in national
highways.
 ○ Operate-Maintain-Develop (OMD) Model:
Implemented as the Operation, Management, and
Development Agreement (OMDA) in airports.
○ Long-Term Lease Agreements: Used for leasing
assets such as telecom towers, bus terminals, and
stadiums.

Structured Financing Models:

○ Real Estate Investment Trusts (REITs): Investment
vehicles that own, operate, or finance
income-generating real estate.
○ Infrastructure Investment Trusts (InVITs):
Investment instruments that allow investors to hold a
stake in infrastructure projects, such as roads and
power transmission lines.

Benefits of the ● Unlocking Value from Existing Assets:

National Monetization helps in unlocking value from government-owned
Monetization assets by leveraging private sector efficiency and capital.
Pipeline (NMP) ● Accelerated Infrastructure Development:
The funds generated through asset monetization will help
finance new infrastructure projects under the NIP, promoting
faster development and modernization of infrastructure.
● Private Sector Efficiency:
Transferring operations to the private sector can enhance
asset management efficiency, innovation, and service delivery,
while the government continues to retain ownership.
● Diversification of Funding Sources:
It reduces the reliance on traditional forms of government
funding, such as borrowing or taxation, and brings in private
and institutional capital.
● Boost to Economic Growth and Employment:
Improved infrastructure leads to better connectivity, which
boosts economic activities, generates employment, and
fosters overall economic growth.
● Better Targeted: Taxpayers’ money would not be utilised for
the maintenance of the assets. Rather, only those people who
use such assets will be required to pay user charges.

Challenges 1. Enhanced Role of the Government:

Under the NMP, the government will continue to build and own
capital assets. However, the current challenges in
infrastructure development, such as time and cost overruns,
delays in land acquisition, and poor infrastructure quality, must
be addressed to ensure the NMP's success.
 2. Impact on the Public: There is a concern that the public
might face higher user charges imposed by the private sector,
which could affect affordability and access to essential
services.
3. Lack of Independent Regulatory Authorities: In sectors like
roads and railways, the absence of an independent regulatory
authority may deter private sector investment. An independent
regulator would help:
○ Formulate rules and regulations for Public-Private
Partnership (PPP) agreements.
○ Ensure that user charges reflect market conditions.
○ Resolve disputes between the government and private
entities, fostering a climate of trust, confidence, and
fairness to encourage private investment.
Financing Problems
● Limited Awareness of Structured Financing Models:
The success of the NMP depends on structured financing
models like Real Estate Investment Trusts (REITs) and
Infrastructure Investment Trusts (InVITs). However, poor
investor awareness could hinder their ability to raise funds.
● Reluctance of Banks to Lend:
Banks may be hesitant to provide loans to private sector
entities for leasing government assets.
● Underdeveloped Corporate Bond Market:
A lack of a mature corporate bond market could limit the ability
of private sector entities to raise capital.
5. Risk of Encouraging Crony Capitalism:
The concern is that only a few large business houses may end
up leasing most of the assets, potentially leading to
monopolistic practices.

Strategies ● Streamlining Investment Guidelines:

Needed (Based Currently, the Securities and Exchange Board of India (SEBI)
on NITI Aayog's imposes restrictions on how much insurance, pension funds,
Recommendatio
and mutual funds can invest in REITs and InVITs. For
ns)
instance, insurance companies are restricted to investing no
more than 3% of the money raised by REITs/InVITs.
Increasing these investment limits could help mobilize more
long-term finance from institutional investors.
● Offering Tax Benefits:
To encourage retail investor participation, the government
 should consider providing income tax incentives for
investments in REITs and InVITs.
● Including REITs/InVITs under the Insolvency and
Bankruptcy Code (IBC):
While REITs and InVITs can issue bonds to raise funds, they
currently do not fall under the IBC. This lack of protection
under IBC may discourage investments, as lenders cannot
seek recourse in case of a default. Including REITs/InVITs
under the IBC would provide greater security and encourage
investment.
● Developing Standard Agreements:
Creating model PPP concession frameworks for various
brownfield asset classes will facilitate quicker adoption and
smoother implementation.
● Creating Institutional Structures for Fast-Tracking Asset
Monetization:
Each ministry should set up a dedicated working group with
the authority to identify assets, determine appropriate
monetization methods, and oversee the transaction process.
● Regulating User Charges by the Private Sector:
Mechanisms should be developed to ensure that private
sector entities set user charges based on the investment
made and risks undertaken. These charges should be fair and
not excessively high, to avoid negatively impacting the general
public.
 Sector Specific Analysis

Framework for Issues involved in Transport Sector

Finance ● Private Sector Participation Issues: The transport sector's

current financing structure limits private investment due to high
risks and insufficient incentives.
● Cost Overruns: Frequent delays and inefficiencies lead to
increased costs, reducing overall project viability.
● Public-Private Partnership (PPP) Challenges: Issues like the
lack of independent regulatory bodies, arbitrary government
actions, and disputes hamper effective PPP models.
● Need for Upgradation and Cross-Subsidy: Outdated
technology and infrastructure require significant investment for
modernization and cross-subsidization to ensure affordable
access.

Construction ● Land Acquisition Delays: Significant delays in acquiring land

for transport projects, particularly in rural and under-served
areas, hinder progress.
● Climate Change Planning: The sector lacks resilience
planning for climate-related disasters, impacting long-term
sustainability.
● Environmental Clearances: Stringent and slow environmental
clearance processes delay projects.
● Red Tape and Bureaucracy: Excessive red tape complicates
project implementation, leading to delays.
● Project Delays: Chronic delays due to multiple factors,
including legal issues, regulatory challenges, and financing
bottlenecks.
● Absence of Last-Mile Connectivity: Lack of last-mile
connectivity leads to inefficient transport systems, increasing
reliance on personal vehicles and adding to congestion.
● Low Transport Efficiency: Reduced speeds due to congestion
and overloading result in extended transit times and higher
costs. For instance, freight trains in India average 25 kmph,
which is only half the speed of those in the US.

Quality ● Scientific Design Standards: Inadequate focus on modern

design standards leads to suboptimal infrastructure
development.
 ● Integration of Multimodal Systems: Poor intermodal
integration, such as between rail, road, and air, limits transport
efficiency and increases congestion.
● Safety Concerns: High accident rates and loss of lives
highlight the need for improved safety standards and
preemptive maintenance.
● Lack of Skilled Personnel: Shortages in skilled workforce for
maintenance and safety inspections reduce service quality.
● High Burden on Safety Inspections: Inadequate safety
inspection regimes lead to higher risks and frequent accidents.

Maintenance, ● Inadequate Attention to Maintenance: Maintenance often

Repair, and occurs post-failure rather than being proactive, leading to
Overhaul non-uniform standards and reduced quality of service.
● Insufficient Funding for Repairs and Overhauls: Inconsistent
funding impedes regular maintenance and affects the longevity
of infrastructure assets.
● Lack of Pre-emptive Maintenance: Most maintenance occurs
reactively, leading to inefficiencies and decreased infrastructure
lifespan.

Operations ● Capacity: Challenges related to handling the increasing

demand without exceeding infrastructure limits.
Efficiency
● Technology: The need to upgrade and implement modern
technology for better operational efficiency.
● Last Mile Connectivity: Issues with connecting main
transportation hubs to the final destinations, affecting overall
service delivery.
● Interoperability: Difficulty in ensuring seamless operation
between different systems and services.
Regulation
● No Independent Regulator: The absence of an autonomous
regulatory body to oversee operations, leading to potential
conflicts of interest and inefficiencies.
 Roads

Facts ● PMGSY: A total of 8,29,409 km of road length has been

sanctioned under PMGSY, with 7,63,308 km completed as of
June 18, 2024, at an expenditure of ₹3.23 lakh crore (including
state share). 99.6% of the targeted habitations under PMGSY-I
have been provided connectivity.
● Toll Digitisation and Maintenance Initiatives: Toll digitisation
reduced waiting times at toll plazas from 734 seconds in 2014
to 47 seconds in 2024. Free flow tolling through Automatic
Number Plate Recognition and Global Navigation Satellite
System has been initiated.
● Infrastructure Investment and Development: Capital
investment in the road sector increased from 0.4% of GDP in
FY15 to about 1.0% in FY24 (around ₹3.01 lakh crore).
● National Highways:
○ Significant progress in national highway development,
with the network increasing by 1.6 times from 2014 to
2024.
○ The Bharatmala Pariyojana expanded the national
highway network, increasing the length of high-speed
corridors by 12 times and 4-lane roads by 2.6 times
between 2014 and 2024.
○ The average pace of NH construction increased from
11.7 km per day in FY14 to ~34 km per day by FY24.
Issues: On the above framework

Initiatives ● Toll digitisation has significantly reduced waiting time at toll

plazas from 734 seconds to 47 seconds.
● Establishment of about 900 wayside amenities (WSAs) to
provide world-class facilities, with 322 already awarded and 50
operational.
● A proactive policy for National Highway (NH) maintenance
has been adopted, with about 37,500 km of the NH network
under maintenance contracts.
● Sustainable materials and new-age construction techniques are
being used in highway development.
● High-tech machinery and cloud-based data-driven construction
have resulted in time and cost reduction.
● Under the "Parvatmala Pariyojana," six ropeway projects have
been awarded to boost last-mile religious and tourist
connectivity.
● Bharatmala Pariyojana: An umbrella program for the
development of highways and roads across the country to
improve connectivity.
● Pradhan Mantri Gram Sadak Yojana (PMGSY): A nationwide
plan to provide good all-weather road connectivity to
unconnected villages.
● National Highway Development Project (NHDP): A project
aimed at expanding and upgrading the network of national
highways in India.
● Setu Bharatam: A program to build bridges for safer travel over
railways and rivers.
● Chardham Mahamarg Vikas: An initiative to improve
connectivity to the Char Dham pilgrimage sites in Uttarakhand.
● Mandatory FASTag: An electronic toll collection system to
enhance the efficiency of toll collection and reduce congestion
at toll plazas.
● Motor Vehicles Amendment Act: An amendment to the Motor
Vehicles Act to improve road safety, increase penalties for traffic
violations, and enhance road discipline.
● Industrial Corridors: Development of industrial corridors to
boost infrastructure and transportation for economic growth.
● Investment Promotion Cell by NHAI: A dedicated cell to
attract investments in the highway and road sector.
● Apps: mParivahan and Sarathi: Digital initiatives for providing
services related to vehicle registration, driving licenses, and
road safety information.
● National Road Safety Policy: A policy framework to promote
road safety and reduce accidents on Indian roads.
 Bharatmala

● Expand and Upgrade NHDP (7 phases)

● Economic Corridors
● Border Roads
● Port Connectivity
● Greenfield Connectivity
● Outcomes
○ Connectivity
○ Reduction in Logistics Costs
○ Development of Border Roads
○ Strategic Significance
○ Crowd-in Private Investment

PMGSY:
● Pradhan Mantri Gram Sadak Yojana (PMGSY)
● All-Weather Roads: To connect all rural habitations
● Green Construction: Use of cold-mix asphalt
● Boost to Rural Economy
● Sub mission for LWE (Left-Wing Extremism) Areas: Special
focus on connectivity

Industrial Corridors

● 11 Industrial Corridors
● Multimodal Connectivity
● Plug and Play Infrastructure
● Future-Ready Cities

Motor Vehicles (MV) Amendment Act

● Harmonised Portals
○ Transparent Licensing
○ Registration by Dealers
● Focus on Safety
○ Fines
○ Penalties for Faulty Design
○ Monitoring of Roads
○ National Road Safety Board
○ Protection of Good Samaritans
○ Treatment of Victims
○ Compulsory Third-Party Insurance

Way Forward
Increase ● Strengthen PWDs: Improve implementation capacity of
Connectivity states/UTs’ public work departments through institutional
by Expanding strengthening and training.
the Road ● Urban Transport Authorities: Establish Metropolitan Urban
Network Transport Authorities in cities with populations over 1 million

Improve Road ● Maintenance Management: Adopt a Maintenance

Maintenance Management System (MMS) and allocate funds from the
and Safety Central Road Fund (CRF) for maintenance.
● Contract Penalties: Impose heavy penalties on contractors for
poor O&M quality.

Skill ● Vocational Training: Introduce road construction courses in

Development ITIs.
● Driving Training Centers: Collaborate with OEMs to set up
driving training centers (DTCs) for commercial drivers.
● Driving Skill Testing: Implement advanced testing methods for
driving licenses.

Increase ● R&D Budget: Allocate 0.1% of MORTH’s annual budget for

Emphasis on R&D.
Research and ● Transport Data Centre: Establish a national transport data
Development center for applied research.
● IT-Enabled Systems: Enhance R&D on IT-enabled traffic
management.
● New Construction Techniques: Develop and periodically
revise codes/standards for technology use.

Increase ● Transform SRTUs: Promote public, rural transport, and last

Capacity and mile connectivity.
Reach of ● Funding: Secure additional funding for public transportation
Public and create interoperable systems.
Transport ● Bus Ports: Develop bus ports and support
technologies/software like VAHAN and Saarthi.

Expand ● Interoperability: Ensure ETC is interoperable across national

Electronic Toll and state highways.
Collection ● Streamline Charging: Improve the FASTag charging system
(ETC) System and infrastructure.

Increase ● Urban Mobility: Move towards multimodal solutions for

Technology seamless movement between modes.
Adoption and ● Logistics Parks: Identify and develop multimodal logistics
Seamless parks (MMLP) for seamless freight movement.
Movement ● Road Freight: Encourage the adoption of innovative
Between technologies in the road freight industry through incentives.
Modes
 Aviation

Data ● Growth in Aviation Market: India is noted as the

third-largest domestic aviation market and one of the
fastest-growing major aviation markets globally. The sector
showed a substantial growth with a 15% year-on-year
increase in total air passengers handled at Indian airports,
reaching 37.6 crore in FY24.
● Domestic and International Traffic: During FY24,
domestic air passenger traffic increased by 13%
year-on-year to 30.6 crore, while international air
passenger traffic increased by 22% year-on-year to 7 crore.
This growth in international traffic was noted to be higher
than domestic traffic due to the lower recovery of
international connectivity in FY23 from the COVID-19
impact.
● Air Cargo: Air cargo handled at Indian airports increased
by 7% year-on-year to 33.7 lakh tonnes in FY24.
● Pilot Licenses and Training: In 2023, a total of 1,622
commercial pilot licenses were issued, with 18% of those
issued to women, highlighting the increasing participation
of women in the sector. The Ministry of Civil Aviation and its
associated organizations have taken steps to increase the
number of pilots in the country. The Airports Authority of
India issued award letters for nine new Flying Training
Organisations (FTOs) at five airports.

Objectives ● Enhance Affordability of Air Travel

● Double Air Cargo Capacity
● Grow the MRO Industry
● Expand Airport Capacity
● Improve Regional Connectivity
● Regional Connectivity Scheme – Ude Desh Ka Aam
Naagrik (RCS-UDAN).
● Implement Fair Tariff Structures

Constraints

Capacity and ● Rapid expansion in India’s civil aviation sector is leading to

Infrastructure a scarcity of airspace, parking bays, and runway slots,
Limitations especially in metro airports like Mumbai and Chennai,
which are nearing saturation. This scarcity could reduce
efficiency and safety and have negative economic impacts.
● The expansion is particularly challenging in major cities
 due to limited hangar space and land availability for airport
expansion. While metro cities might support multiple
airports, non-metro cities may not, due to lower passenger
volumes.

Shortage of Skilled ● The aviation sector is expected to support 1.0 to 1.2 million
Workers jobs by 2035, necessitating the skilling of around 0.25
million people over the next decade. A lack of
industry-recognized skills—ranging from pilots and crew to
maintenance and ground handling staff—could constrain
sector growth.

● Tariff Determination: The shift from a single to a hybrid till

High Costs for structure for airport tariffs, while encouraging infrastructure
Passengers and investment, increases costs for airlines and passengers.
Cargo ● Taxes on Aviation Turbine Fuel (ATF): High taxes and
limited competition make ATF more expensive in India
compared to ASEAN and Middle Eastern countries. ATF
prices can be up to 60% higher due to high central and
state taxes, with fuel costs constituting 45% of operating
charges, compared to the global average of 30%.
● Aviation gasoline (AvGas): used for training aircraft, is
imported, expensive due to high taxes (18% GST), and has
unreliable supply, making flying training both costly and
time-consuming.
● GST on Aircraft Leases and Spare Parts: GST rates of
5% on aircraft leases and 5-28% on engines and spare
parts further elevate costs for the aviation sector.

Aviation Safety ● Despite a decrease in aviation safety violations from 442 in

Concerns 2016 to 337 in 2017, the absolute number of violations
remains high, indicating ongoing safety challenges.

Way Forward

Enhance Aviation ● Complete the construction of airports under the UDAN

Infrastructure initiative promptly. Revival of 50 unserved and underserved
airports/airstrips should be prioritized.
● Complete two airports in Major metros and significantly
increase infrastructure capacity at the 10 busiest airports.
● Include provisions for developing domestic hubs while
auctioning traffic rights.
Enhance Aviation ● Complete the construction of airports under the UDAN
Infrastructure initiative promptly. Revival of 50 unserved and underserved
airports/airstrips should be prioritized.
● Complete two airports in Major metros and significantly
increase infrastructure capacity at the 10 busiest airports.
● Include provisions for developing domestic hubs while
auctioning traffic rights.

Increase ● Reduce taxes on MRO services and consider granting

Investment in the infrastructure status to the MRO sector.
Sector ● Expand aircraft parking infrastructure at metro airports and
develop additional parking hubs at suitable locations,
accessible via short-haul flights.
● Monetize vacant real estate near Airports Authority of India
(AAI) airports in major traffic centers to boost
non-aeronautical revenues.

Address Skilled ● Promote collaboration between original equipment

Manpower manufacturers (OEMs), industry, and educational
Shortages institutions to teach advanced concepts in aviation, such as
management principles and IT in aviation.
● Develop long-term plans for advanced research in aviation
technologies to foster a manufacturing ecosystem.
● Expedite the launch of courses by the National Aviation
University in consultation with stakeholders.
● Encourage private sector involvement in sponsoring
aviation institutions, training programs, and R&D projects.
● Further reduce GST rates on AvGas to make flight training
more affordable.

Promote Air Cargo ● Support "Fly-from-India" initiatives by establishing

Growth transshipment hubs, with Delhi launching in May 2018 and
Chennai and Mumbai following.
● Develop an integrated digital supply chain or e-cargo
gateway based on the National Air Cargo Community
System (NACCS) platform. The system may include
digital business enablers such as:
○ e-Contracting/booking of cargo with financial
payment gateways.
○ e-Transportation multimodality (road-air first/last
mile connectivity).
 ○ e-Compliances (online clearances by six
participating government agencies initially, with
more to follow).
○ Cargo Sewa – a grievance redressal module linked
to Air Sewa.

Simplify the ● Further deregulate and open the aviation market to

Regulatory increase passenger and freight traffic.
Environment for ● Adopt a consistent tariff model to reduce passenger costs.
Airports ● Align taxation and pricing structures with global standards
by considering including ATF under GST.
● Amend the AAI Act to allow commercial use of airport land
by liberalizing end-use restrictions for current and future
airports.
● Strengthen regulatory capacity regarding public-private
partnerships and streamline the judicial review process to
ensure timely implementation of the Directorate General of
Civil Aviation (DGCA) decisions.
● Ensure the DGCA operates as an independent regulator,
with the Ministry of Civil Aviation focusing on policy
development.
● Ensure compliance with the regulatory and security
standards set by the International Civil Aviation
Organization (ICAO), possibly requiring additional skilling
of personnel. DGCA should build adequate staff
capabilities to maintain compliance.

Prioritize Aviation ● Shift focus to accident/incident prevention and preemptive

Safety measures.
● Enforce zero tolerance for safety violations.

Initiatives ● Increasing Foreign Direct Investment (FDI): Up to 100%

FDI under the automatic route in non-scheduled air
transport services, MRO for maintenance and repair
organizations, etc.

● National Civil Aviation Policy 2016 (NCAP): To promote

ease of doing business, deregulation, simplified
procedures, and e-governance.

● Regional Connectivity Scheme or UDAN (‘Ude Desh ka

Aam Nagrik’): To enhance connectivity to India’s unserved
 and under-served airports and envisages to make air travel
affordable.

● Digi Yatra Policy: For providing passengers seamless and

hassle-free experience at airports without the need for
verification of ticket and ID at multiple touch points.

● National Air Sport Policy (NASP) 2022: For making India

as one of the top sports nations by 2030 by providing a
safe, affordable, accessible, enjoyable, and sustainable air
sports ecosystem.

● Monetising Assets: Airport Authority of India (AAI) has

formed joint ventures and awarded a few under
public–private partnership (PPP) for a period of 50 years.

● Proliferation of Drones: Government has approved the

PLI scheme for drones and drone components as a
follow-through of the liberalized Drone Rules, 2021.

● Disinvestment of Air India: The process of strategic

disinvestment of 100% stake of Government of India in Air
India (AI) along with equity shareholding of Air India in Air
India Express (AIXL).

Railways

Facts Railway Freight and Passenger Traffic:

● Railway passenger traffic is on a recovery path post-COVID, with

passenger traffic originating in Indian Railways (IR) reaching 673
crore in FY24, which is a 5.2 percent increase compared to the
previous year.
● IR carried 158.8 crore tonnes of revenue-earning freight in FY24,
marking a 5.3 percent increase over the previous year. The freight
loadings of the railways achieved a CAGR of 7.1 percent from
FY20 to FY24.

Digital and Operational Enhancements:

● Indian Railways has introduced Wi-Fi facilities at 6,108 stations to

improve the passenger experience.
● The IRCTC’s online ticketing system is one of the largest
e-commerce websites in India and the Asia Pacific, accessible
through various platforms.
 ● The Freight Operations Information System manages all aspects
of freight operations, including booking and consignment tracking.

Capacity Building and Electrification:

● Indian Railways has introduced eight centralized training institutes,

training about 6.5 lakh railway officials in FY24.
● Under the Mission 100 percent Electrification Programme, the
electrified network of IR has been extended to 63,456 km, covering
96.4 percent of the network.

Issues Finance
● Private Sector Participation: Challenges in encouraging private
investment in infrastructure projects.
● Cost Overruns: Budget overshoots during project execution,
leading to increased financial strain.
● PPP Challenges: Difficulties in implementing Public-Private
Partnerships, often due to complex regulations.
● Underground Cross-Subsidy: Financial model where more
profitable sectors subsidize less profitable ones, often leading to
funding imbalances.
Construction
● Land Acquisition: Delays and conflicts in acquiring land for
infrastructure projects.
● Climate Change Planning: Need for integrating climate resilience
in project designs, often overlooked.
● Environmental Clearance: Time-consuming approval processes
that can delay projects.
● Red Tape: Bureaucratic hurdles that slow down project execution.
● Project Delays: Accumulation of factors leading to extended
project timelines.
Quality
● Scientific Design: Ensuring projects are based on sound
engineering principles to avoid future issues.
● Integration (Multimodal): Difficulty in coordinating multiple
transportation modes, leading to inefficiencies.
● Safety: Ensuring that safety standards are met during design and
execution.
● Skills Lacking: A shortage of qualified personnel, leading to
compromised project quality.
● High Burden: Increased workload on existing staff due to skill
gaps. (150%)
● Safety Impositions: Regulations that may be difficult to meet due
to High burden.
Maintenance, Repair, and Overhaul
● Inadequate Attention: Maintenance often neglected, leading to
deterioration of infrastructure.
● Funding: Insufficient budget allocations for regular upkeep and
repairs.
Monitoring
● Data: Inconsistent or inadequate data collection hampers effective
monitoring.
● Common Reporting Standards: Lack of uniform reporting
practices across different entities.
● Periodicity: Inconsistent monitoring intervals lead to gaps in
oversight.
● Various Levels of Government: Disparities in monitoring
practices at different governmental levels cause inefficiencies.

Operations

● Capacity

○ More Mobilization Than Carrying Capacity:

Overutilization of infrastructure leads to strain and
inefficiencies.
○ Efficiency
○ Technology: Outdated or inadequate technology reduces
operational efficiency.
○ Last Mile Connectivity: Gaps in connecting major
infrastructure to final destinations affect service quality.
○ Interoperability: Difficulty in integrating different systems,
leading to operational bottlenecks.
○ Vacancies in HR: Staff shortages lead to operational
delays and inefficiencies.
○ Poor Customer Service: Service quality suffers due to
operational inefficiencies.
Safety
○ Negligence of MRO: often overlooked, leading to safety
hazards.
○ Manual Signaling: Reliance on outdated manual systems
increases the risk of human error.
○ Sabotage and Vandalism: Deliberate damage to
infrastructure creates safety risks.
○ Slow Tech Adoption: Hesitance in adopting new
technologies undermines safety improvements.
Regulation
○ Inconsistent and outdated regulations hamper the
ability to maintain safety and operational standards.
Way ● Optimize Existing Infrastructure:
Forward ○ Complete ongoing projects to enhance capacity and
revenue. Upgrade and maintain the network to meet
demand.
● Reform Organizational Structure:
○ Open freight terminals, locomotives, and rolling stock to
private sector involvement with a fair regulatory framework.
○ Transfer coach and locomotive manufacturing and repairs
to private players, with IR retaining regulatory control for
safety.
○ Separate suburban passenger transport and introduce light
rail networks in urban areas under local governance.
● Revise Fare Structures and Monetize Assets:
○ Adjust pricing models for passenger and freight services to
ensure sustainability and competitiveness.
○ Establish the Rail Development Authority (RDA) for
dynamic pricing and balance between passenger and
freight segments.
○ Monetize railway land and increase retail revenue by
modernizing stations and involving private players.
● Enhance Safety and Modernize Stations:
○ Address safety issues through the Rashtriya Rail
Sanraksha Kosh (RRSK).
○ Remove level crossings, fence tracks, and implement
advanced safety technologies.
● Improve Business Operations:
○ Create an independent agency for technology adoption and
standardization.
○ Implement common transport documents and consistent
tariff rules.
● Establish an Independent Regulator:
○ Form the Rail Development Authority (RDA) to regulate
prices, protect consumer interests, promote efficiency,
attract investment, and oversee open access to freight
corridors.

Initiatives ● Amrit Bharat Stations

● DFCs (Dedicated Freight Corridors)
● Mumbai-Ahmedabad High-Speed Railway
● Gati Shakti Multi-Modal Cargo Terminal
● Virtual Aggregation Platform for Parcel Space
● PM Jan Aushadhi Centers in Railways

Protection:
● Electronic Interlocking
● Kavach: Automatic Train Protection
● Automatic Block Signalling
 ● 100 Percent Electrification (currently 96%)

Railway Accidents in India: Causes and Safety Measures

The Indian Railways is one of the largest railway networks in the world, with millions of
people relying on it for transportation every day. Statistics show that over the last two
decades, the number of derailments which constitute the majority of accidents has
drastically declined from around 350 per year around the turn of the millennium, to 22 in
2021-22.

Primary Reasons ● Infrastructure Defects: Railway infrastructure, including

behind Railway tracks, bridges, and rolling stock, often suffers from poor
Accident maintenance, aging, and lack of modernization. Built
mostly in the 19th and 20th centuries, much of it hasn't
been upgraded to meet current demands. The system also
faces issues like funding shortages, corruption, and
inefficiency, leading to overcapacity on many routes, which
increases accident risks.

● Human Errors: Railway staff are prone to mistakes due to

fatigue, negligence, and inadequate training. These errors
can result in wrong signalling, miscommunication, or
overlooked hazards, leading to accidents. Poor training
and communication further affect staff performance and
safety.

● Signalling Failures: The signalling system, crucial for

train movement, can fail due to technical glitches, power
outages, or human errors. Such failures can cause trains
to run on the wrong track or collide. For example, a recent
train accident in Odisha was linked to a signalling error due
to miscommunication.

● Unmanned Level Crossings (UMLCs): UMLCs, where

tracks cross roads without barriers or signals, pose a high
accident risk. Although all UMLCs on broad gauge routes
have been eliminated, many manned level crossings still
present significant danger. In 2018-19, UMLCs accounted
for 16% of train accidents in India.

Steps taken by ● Rashtriya Rail Sanraksha Kosh (RRSK): Established in

Railways to Reduce 2017-18 with a ₹1 lakh crore fund over five years for
Accidents critical safety works like track renewals, signalling, and
bridge rehabilitation.

● Technological Upgradation: Includes improved coach

designs, like Modified Centre Buffer Couplers and
Automatic Fire & Smoke Detection systems. Also includes
 the installation of KAVACH, an indigenous Automatic Train
Protection system.

● LHB Design Coaches: German technology-based

coaches used in Mail/Express trains, offering better safety,
fire resistance, higher speed potential, and longer service
life compared to older designs.

● GPS-based Fog Pass Device: A handheld GPS device

that assists loco pilots in foggy conditions by showing
distances to signals and level crossings, with a buzzer
alert for approaching landmarks.

● Modern Track Structure: Involves using stronger, more

durable materials like Prestressed Concrete Sleepers and
higher tensile strength rails to enhance track and bridge
durability.

● Ultrasonic Flaw Detection (USFD): A non-destructive

testing method that uses sound waves to detect and
replace faulty rails, reducing derailment risks.

● Mechanization of Track Maintenance: Utilizes machines

for track maintenance, improving safety and reducing
human error through automation.

● Interlocking System: Centralized control of points and

signals using electronic devices, reducing manual
operations and enhancing safety.

● Elimination of UMLCs: Progressive elimination of

Unmanned Level Crossings through closures, mergers,
manning, or construction of subways/bridges.

Various Committees Kakodkar Committee (2012):

recommended to ● Creating a statutory Railway Safety Authority.
ensure Railways ● Setting up a non-lapsable Rashtriya Rail Sanraksha Kosh
Safety (RRSK) of ₹1 lakh crore over 5 years for safety works.
● Adopting advanced technologies for track maintenance
and inspection.
● Improving human resource development and
management.
● Ensuring independent accident investigation.

Bibek Debroy Committee (2014):

● Separating the railway budget from the general budget.
● Outsourcing non-core activities.
● Creating a Railway Infrastructure Authority of India.

Vinod Rai Committee (2015):

 ● Establishing an independent Railway Safety Authority with
statutory powers.
● Setting up a Railway Accident Investigation Board to
conduct independent and impartial inquiries.
● Creating a separate Railway Infrastructure Company to
own and maintain railway assets.
● Introducing a performance-linked incentive scheme for
railway employees

Way Forward to ● Reassess IRMS Scheme: Evaluate the impact of the

Enhance Safety in Indian Railways Management Service (IRMS) on loyalty,
India ownership, and safety management. Consider adjustments
to maintain specialization and commitment to safety within
specific departments.

● Increase Safety Investments: Allocate more funds for

essential safety-related works, such as track renewal,
bridge repair, and signalling upgrades.

● Minimize Human Errors through Training: Regularly

train railway staff on the latest technologies, safety rules,
and procedures to reduce human errors.

● Eliminate Level Crossings: Replace unmanned and

manned level crossings with Road Overbridges (ROBs) or
Road Underbridges (RUBs).

● Adopt Advanced Safety Technologies: Expand the

installation of anti-collision devices like Kavach, Train
Protection Warning System (TPWS), and Automatic Train
Control (ATC) across the entire rail network.

● Introduce Performance Incentives: Implement

performance-linked incentives to reward railway staff for
adherence to safety rules and procedures.

● Outsource Non-Core Activities: Transfer non-core tasks,

such as managing hospitals and colleges, to private or
public sector entities to improve efficiency and reduce
costs.

● Establish a Railway Safety Authority: Create a statutory

Railway Safety Authority to set safety standards, conduct
audits, enforce accountability, and investigate accidents.

● Conduct Regular Safety Audits: Perform regular safety

audits and inspections to monitor performance, enforce
accountability, and apply penalties for lapses.
 ● Enhance Coordination and Communication: Improve
coordination and communication across the railway board,
zonal railways, and other units involved in railway
operations.

● Implement CIRAS: Establish a Confidential Incident

Reporting and Analysis System to encourage staff to
report safety deviations in real-time while ensuring
confidentiality.

Best Global United Kingdom:

Practise ● Train Protection and Warning System (TPWS):
Automatically stops trains that pass signals at danger or
exceed speed limits.
● European Train Control System (ETCS): Ensures
continuous communication between trains and signalling
centers.
● Rail Accident Investigation Branch (RAIB): Conducts
independent investigations of railway accidents and
incidents.

Japan:
● Automatic Train Control (ATC): Monitors and controls
train speed and braking.
● Comprehensive Automatic Train Inspection System
(CATIS): Detects train defects using sensors and cameras.
● Earthquake Early Warning System (EEWS): Alerts trains
to stop or slow down during seismic activity.

Ports, Shipping and Inland Waterways

Objective ● Double the share of freight by coastal shipping and inland

waterways from 6% to 12% by 2025.
● Increase port handling capacity
● Reduce turnaround time at major ports from 3.44 days
(2016-17) to 1-2 days (global average).
● Increase throughput of inland waterways
● Augment inland water transport capacity by increasing the
least available depth.

Facts: Ports and Shipping:

● Coastline: 7,500 km, 12 major ports, 205 non-major ports.
● Trade: 90% volume, 70% value via ports.
 ● Freight: Water transport only 6% of freight (2016-17), despite
being cost-effective.
● Capacity: 2161.85 MMT (2017), 52.44% utilization, 1133.69
MMT throughput.
● Sagarmala: Modernization, port connectivity, coastal
communities, industrialization, INR 35,000-40,000 crore cost
savings by 2025.
● Organizations: SDCL for funding, IPRCL for port-rail
projects.

Inland Waterways:
● Freight Traffic: <2% of organized freight, negligible
passenger traffic.
● India has a significant endowment of rivers, canals, and
other waterways, amounting to a total navigable length of
approximately 14,500 kilometers.

Operating cost
comparison
Sagarmala

Constraints

Modal Mix ● Roads (54%) dominate cargo transport, followed by rail

(33%), with waterways (6%) being underutilized despite
cost-effectiveness.

Draught Levels ● Most Indian ports lack the necessary 18-meter depth to
accommodate large container vessels, limiting their potential
as hub ports.

Connectivity to ● Weak hinterland connectivity between production centers and

Ports gateway ports leads to higher costs and delays due to
sub-optimal transportation modes.

Transshipment ● A significant portion of India's containers is transshipped

Port through foreign ports like Colombo, Singapore, and Dubai,
increasing costs and delays.

Charges by ● High and varied charges imposed by shipping lines contribute

Shipping Lines to a negative perception of sea transport.

Capital for Inland ● High capital costs make inland waterway transport (IWT)
Vessels freight uncompetitive, deterring investment in vessel
construction.

Technical Issues ● Limited depths, siltation, non-mechanized navigation

in Inland systems, and insufficient terminal facilities hinder IWT
Waterways utilization.

Regulatory ● Outdated state regulations governing cross ferry movement

Issues for Inland may not adequately address safety, creating barriers to inland
Waterways navigation.
Way Forward

Open Up India’s ● Attract international players to increase draft depth at ports

Dredging Market for large vessels by consolidating contracts and removing the
right to first refusal for Indian vendors.
● Achieve draft depths of 14-18 meters in major ports;
Visakhapatnam, Mormugao, and Kamarajar are key focus
areas.

Expedite ● Fast-track projects to improve port connectivity, establish

Implementation Coastal Economic Zones (CEZs), and build new ports.
of Sagarmala ● Implement single window cargo clearance and mechanized
handling to boost throughput.

Ease Business ● Reevaluate the Free on Board (FoB) policy to balance

Environment for importer-exporter risk.
Shipping and ● Enhance port technology and learn from successful global
Ports ports like Rotterdam and Singapore.

Develop ● Complete Cochin ICCT, Vizhinjam, and Enayam ports on

Transshipment schedule to form a transshipment cluster.
Ports and ● Enact the new Merchant Shipping Bill to improve business
Shipping Lines transparency and services

Improve Last ● Integrate IWT with multimodal connectivity, ensuring inland

Mile Connectivity terminals have road/rail links.
to Inland ● Procure floating terminals and cranes, and enhance linkages
Waterways between national and state waterways.

Facilitate Access ● Include inland vessel financing in priority sector lending;

to Capital for categorize them as infrastructure equipment.
Inland Vessels ● Provide viability gap funding for 10 years and waive waterway
charges until infrastructure is developed.
● Revive the shipbuilding finance scheme to boost the sector.

Address ● Prevent unjustified detention of vessels and issue clear

Technical and directives for security.
Regulatory ● Strengthen or establish Inland Water Transport Directorates
Constraints in or Maritime Boards in states for better regulation and
Inland facilitation of IWT.
Waterways

Logistics

Objectives ● Achieve multi-modal cargo movement to match global

logistics standards.
● Reduce logistics cost from 14% to less than 10% of
 GDP.
● Expand the logistics market
● Increase logistics sector jobs
● Reduce border compliance time to 24 hours for exports
and 48 hours for imports, as per the National Trade
Facilitation Action Plan.

Challenges

Sources ● High Logistics Costs: Driven by challenges like limited

access to finance, underdeveloped infrastructure, poor
connectivity, and an unfavorable modal mix.

● Technology Interoperability: Lack of software

interoperability across transport modes increases transit
times and requires manual interventions.

● Warehousing Challenges: Limited and fragmented

warehousing capacity, with low private sector involvement
and mostly unmechanized facilities, hampers efficiency.

● Competition and Capacity Utilization: Unequal

competition between public and private sectors leads to
underutilized capacity and inefficiencies.

● No ease of Storage: India's warehousing sector is

underdeveloped with limited capacity, low private sector
participation, and largely unmechanized facilities, leading
to inefficiencies in storage and handling.

● Investment Deficit: Insufficient investment in

infrastructure development, including transport networks
and warehousing, hampers the overall efficiency and
growth of the logistics sector.

Operations ● Border Compliance Delays: High average border

compliance and document processing times (106 hours
for export compliance, 264 hours for imports) slow down
logistics.

● Modal Link Missing: Poor integration between different

modes of transport (road, rail, waterways) results in
delays and inefficiencies, limiting the seamless movement
of goods across the country.

● Modal Mix: The logistics sector relies heavily on road

transport, with inadequate use of more cost-effective
modes like rail and waterways, leading to higher logistics
costs.
 ● Seamless Movement Issues: Poor last-mile
connectivity, lack of interoperable technology, and
inadequate infrastructure delay the movement of goods
across modes, especially in coastal shipping.

● Admin Delays: Bureaucratic hurdles, complex

regulations, and non-uniform documentation across
states lead to administrative delays, increasing
transaction costs and reducing logistics efficiency.

● Coordination Issues: Multiple stakeholders and

regulatory oversight in transport, warehousing, freight
forwarding, and value-added logistics lead to complexity,
inefficiencies, and increased transaction costs despite
GST improvements.

● Green Infrastructure: The sector lacks environmentally

sustainable infrastructure, such as energy-efficient
transportation and warehousing facilities, which is critical
for reducing carbon footprints.

Customer ● Last mile Connectivity: Inadequate infrastructure for

last-mile connectivity, especially in remote areas, causes
delays in delivery and increases logistics costs.

● Unorganised Delivery sector: A large portion of the

delivery sector remains unorganized, leading to
inconsistencies in service quality, inefficiencies, and
difficulties in scaling operations.

Way Forward ● Rationalize Tariffs: Streamline tariff policies across

different transport modes, ensuring consistent pricing,
especially in rail freight and air cargo.

● Centralized Transport Data Body: Establish an

overarching body to manage, analyze, and disseminate
transport data, integrating it into the developing logistics
portal.

● Enhance Warehouse Efficiency: Optimize food storage

with vertical silos and specialized wagons. Convert
existing warehouses into multi-storeyed facilities to
maximize space.

● Promote Multimodal Solutions: Develop multimodal

logistics parks to improve infrastructure, connectivity, and
modal mix. Leverage best practices from global logistics
parks.

● Private Participation in CONCOR & Ports: Allow

 private operators to use CONCOR terminals and port
facilities, enhancing infrastructure utilization and capacity.

● Increase Technology Use: Integrate IT across transport

modes with container tracking, RFID, and a single
logistics platform. Establish a dedicated office for
technology adoption.
● Leverage AI

● Adopt International Standards: Shift towards global

standards for transport equipment and software, ensuring
compatibility and efficiency in operations.
 National Logistics Policy
(Economic Survey 2023-24)

The National Logistics Policy (NLP) was launched in September 2022 with the aim of
enhancing business competitiveness through an integrated, efficient, sustainable, and
cost-effective logistics network. The policy leverages best-in-class technology and
processes to reduce logistics costs, improve the Logistics Performance Index ranking, and
create a data-driven decision support mechanism for an efficient logistics ecosystem.

Implementation

Integrated Digital ● Development of the Unified Logistics Integrated

Logistics Systems Platform, which integrates 36 logistics-related digital
systems/portals across eight Ministries, providing
real-time information on 1,800 data fields.
● Establishment of a Logistics Data Bank using RFID, IoT,
and Big Data analytics to track 100% of India’s
containerized EXIM cargo.

Service Quality ● An e-book on warehousing standards outlines existing

Standards standards issued by the Bureau of Indian Standards and
Warehouse Development and Regulatory Authority.

Capacity Building ● Integration of training courses on logistics and

PMGS-NMP with central and state training institutes.

State Engagement ● Development of State Logistics Plans aligned with NLP,

with 26 States having notified their State Logistics
policies. An annual “Logistics Ease Across Different
States (LEADS)” survey is conducted in all States and
Union Territories.

Sectoral Plans for ● Launch of the Coal Logistics Plan and Policy in February
Efficient Logistics 2024 and preparation of the Comprehensive Port
Connectivity Plan in 2022.

Facilitation of ● Review of guidelines for Multi-Modal Logistics Park.

Development of
Logistics Park