Top 12 Challenges Facing India in the Decades Ahead – 12 – Infrastructure

When it comes to infrastructure in India, as notes, it really is A Long Road Ahead. China really is decades ahead of India in terms of its transportation and communication infrastructure. In India, airports, rail networks, roads and ports are all in desperate need of repair, expansion, replacement, and, in some regions, creation! As Manish Agarwal stated in A Passage to Modern India (PDF) in the Summer, 2013 issue of Gridlines, decades of underinvestment have left the country with dire deficits in such critical areas as railways, roads, ports, airports, telecommunications and electricity generation. In the World Economic Forum’s Global Competitiveness Report for 2011-2012, India ranked 89th out of 142 countries for its infrastructure. In this light, it’s remarkable that India is ranked 9th in (nominal) GDP by UN, IMF, and World Bank!

Roads are terrible. In a country where 65% of all freight is transported by road, this is a supply management nightmare. In fact, the traffic situation is so severe that the maximum highway speed for trucks and buses is only 30-40 km per hour! (As per a report of the Sub-Group on Policy Issues of the Government of India’s Ministry Road Transport and Highways, found on the Ministry’s Web Site.) And with the urban population expected to increase by 33% in the next five years, the situation is only going to get worse before it gets better.

Even if India succeeds in spending the 1 Trillion allocation it has committed to between now and 2017 — targeted at three airports, two ports, an elevated rail corridor in Mumbai, and almost 9,600 kms of road, the congestion eliminated will only be a drop in the bucket in a country with 87 airports that offer commercial service (Source: Wikipedia), 13 major and 187 notified minor and intermediate ports (Source: Wikipedia) of which 139 are operable (Source: India Core), 64,460 kms of rail (which is the fourth largest rail network in the world, source: Wikipedia), and 4,236,000 kms of road in 2011 (Source: Wikipedia). Thus, even if India managed to achieve its plan of building 20 kms of road a day, or 7,300 kms a year, that would only increase the total capacity by at most 0.17% annually, and do almost nothing to address the severe over-congestion plaguing the urban areas and major trade routes. Especially when India is adding about four million four-plus tire vehicles every year and about eleven million two-wheelers.

The airport situation is just as bad. Even though the country has 87 airpots with commercial service, the India Planning Commission estimates that the country will need an additional 180 airports in the next decade — so improving 3 is not going to do much! (See the 12th 5-Year Plan from 2012-2017, page 21.)

The port situation isn’t any better. As per IndiaCore, the current capacity at major ports is overstretched. The major ports together have a capacity of 215 million metric tonnes (MMT) at 1997- 98 levels (and 288 metric tons at 2001-2002 levels). However, the traffic for total ports in India was worth 740.3 MMT in 2009 and 818.7 MMT in 2010 and this is expected to rise to 1,373.1 MT in 2015 at a compound annual growth rate of 7.6% a year. In other words, throughput increased by a factor of 4 during the zeroes and is expected to increase another 50% by the end of 2015. However, investment in Indian ports in the zeroes was a mere 2.5 Billion. (Source: Global Investments in Ports and Terminals) To put this in perspective, the US West Coast ports are investing 12 Billion (Source: Pacific Merchant Shipping Association) just to handle a few more hundred MMT.

When you consider the inadequacy of the road, rail, air, and ocean transport networks, one has to wonder how India is going to cope with the expected annual rate of increase of 12% for domestic cargo and 10% for international cargo over the next five years, at the same time passenger traffic is expected to increase 12% annually domestically and 8% annually internationally. It’s a huge challenge, and one that’s not going to be solved anytime soon.