INFRASTRUCTURE INDUSTRY by ANOOP M S

INFRASTRUCTURE INDUSTRY







Submitted by

Anoop.M.S
1st semester MBA, ICM







INDIAN INFRASTRUCTURE AN OVER VIEW

An average economic growth of 8.6 per cent over the past three years has India bursting at the seams, so to speak, with its infrastructure sector stretched way beyond capacity. Spiraling demand for air travel, reliable power supply, and efficient ports, roads, and railways has not been matched by a proportionate increase in supply. It is widely acknowledged that severe supply-side bottlenecks can retard the economy’s potential rate of growth. There is a palpable urgency and competition among states to provide better infrastructure to users but most infrastructure projects are facing serious land constraints as well as the ire of those displaced by expansion of infrastructure facilities. Rural as well as urban land holders are now increasingly aware of their rights, demanding sufficient compensation to form a source of livelihood over a long period of time

To improve India’s poor roads, narrow bridges, and dilapidated airports which choke the flow of goods and people, a large injection of capital into the system is required. The infrastructure sector is being paid maximum policy attention to ensure that supply shortages do not trigger runaway inflation. At present, it offers significant opportunities to private investors, both domestic and foreign. The government has been dismantling longstanding barriers and actively encouraging private investment in big public-works projects. Private-sector companies have been invited to manage airports, which used to be exclusively government-run. The Government is helping private sector developers by lowering their risk in road projects. Telecom and aviation sectors have demonstrated that introduction of private capital introduces discipline of time management and leads to remarkable results even within the very short term. To harness private sector efficiencies in design and construction of infrastructure projects the Planning Commission envisages that at least 75 per cent of new Investment into infrastructure will come from the private sector—some in the form of fully private ventures,
others as public–private partnerships (PPPs).


According to the GOI the country needs US$ 320 billion (at 2005–6 prices) in infrastructure spending over the next five years and close to half of that will need to come from the private sector to maintain the current growth rate and to bring millions of Indians out of poverty.

Investment Required for Indian Infrastructure from 2007–12
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Power3 130
Railways 66
Highways 49
Ports 11
Civil Aviation 9
Other 55
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Total 320

Calculated at 1$ =45.00 rupees

The major sectors in Indian infrastructure scenario are
1. Power.
2. Telecom.
3. Transport.
4. Commercial and urban infrastructure.


Let us consider each sector separately.








1. Power
The power sector, an early pioneer of reform, has progressed through a decade of trial and plenty of error. The expectation of extensive private sector involvement in the power sector, especially in the generation segment, could not materialize. This is perhaps because the financial health of the distribution system was not capable of sustaining such large private investments in generation. The key indicator reflecting the sustainability of the sector is aggregate technical and commercial (ATC) losses.
India Energy Infrastructure: India is certainly among the fastest growing countries in the world and its energy needs have increased exponentially over the past few years. This has put immense pressure on the existing power infrastructure (India Energy Infrastructure). In recent times the Indian government has realized the gravity of the situation and has shifted its focus to the power transmission and distribution sector.
A key part part of the overall power reform strategy is to relay power effectively and efficiently from regions of surplus to deficit areas and load centers. The government is pushing ahead aggressively with its plans to build a national power grid. This is expected to ease peak-time shortages and make better use of available generating capacity.
Power is an essential requirement for all facets of our life and has been recognized as a basic human need. It is the critical infrastructure on which the socio-economic development of the country depends. The growth of the economy and its global competitiveness hinges on the availability of reliable and quality power at competitive rates. The demand of power in India is enormous and is growing steadily. The vast Indian power market, today offers one of the highest growth opportunities for private developers.
India is endowed with a wealth of rich natural resources and sources of energy. Resources for power generation are unevenly dispersed across the country. This can be appropriately and optimally utilized to make available reliable supply of electricity to each and every household. Electricity is considered key driver for targeted 8 to 10% economic growth of India. Electricity supply at globally competitive rates would also make economic activity in the country competitive in the globalized environment.
As per the Indian Constitution, the power sector is a concurrent subject and is the joint responsibility of the State and Central Governments. The power sector in India is dominated by the government. The State and Central Government sectors account for 58% and 32% of the generation capacity respectively while the private sector accounts for about 10%. The bulk of the transmission and distribution functions are with State utilities. The private sector has a small but growing presence in distribution and is making an entry into transmission. Power Sector which had been funded mainly through budgetary support and external borrowings, was opened to private sector in 1991.
Growth of Power Sector
Growth of Power Sector infrastructure in India since its Independence has been noteworthy making India the third largest producer of electricity in Asia. Generating capacity has grown manifold from 1,362 MW in 1947 to 113,506 MW (as on 30.09.2004). The overall generation in India has increased from 301 Billion Units (BUs) during 1992- 93 to 558.1 BUs in 2003- 04.
In its quest for increasing availability of electricity, India has adopted a blend of thermal, hydel and nuclear sources. Out of these, coal based thermal power plants and in some regions, hydro power plants have been the mainstay of electricity generation. Oil, natural gas and nuclear power accounts for a smaller proportion. Of late, emphasis is also being laid on non-conventional energy sources i.e. solar, wind and tidal.




Unbalanced Growth & Shortages
Along with this quantitative growth, the Indian electricity sector has also achieved qualitative growth. This is reflected in the advanced technological capabilities and large number of highly skilled personnel available in the country. While this must be appreciated, it must also be realized that the growth of the sector has not been balanced. The availability of power has increased but demand has consistently outstripped supply and substantial energy & peak shortages of 7.1% & 11.2% prevail in India. Coupled with this is the urban-rural dichotomy in supply- as per Census 2001, only about 56% of households have access to electricity, with the rural access being 44% and urban access about 82%. In the case of those who do have electricity, reliability and quality are matters of great concern. The annual per capita consumption, at about 580 kWh is among the lowest in the world.
These problems emanate from:
- inadequate power generation capacity
- lack of optimum utilisation of the existing generation capacity
- inadequate inter-regional transmission links
- inadequate and ageing sub-transmission & distribution network leading to power cuts and local failures/faults
- T&D losses, large scale theft and skewed tariff structure
- slow pace of rural electrification
- inefficient use of electricity by the end consumer
- lack of grid discipline
To mitigate the shortages, the Government of India (GoI) has set a goal - Mission 2012: Power for All. A comprehensive Blueprint for Power Sector development has been prepared encompassing an integrated strategy for the sector development with following objectives:-
- Sufficient power to achieve GDP growth rate of 8%
- Reliable of power
- Quality power
- Optimum power cost
- Commercial viability of power industry
- Power for all
Meeting the target of providing access to all households by 2012 by adding 100,000 MW capacity and integration of regional grids into the national grids with 30,000 MW of inter- regional transfer capacity by the year 2012 is a daunting task. The task would require massive addition to Generation capacity, Transmission system & Distribution network.
Accordingly, the programmes of the GoI revolve around the following:-
- Access to electricity to be available for all households in the next 5 years.
- Availability of power on demand to be fully met by 2012.
- Energy shortage and peaking shortage to be overcome by providing adequate spinning reserves.
- Reliability and quality of power to be supplied in efficient manner.
- Electricity Sector to achieve financial turnaround and commercial viability.
- Consumers’ interests to be accorded top priority
Power Generation Strategy with focus on an integrated approach including low cost generation, optimization of capacity utilization, controlling the input cost, optimization of fuel mix, technology up gradation, capacity addition through nuclear and non-conventional energy sources, high priority for development of hydro power, a comprehensive project monitoring and control system
- Transmission Strategy with focus on development of National Grid including Interstate connections, Technology up gradation & optimization of transmission cost.
- Distribution strategy to achieve Distribution Reforms with focus on System up gradation, loss reduction, theft control, consumer service orientation, quality power supply commercialization, Decentralized distributed generation and supply for rural areas.
- Regulation Strategy aimed at protecting Consumer interests and making the sector commercially viable.
- Financing Strategy to generate resources for required growth of the power sector.
Conservation Strategy to optimize the utilization of electricity with focus on Demand Side management, Load management and Technology up gradation to provide energy efficient equipment / gadgets.
- Communication Strategy for political consensus with media support to enhance the general public awareness.
Power Sector Reforms
The power sector continues to be one of the greatest constraints to maintaining growth and further reducing poverty in India. 45% of the households remain unconnected to the public power system, and those who are connected, often receive infrequent and unreliable service, making power supply a brake on private sector development and economic growth.
The State Electricity Boards (SEBs) have been incurring losses and were unable even to make payments to the CPSUs like NTPC, PGCIL etc for purchase of power. The accumulation of outstanding to the CPSUs grew over Rs 40,000 crore, seriously hampering their capacity addition programme. The reform of the power sector is crucial, as financial losses amount to 1.5% of the GDP.
2. TELECOM
Telecom sector reforms have been gradual and government privatized green-field development right from the beginning. Technology played an important role in development of wireless telephony in the country. Thanks to deliberate regulatory reforms and market forces unleashed
by free competition there seems to be no model superior to private ownership of wireless telephony. India has emerged as the third largest telecommunication network in the world after China and the US with the total telephone (mobile + fixed line) subscriber base touching 257 million at end-October 2007. With this, the overall teledensity has reached 22.5 per cent as against 16.9 per cent in December 2006. With the target of 250 million phones achieved ahead of this year’s December deadline, the Government is planning to have 500 million connections by 2010, besides nine million broadband lines by 2007-end. Compared to telephony systems of
other countries, pricing of the Indian system is the most competitive. One could argue about the service standards but it can be handled by a vigilant regulatory authority. However, low penetration of rural wireless telephony remains a challenge to policy makers as well as to telecom experts. At present, about 68 per cent of the population lives in rural areas and mobile telecom penetration is a meager 1 per cent. Compared with urban mobile coverage at about
40 per cent, there is a huge potential to increase rural penetration in the country. Low cost handsets, coupled with lower delivery cost of wireless services has driven the market in 2007. Most mobile operators in India will gain from the increased mobile penetration and their subscriber base will grow at a faster pace in the next three years.
The unleashing of USO funds for mobile telephony has led Indian cellular operators
to line up investments of about US$ 20 billion over the next two years to bring over 80 per cent of the population under mobile coverage. The planned investment for the next couple of years is 50 per cent higher than what has been invested in the last twelve years. Sniffing huge
potential in the mobile penetration and coverage area of networks, service providers are planning capital expenditure to the tune of US$ 10 billion each in fiscals 2008 and 2009. Given such huge capex plans, the population coverage of mobile services would exceed 80 per cent in
the next two years, while providing a much-needed thrust to wireless penetration.



The telecom industry is one of the prime contributors to India's GDP. The once monopolistic market is today, highly competitive. This has necessitated the growth of India telecom infrastructure.

From the time of the British Rule, the Telecom Industry was under the strict supervision of the government. The trend continued even after independence until the late 1990s when the following initiatives were taken up by the government:
• The telecom sector was opened up for private investment as a part of liberalization-privatization-globalization policies.
• On 1st October, 2000 the Government corporatized its operations wing under the name of Bharat Sanchar Nigam Limited (BSNL).
• The criteria for private companies for entering the telecom sector was relaxed.
What followed, was a rapid expansion of the market for mobile phones and allied innovations, hence bringing about a new era in the telecom sector in India.

India telecom infrastructure – present status

The government of India believes that for rapid economic development backed by social welfare, the telecom infrastructure in India needs to be uplifted. This necessitates the formulation of a comprehensive telecom policy that visualizes the future of the Indian telecom market.

By the beginning of 2007, the telecom network in India consisted of 48 million fixed-line connections. Nowadays, a vast majority of the population has access to telephone services. The highly competitive environment has ensured low pricing of goods and services that caters to the weaker sections of the society. Moreover, the enhancement of India telecom infrastructure has also widened the scope of the telecom sector to other allied ventures like mobile services, Internet, cable TV services, E-Commerce, and other forms of Information Technology (IT).

In terms of long distance calls, India telecom infrastructure has made remarkable progress. Latest technologies, like use of fiber-optic cables has enhanced call-clarity and reduced call-costs to a large extent.

The present telecom and mobile-phone service providers in India, apart from BSNL include Hutchison Essar, Reliance Communications, Bharti Airtel, Idea, Tata Indicom, and a few others.



Market share distribution mobile subscribers-Dec 08



Factors driving growth for passive infrastructure sharing:

• High usage and limited spectrum availability
• Quality of service
• Enhancement of profitability
• Entry of new players and expansion plans of existing operators
• Shorter rollout time, a key necessity
• New technologies to further stimulate demand

3. TRANSPORT

India’s transport sector is large and diverse; it caters to the needs of 1.1 billion people. In 1997, the sector contributed 4.4 percent to the nation’s GDP, with road transportation contributing the lion’s share.

Good physical connectivity in the urban and rural areas is essential for economic growth. Since the early 1990s, India's growing economy has witnessed a rise in demand for transport infrastructure and services by around 10 percent a year.

However, the sector has not been able to keep pace with rising demand and is proving to be a drag on the economy. Major improvements in the sector are therefore required to support the country's continued economic growth and to reduce poverty.

Railways.
Indian Railways is the largest railway in Asia and the fourth most heavily used system in the world. It carries some 14 million passengers a day and is one of the world’s largest employers. Till recently, the railways played a leading role in carrying passengers and cargo across India’s vast territory. However, with tariff policies that overcharge freight to subsidize passenger travel, the movement of freight is increasingly shifting from railways to roads.

Roads
Roads are the dominant mode of transportation in India today. They carry almost 90 percent of the country’s passenger traffic and 65 percent of its freight. The density of India’s highway network -- at 0.66 km of highway per square kilometer of land – is similar to that of the United States (0.65) and much greater than China's (0.16) or Brazil's (0.20). However, most highways in India are narrow and congested with poor surface quality, and 40 percent of India’s villages do not have access to all-weather roads.

Ports
India has 12 major and 185 minor and intermediate ports along its vast coastline. These ports serve the country’s growing foreign trade in petroleum products, iron ore, and coal, as well as the increasing movement of containers. Inland water transportation remains largely undeveloped despite India's 14,000 kilometers of navigable rivers and canals.
Aviation
India has 60 airports, including 11 international airports. The dramatic increase in air traffic for both passengers and cargo in recent years has placed a heavy strain on the country's four major airports.
Transport infrastructure in India is better developed in the southern and southwestern parts of the country.
The major challenges facing the sector are:
• India’s roads are congested and of poor quality. Lane capacity is low - most national highways are two lanes or less. A quarter of all India's highways are congested, reducing truck and bus speeds to 30-40 kmph. Most roads are of poor quality. Road maintenance remains significantly under-funded - only around one-third of maintenance needs are met. This leads to the deterioration of roads and high transport costs for users.
• Rural areas have poor access. Roads are significant for the development of the rural areas - home to almost 70 percent of India's population. Although the rural road network is extensive, some 40 percent of India’s villages do not have access to all-weather roads and remain cut off during the monsoon season. The problem is more acute in India's northern and northeastern states which are poorly linked to the country’s major economic centers.
• The railways are facing severe capacity constraints. All the country’s high-density rail corridors face severe capacity constraints. Also, freight transportation costs by rail are much higher than in most countries as freight tariffs in India have been kept high to subsidize passenger traffic.
• Urban centres are severely congested. In Mumbai and other metropolitan centers, roads are often severly congested during the rush hours. The dramatic growth in vehicle ownership – at some 15 percent a year during the past decade - has reduced rush hour speeds to 5-10 km an hour in the central areas of major cities.
• Ports are congested and inefficient. Port traffic has more than doubled during the 1990s, touching 521 million tons in 2004-05. This is expected to grow further to about 900 million tons by 2011-12. India's ports need to significantly ramp up their capacity and efficiency to meet this surging demand.
Airport infrastructure is strained. Air traffic has been growing at over 15 percent a year leading to severe strain on infrastructure at major airports, especially in the Delhi and Mumbai airports which account for around 50 percent of nation’s air traffic.
Key Government Strategies
According to India’s Tenth Five Year Plan, the Government aims to modernize, expand, and integrate the country's transport services. It also seeks to mobilize resources for this purpose and to gradually shift the role of government from that of a producer to an enabler. In recent years, the Government has made substantial efforts to tackle the sector’s shortcomings and to reform its transport institutions. These include:

• Increasing public funding for transportation in its Five Year Plans.
• Launching the ambitious National Highway Development Program with improved connectivity between Delhi, Mumbai, Chennai and Kolkata, popularly called the Golden Quadrilateral, in the first phase, and now followed by a seven phase program ending in 2015.
• Financing the development and maintenance of roads by creating a Central Road Fund (CRF) through an earmarked tax on diesel and petrol.
• Operational sing the National Highway Authority to act as an infrastructure procurer and not just provider.
• Amending the National Highway Act to expedite land acquisition, permit private financing and allow tolling.
• Improving rural access by launching the Pradhan Mantri Gram Sadak Yojana (Prime Minister’s Rural Roads Program).
• Reducing the congestion on rail corridors along the highly trafficked Golden Quadrilateral and improving port connectivity by launching the National Rail Vikas Yojana (National Railway Development Program) and more recently the development of dedicated freight corridor.
• Upgrading infrastructure and connectivity in the country's twelve major ports by initiating the National Maritime Development Program.
• Privatization and expansion of the Mumbai and New Delhi Airports.
• Enhancing sector capacity and improving efficiencies through clear policy directive for greater private sector participation. Large parts of the NHDP and NMDP are to be executed through public private partnerships (PPP).
The importance of transport in national economy has been enumerated below.

Transport is the basic service for increasing national income:- As national income rises, infrastructure adopts to support changing patterns of demand, with the shares of power, transport and communication. Transport is one of the most pervasive services within the country. It can be described as a vital sector of growth.

Transport helps to create new economic activity. :-
economic development in a country requires adequate and effective transport services. The degree to which transport creates new activity may depend upon equally necessary condition within the economy. Transport is one of the essential elements of an integrated plan for area development.

Transport system is the indicator of development in a country:-
One of the major indicator of development of a country is the existence of high quality transport network, availability of number of mechanized motor transport, adequate number of railway, air and shipping services as per the demand of the users. So transport development is synonymous with economic growth. To overcome the deficiencies in various modes of transport, emphasis is laid on improvement of transport infrastructure. Effective transportation systems have been playing a vital role in the economic prosperity of a country.

Transport enlarge the trading activities of a country:-
The industrially developed countries lay more emphasis on the development of this sector to enlarge not only their trade but also to increase the frequency of the passenger service. The search for an integrated system combines the merits of the individual transportation modes and eliminates the uneconomic and unproductive activities.

Transport influence daily life of the people: -
It influences economic development, population distribution, energy consumption, access to markets, and materials and pace. On the international scene, transportation is the connecting link, which permits the exchange of goods and the people among the nations of the world. It contribute substantially to GDP, provides employment for millions of people.

Transport system is a catalyst of the socio-economic development:-
transportation plays an important role in rapid economic development of a country. Improved and effective transportation is indispensable to economic progress. Transport sector bears a close and complex relationship with all other sectors of the economy. Transport acts as an acceleration and catalyst for faster, higher and quicker economic growth.

Transport promotes industrialization:-
It increases wealth, promotes industrialization and transforms the organization of industry and transforms the organization of industry, creates urban conglomeration, raises the standard of living of the people and promotes culture. Transport infrastructure services can have significant effects in improving quality of life of the people.

Transport provides access to the rural area: -
Good networks of railway and roadways, navigable rivers and canals, coastal waterways and airways turn the liability of far regions into assets by uniting them into a single self-contained economy. Transport system is thus, the nerves of an economy, which stimulates its developments and activities.

Transport system provides the vital linkage between production and consumption Development of transport infrastructure helps the globalization of production process. Transport is essential in an economy because the demand and supply of goods don’t reach equilibrium at any particular area or point of time. The need for dispatching the goods arises as they are often produced in one place to be sold and consumed in another place. Transport provides the vital link between the production and consumption point and the objective of production is not fulfilled till the commodity reaches the consumer. Transport, thus, form an integral part of the broader systems of production, distribution and marketing. Transport Infrastructure services is critical for diversification and modernisation of production and distribution process.
Transport is the key factor to link dispersed (scattered) areas:- As a sector of the national economy, transport is characterized by long range investment much of which is devoted for creation of basis facilities such as rail tracks, roads, ports, air terminals, ship building and repairing yards.
Transport increases the economic efficiency of resources. The economic efficiency of resources of various countries is increased with the growth of different mode of transportation over the years. Transport reduces the cost of production and distribution by effective, planned, integrated and co-ordinated network. All nations of the world, whether developed or developing, has to depend largely on transport development for better utilization of resources.
Transport provides mobility of labour and boost tourism industry:-The transport system removes the in-equilibrium in labour market by providing means for mobility of labour from surplus area to deficient areas. The tourism industry also can grow with the transport network to places of tourist importance. Connectivity of transport links help the people to move from one place to the other not only for commercial purpose but also to keep social link with each other.
Adequate transport facilities in a country help to combat the natural calamities:- Quick relief work can be initiated after the occurrence of natural calamities such as flood, drought, famine, earthquake and tsunami in a better way with the existence of fast transportation network.



4. COMMERCIAL AND URBAN INFRASTRUCTURE
Commercial and urban infrastructure is dictated by the topography and demography of a place. It is a vast canvas to cover and there are many experiments which have been tried out in this area. Urban transportation is a very important area in this context. Rail based urban mass transport system has emerged from the shadows and the well-run, comfortable metro system of Delhi has become as important to the fast expanding city as its expansive road network. Metropolitan cities—Mumbai, Kolkata, Hyderabad, and Chennai—are actively pursuing metro rail projects to meet the growing demand for urban transportation.

Infrastructure development has a key role to play in both economic growth and poverty eduction. Investors, policymakers and citizens alike acutely feel the constraint of physical infrastructure on economic growth. Many of the ingredients for rapid economic growth and poverty reduction in India are already in place and the transformation of the lives
of millions seems within reach. Yet there is a long way to go. The challenge of finding the money to invest in infrastructure projects without jeopardizing fiscal health has been keeping
Policymakers on their toes. In this chapter we discuss the efforts made by the government in this area. Many initiatives taken in the infrastructure sector, laudable as they are, are coming under the scrutiny of the public and the investors. The commercialization of infrastructure is not
progressing fast enough to provide decent living conditions to citizens at large. Young India struggles daily to reach school and workplace and yet remains optimistic. We describe here,
recent developments in different sub-sectors within the infrastructure sector. Challenges are emerging with changes in technology in the telecom sector. Development in the power and transport sectors is slowing down due to a plethora of issues, which we study here. Within the transport sector we map the growth trajectory of those sub-sectors that are expanding rapidly. Within urban infrastructure we take note of the important projects in progress and study the
consequences of long-term policy failure.

The development of urban infrastructure has been fairly stop-gap in the last few decades. Barring a few large projects in a handful of cities, paucity of urban infrastructure projects is glaring. Whereas city mass transport systems and airports have found place in developmental plans, essential services such as roads, drinking water, sewage management, drainage, and primary health—the under belly of urban infrastructure have not yet come on the developmental radar. Efforts are being made to develop urban infrastructure in a sustainable fashion. Government wants ULBs to seriously take up the planning and development of urban infrastructure. The deluge in Mumbai was a reminder that decisions made by authorities without due regard for consequences can prove painful later on. The government is putting in place a policy framework
under JNNURM, which would allow large infrastructure projects to come up in PPP. With the economy growing at 8 per cent plus rate, business confidence in the economy is at a ten year high and the government is targeting an economic growth rate of 8 per cent during the Eleventh Plan (2008–12). The picture is one of brimming optimism; the need of the hour is to ensure that
the irrational measures of the polity do not take a toll on the pace of the acceleration of reforms


















CONCLUSION

India has made considerable progress in the past decade in attracting private investment into infrastructure: first in telecommunications, then in ports and roads, and most recently in airports and container freight. But progress in other sectors is painfully slow. There is a broad positive correlation between GDP growth and infrastructure spending (as measured by the annual share of infrastructure spending in GDP) in India in the post-independence period up to 1994.
As to the causality of this relationship, what is evident is that each time growth has faltered on account of drought, foreign exchange crisis or political upheaval, infrastructure spending as a share of GDP has invariably suffered (Lall and Rastogi, 2007). India’s Planning Commission, in its approach paper to the 11th Five Year Plan, acknowledges the gravity of the problem and
calls for infrastructure spending to rise to 8 per cent of GDP in the period 2008–12 from 4.6 per cent achieved in 2005–6. According to the Indian government, the country needs US$ 320 billion in infrastructure spending over the next five years (close to half of that will need to come from the private sector) to maintain the current growth rate and to bring millions of Indians out of poverty. Even that may not be enough. The Parekh committee recommended that the infrastructure spending target be lifted another 48 per cent to US$ 475 billion (GoI, 2007a). Public figures who used to be suspicious of profit-seeking companies are increasingly calling for PPPs, realizing that is the only way they can get power, roads, and ports to the people, given the limits of government funding.
Notable among the highlights of the year 2007 has been the reconfirmation that rural as well as urban consumers want quality power rather than subsidized power. Three UMPPs have been awarded to private sector. Rural mobile telephony has taken off in earnest. Minimum subsidy
bidding is found to be a better way to provide infrastructure services using PPP than administrative controls. Incipient shortage of skilled construction workers and competition among IT companies and engineering firms to attract engineers, suggest that PPP to build infrastructure projects has gained sufficient maturity in the country.