ROAD TRANSPORTATION INDUSTRY bY JISHA K R

ROAD TRANSPORTATION






ASSIGNMENT NO: 1


ASSIGNMENT SUBMITTED TO

Prof.JAIMOHAN NAIR


ASSIGNMENT SUBMITTED BY

JISHA.K.R
IMK-ICM
POOJAPURA





ROAD TRANSPORTATION

INTRODUCTION

India has an extensive network of major and minor roads as well as a good number of well maintained networks of national highways connecting all major cities. The network figures some 3.32 million km that includes national high ways, state high ways, and district road and rural road. The length of national highways in the country is 65,569 presently. There are 259 national high ways on the basis of their route numbers.

Road carry about 70% of freight traffic , 85% of passenger traffic in the country, national highways carry about 40% of vehicular traffic in the country. Traffic on the road
is growing 7% to 10% per annum.The roadways provide transportation to millions of people every day. However vast section of country’s road network, especially in rural area are still in process of development. The government of India has been continuously developing the linking roads between major cities. The minor roads in villages and small towns across the country are also in a process of development. Transportation can be roughly grouped into two categories; transportation of goods and transportation of people. In many countries licensing requirement and safety regulations ensure a separation of the two industries.

The nature of goods transportation depends, apart from the degree of development of local infrastructure, on the distance the goods are transported by road, the weight and volume of the individual shipment and the type of goods transported. For the short distance and light, small shipment a van may be used. For large shipments truck is appropriate. People are transported on roads either in individual cars or automobiles or in mass Transit/public transport by bus. Special modes of individual transport by road like rickshaws are locally available.







HISTORY OF ROAD TRANSPORTAION


The first method of road transportation was oxen or even human beings carrying goods over a track. As commerce increased tracks over flattened or widened to accommodate the activities .Later a frame was used to drag loads was developed. The wheel came still later probably preceded by use of logs as rollers.
During the industrial revolution and because of increased commerce that came with it improved roadways became imperative. The problem was rain combined with dirt roads became commerce-miring mud .JOHN LOUDEN MC ADAM designed first modern high ways. He developed inexpensive Paving material of soil and stone aggregate, and he embanked roads a few feet higher than the surrounding terrain to cause water to drain away from the surface. At the same time, Thomas Telford, made substantial advances in the engineering of new roads and the construction of bridges, particularly, the London to Holyhead road.
Various systems had been developed over centuries to reduce bogging and dust in cities, including cobblestones and wooden paving. Tar-bound macadam (tarma various systems had been developed over centuries to reduce bogging and dust in cities, including cobblestones and wooden paving. Tar-bound macadam (tarmac) was applied to macadam roads towards the end of the 19th century in cities such as Paris. In the early 20th century tarmac and concrete paving were extended into the countryside.
MODERN ROADS

Today roads are principally asphalt or concrete.Asphalt is known as flexible pavement. one which slowly will "flow" under the pounding of traffic. Concrete is a rigid pavement, which can take heavier loads but is more expensive and requires more carefully prepared sub base. So, generally, major roads are concrete and local roads are asphalt. Often concrete roads are covered with a thin layer of asphalt to create a wearing surface.
Modern pavements are designed for heavier vehicle loads and faster speeds, requiring thicker slabs and deeper subbase. Subbase is the layer or successive layers of stone, gravel and sand supporting the pavement. It is needed to spread out the slab load bearing on the underlying soil and to conduct away any water getting under the slabs. Water will undermine a pavement over time, so much of pavement and pavement joint design are meant to minimize the amount of water getting and staying under the slabs.Shoulders are also an integral part of highway design. They are multipurpose; they can provide a margin of side clearance, a refuge for incapacitated vehicles, an emergency lane, and parking space. They also serve a design purpose, and that is to prevent water from percolating into the soil near the main pavement's edge. Shoulder pavement is designed to a lower standard than the pavement in the traveled way and won't hold up as well to traffic. (Which is why driving on the shoulder is generally prohibited.)
Pavement technology is still evolving, albeit in not easily noticed increments. For instance, chemical additives in the pavement mix make the pavement more weather instance, chemical additives in the pavement mix make the pavement more weather hydroplanning, instance, chemical additives in the pavement mix make pavement more weather traffic control. Nearly all roadways are built with devices meant to control traffic. Most notable to the motorist are those meant to communicate directly with the driver.

Broadly, these fall into three categories: signs, signals or pavement markings. They help the driver navigate; they assign the right-of-way at intersections ; assign the right-of-way at intersections as speed limits and parking regulations; they advise of potential hazards; they indicate passing and no passing zones; and otherwise deliver information and to assure traffic is orderly and safe.

200 years ago these devices were signs, nearly all informal. In the late 19th century signals began to appear in the biggest cities at a few highly congested intersections. They were manually operated, and consisted of semaphores, flags or padles or in some cases colored electric lights, all modeled on railroad signals. In the 20th century signals were automated, at first with electromechanical devices and later with computers. Signals can be quite sophisticated: with vehicle sensors embedded in the pavement, the signal can control and choreograph the turning movements of heavy traffic in the most complex at a few highly congested intersections. They were manually operated, and consisted of semaphores, flags of intersections. In the 1920s traffic engineers learned how to coordinate signals along a thoroughfare to increase its speeds and volumes. In the 1980s, with computers, similar coordination of whole networks became possible. In the 1920s pavement markings were introduced. Initially they were used to indicate the road’s centerline. Soon after they were coded with information to aid motorists in passing safely.

Later, with multi-lane roads they were used to define lanes. Other uses, such as indicating permitted turning movements and pedestrian crossings soon followed.In the 20th century traffic control devices were standardized. Before then every locality decided on what its devices would look like and where they would be applied. This could be confusing, especially to traffic from outside the locality. In the United States standardization was first taken at the state level, and late in the century at the federal level. Each country has a Manual of Uniform Traffic Control Devices (MUTCD) and there are efforts to blend them into a worldwide standard.
PNEUMATIC TIRES
As the horse-drawn carriage was replaced by the car and lorry or truck, and speeds increased, the need for smoother roads and less vertical displacement became more apparent, and pneumatic tires were developed to decrease the apparent roughness. Wagon and carriage wheels, made of wood, had a tire in the form of an iron strip that kept the wheel from wearing out quickly. Pneumatic tires, which had a larger footprint than iron tires, also were less likely to get bogged down in the mud on unpaved roads.



MEANS OF TRANSPORTATION

• BUSES

Buses are very cheap in most cities but also very crowded and have unpredictable timings, frequently necessitating long waits. In the big cities and towns of India, buses are the major mode of transport. Luxury and air-conditioned buses also service some cities. Most means of transportation within cities is run by the government. Buses are categorized, based upon the number of seats, the time it takes to travel from A to B, and general comfort. Express and limited buses are usually more expensive options compared to the normal ones, the latter being increasingly modern whilst cheap and easily accessible.
• VANS
Vans or Mini-Buses is a more prevalent form of transportation especially in remote areas and common route with consistent yet small transportation needs. Not to mention it's presence in other cities, where it is often a traffice menace.

• AUTORICKSHAWS

An auto rickshaw (auto or rickshaw or tempo in popular parlance) is a three-wheeler vehicle for hire. They typically have no doors or seatbelts. They are generally yellow or green in colour and have a black canopy on the top. An auto rickshaw is generally characterized by a tin/iron body resting on three small wheels (one in front, two on the rear), a small cabin for the driver in the front and seating for three in the rear. Their design varies considerably from place to place. In some locations, they have an extra plank on the seat to accommodate a fourth passenger. Hiring an auto often involves bargaining with the driver.


• TWO WHEELERS
Two wheelers are the most popular mode of transport in terms of number of vehicles. There are two main types of powered two-wheelers, the motor scooter and the motorcycle. The scooter was first built in post-war Italy as a two-wheeler with small wheels (supposedly to utilize war-surplus aircraft tail wheels). It differs from the motorcycle in having the driver seated with his legs together, and is thus favoured by women drivers (assari, a common Indian dress for women, doesn't permit separation of legs). The Italian Vespa scooter was built in India under license by Bajaj Auto, and together with the Italian Lambretta scooter dominated the two-wheeler scene. Much later came the hugely successful Bajaj Chetak scooter, but Bajaj has since lost the market to new entrants like Kinetic Motors. In the past decade, lightweight mini-scooters like the TVS Scooty and the Honda Activa have made it much easier for women to travel.

The post-war years saw the predominance of foreign motorcycles, mainly British ones like Norton, BSA, and Ariel etc. In the 1960s Indian-made bikes like Royal Enfield Bullet (a 350cc British design), Jawa (a 250cc Czech design) and Rajdoot (a 175cc Polish design) predominated. After the beginning of liberalization Indian versions of popular Japanese bikes such as Suzuki, Honda, Kawasaki and Yamaha hit the roads, leading to motorcycles outstripping scooters in popularity. The overwhelmingly large number of bikes sold have engines 175cc or less.
• CARS
The demand for cars in India is one of the highest in the world. In2002 more than 50,000 new cars were brought in Delhi alone. Compact cars predominate due to low cost. Maruti, Hyundai, Tata Motors and Ford are the most popular brands in the order of their market share. The clunky Ambassador once had a monopoly but is now an icon of pre-liberalization India , and is still used by politicians.Maruti 800 launched in1984 created the first revolution in the Indian auto sector because of its low pricing. It had the highest market share until 2004, when it was overtaken by other low cost models of Maruti and those of foreign entrants like Hyundai. Over the 20 year period since its introduction about 2.4 milion units of Maruti 800 have been sold.


TRADITIONAL MEANS OF TRANSPORT

• TRAMS

The advent of the British saw trams being introduced in many cities including Mumbai and Calcutta . They are still in use in Calcutta and provide a pollution-free means of transportation. The nationalised Calcutta Tram Company has introduced buses on certain routes in order to generate more revenue and reduce losses.

• CYCLE RICKSHAW

Cycle rickshaws were introduced into India in 1920s from the Far East.They are bigger than a tricycle where two people sit on an elevated seat at the back and a person pedals from the front. In the late 2000's, they were banned in several cities for causingtraffic congestion. However, environmentalists have supported the retention of cycle rickshaws as a non-polluting and inexpensive mode of transport.
• HAND PULLED RICKSHAW
This type of transport is still available in Kolkata wherein a person pulls the rickshaw by hand. The Government of West Bengal proposed a ban on these rickshaws in 2005 describing them as "inhuman". Though a bill aiming to address this issue, termed as 'Calcutta Hackney Carriage Bill', was passed by the West Bengal Assembly in 2006, it has not been implemented yet. The Government of West Bengal is working on an amendment of this bill to avoid the loopholes that got exposed when the Hand-pulled Rickshaw Owner's Association filed a petition against the bill.
• BICYCLES
Bicycles are a common mode of travel in much of India. More people can now afford to own a cycle than ever before. In 2005, more than 40% of Indian households owned a bicycle, with ownership rates ranging from around 30% to 70% at the state level. Along with walking, cycling accounts for 50 to 75 % of the commuter trips for those in the informal sector in urban areas.
• BULLOCK CARTS AND HORSE CARRIAGES
Bullock carts have been traditionally used for transport, especially in rural India. The advent of the British saw drastic improvements in the horse carriages which were used for transport since early days. Today, they are used in smaller towns and are referred as tongas or buggies. Victorias of Mumbai are still used for tourist purposes, but horse carriages are now rarely found in India. In recent years some cities have banned the movement of bullock carts and other slow moving vehicles on the main roads.
• PALANQUIN
A palanquin is also known as palkis, were one of the luxurious methods used by the rich and noblemen for travelling. This was primarily used in the olden days to carry a deity or idol of a god, and many temples have sculptures of god being carried in a palki. Later on, it was primarily used by European noblemen and ladies from the upper classes of society prior to the advent of the railways in India. Modern use of the palanquin is limited to being an ostentatious method for the bride to make her entrance at some Indian weddings.
• WALKING
In ancient times, people often covered long distances on foot. For instance, Adi Sankaracharya traveled all over India. Walking still constitutes an important mode of transport in urban areas. In the city of Mumbai to further improve the transit conditions for pedestrians the Mumbai Metropolitan Region Development Authorityhas commenced the construction of more than 50 skywalk as part of the Mumbai Skywalk project.

















ROAD INFRASTRUCTURE AND DEVELOPMENT
The aggregate length of roads, which was 0.4 million kms in 1950-51, has increased eight-fold to 3.32 million kms in 1995-96 but the number of goods vehicle fleet has increased 22-fold from 0.82 lakh to 17.85 lakh in the corresponding period. The national highway network, which carries about 40% of the road traffic, is just a little over 1% of the road network.

Table 1: Growth of Road Network (in 'ooo Kms.)
Category 1951 1996 %AGE Change p.a.
National Highways 19.8(5%) 34.5 (1.04%) 1.24
State Highways 60.0(15%) 135.1 (4.07%) 1.82
Other Roads 318.0(80%) 3150.0 (94.89%) 5.23
Total 400.0(100%) 3319.6 (100%) 4.81
Note: Figures in parentheses are in percentages of total road network.
( Source: Ninth Five Year Plan (1997-2000), Volume II)
NHs are less than 2% of the entire network but carry about 40% of the country's traffic. The total road kilometer age has not been growing adequately to meet the demand for speedy and efficient transportation of material traffic.
ROAD DEVELOPMENT IN INDIA
The economic development of the country and the consequent surge in the demand for transport services, and also the strategic needs of the country necessitated expansion as well as improvement of the road network. The country took up this uphill task in a planned manner.

Recognising the need to develop arterial routes to link the Union capital with the state capitals, major seaports and other highways, the National Highways Act, 1956 was enacted. In 1957, the chief -engineers (road and bridges development) of the Central and the state governments met in Bombay. Having taken into account the size of area, population, regional levels of development and feature potential, the engineers presented a 20-year Road Development Plan (1961-81) in 1958 which is popularly known as the Bombay Plan.

The Plan anticipated an increase in road length from 6. 10 lakh km in 1960 to 10.50 lakh km in 1981. The Plan target was to achieve a density of 32.5 km of roads per 100 sq km of area, 44 km for developed agricultural areas, 19 km for semi-developed and 12 km for underdeveloped areas at an estimated cost of Rs 5,200 crore, including Rs 630 crore for village roads.

The Bombay Plan set a target of 8.88 lakh km of major district roads, order district roads and classified village roads. This target was exceeded in 1978 with the construction of 9.7 lakh km of roads. The target of 98,000 km of state highways could only be achieved a decade later. Of the target of 52,000 km only 34,619 km was achieved till1April, 1997.Another Road Development Plan (1981-2001), known as the Lucknow Plan of the Indian Road Congress, has made a case for 66,000 km of National Highways by 2001 A.D.

The National Transport Policy Committee, set up in 1978 under the chairmanship of B. D. Pandey, submitted its report in May 1980. It recommended 37 roads with a 12,955 km length for inclusion in the National highway network. Out of these, only 11 roads, aggregating 3,595 km length, were completed over a span of one-and-a-half decades.

The Government of India instituted an Asian Development Bank-aided study in February 1990 on Development of Long-Term Plan for Expressways in India. The study was completed in 1991 and it has recommended development of 10020km of expressing by 2015 at an estimate cost of Rs 58,000 crore.




ROAD DEVELOPMENT PROGRAMMES
The centrally funded/assisted notable road development programmes started during various Plan periods were: Programme for Roads of Economic and interstate importance launched during the First Plan; Strategic Roads Programme started in 1965; Sensitive Border Area Roads, Hill Area Development, the Western Ghat Development programmes and the Road component of Tribal Sub-Plan, all launched during the Fifth Plan; and Tribal Roads, Special Problem Area Roads and Command Area Development programmes, etc., started during the Sixth Plan.

To encourage private sector participation, the National Highways Act 1956 was amended in 1995 to enable the levy of toll on selected improved sections Of the National Highways. It allows the private sector to participate in construction, maintenance and operation of roads on Build-Operate-and Transfer (BOT) basis. Two projects of bypass, one at Thane-Bhiwandi in Maharashtra and the other at Udaipur in Rajasthan, and one project of road over bridge at Chaltan in Gujarat were awarded on a BOT basis in 1996. These projects involved investments of Rs 17 crore, Rs 24 crore and Rs 10 crore respectively.

HIGHWAYS

India has a well developed network of National Highways connecting all the major cities and state capitals. Most highways are 2 laned, while in some better developed areas they may broaden to 4 lanes. Close to big cities, highways can even be 8 laned. All the highways are metal led. In most developed states the roads are smooth, however in less developed states and in sparsely populated areas, highways are riddled with potholes.Very few of India's highways are concretised, the most notable being the Mumbai-Pune Expressway.

Highways form the economic backbone of the country. Highways have facilitated development along the route and many towns have sprung up along major highways. In recent years construction has commenced on a nationwide system of multi-lane highways, including theGolden Quadrilateral expressways which link the largest cities in

India. A bus serviceSrinagars (India controlled, Jammu and Kashmir) –Muzaffarabad (Pakistan controlled, Azad Kashmir, part of what India callsPoK), with one bus service every two weeks, at the same time in both directions, opened on7 April2005. Length: total - 3,319,644 km; paved - 1,517,077 km; unpaved - 1,802,567 km (1999 est.)

The longest National Highway is NH 7, which goes from Varanasi in Uttar Pradesh to the southernmost tip of India, Kanyakumari in Tamilnadu. It covers a distance of 2369 kms. One of India's very famous highway projects is the Golden Quadrilateral Highway Project, connecting India's four metropolitan cities, Delhi, Mumbai, Kolkatta and Chennai.

All national highways are metalled, but very few are constructed of concrete, the most notable being the Mumbai-Pune Expressway. In recent years construction has commenced on a nationwide system of multi-lane highways, including the Golden Quadrilateral and North-South and East-West Corridors which link the largest cities in India. In 2000, around 40% of villages in India lacked access to all-weather roads and remained isolated during the monsoon season. To improve rural connectivity, Pradhan Mantri Gram Sadak Yojana (Prime Minister's Rural Road Program), a project funded by the Central Government with the help of World Bank, was launched in 2000 to build all-weather roads to connect all habitations with a population of 500 or above (250 or above for hilly areas).

NATIONAL HIGHWAY AUTHORITY OF INDIA
Set up in 1989, it started functioning only in February, 1995. It is an autonomous body entrusted with the responsibility of development, maintenance and operation of the National Highways and other associated facilities vested in the Government of India.

Maintenance:

The maintenance and improvement of roads, though an ongoing programme, has not produced the desired results due to meager allocations. The country’s road network generates large revenues. But the country spends merely 35-40 per cent of this revenue on the improvement and maintenance of roads whereas Japan spends 128 per cent, USA 97 per cent and Germany 82 per cent annually. The National Highways too are facing a similar situation.
The allocations in respect of highways has declined from. 1.5 per cent in the First Plan to 0.57 in the Eighth Plan. External aided projects for improvement of highways started in 1985 with the World Bank assistance and later on with assistance from the Asian Development Bank and the Overseas Economic Cooperation Fund.

The increasing road traffic, as the expected freight movement of 28 lakh TEUs on the roads annually during the Eighth Plan period would suggest, and the heavy backlog of maintenance and improvement, have brought the road network to a breaking point. An investment of Rs 52,200 crore is needed to restore the National Highway network alone.
A study in 1994 estimated the annual vehicle operating cost on Indian roads as Rs 100,000 crore (Rs 40,000 crore for National Highways and Rs 60,000 crore for State Roads). The study further revealed that a good road network can reduce this cost by Rs 15,000 crore (National Highways - Rs 6,000 crore and State Roads Rs 9,000 crore). Since the fuel component comprises nearly 15 per cent of this cost, the resultant saving in fuel consumption would be about Rs 2,250 crore per annum (Rs 900 crore on the National Highways and Rs 1,350 crore in State Roads.
Growth Trends
Growth of Road Freight Industry
During the period 1951 to 1994, the average yearly growth of traffic has been of the order of 8 to 10%. (Source: Transport India 2000 Conference Paper) Fig. 2 indicates that freight traffic has increased from 6 billion tones kilometers (BTK) in 1951 to 800 BTK in 1999. Such a rapid growth has occurred mainly owing to the flexibility and accessibility offered by road transportation.
Growth of Vehicular Traffic
Since Independence, the number of motor vehicles in the country has been increasing rapidly. The number of goods vehicles increased from 82,000 in 1950-51 to 17.96 lakh in 1994-95. During the same period, the number of buses increased from 34,000 to 4.25 lakh. The total vehicle population swelled from 3.06 lakh in 1950-51 to nearly 302.87 lakh in 1994-95.
The private sector, mostly unorganized and comprising individual operators, has had a dominant presence in the field of road transportation. It runs almost the entire goods-carrier industry and also owns nearly 73.75 per cent of the buses at present. After the Road Transport Corporation Act 1950 became operational, almost all states and union territories have nationalized passenger transport in varying degrees by setting up corporations. In other cases, these services are operated by municipal corporations or registered companies. At present, the number of such bodies stands at 69 with a fleet strength- of 1,11,538 buses carrying 6.88 crore passengers every day. The Motor Vehicles Act 1988 replaced the Motor Vehicles Act 1939 and introduced far-reaching changes in the road transport sector.
The rapid growth in the number of goods vehicles is indicative of the increased volume of freight handled by road.


Fig.1
Source: Study on Trucking Operations in India- Problems and Potential; Asian Institute of Transport Development)

Fig. 2
Source: Transport India 2000)
Note: Figures for LCV for the years 1995, 1997 N.A.)

The no. of goods vehicles has been steadily increasing; however it is still not sufficient to meet the high demand. The annual growth of trucks during the period 1995-96 has been negative (-6.3%) as indicated in Fig.2 indicating that during this period the growth of other goods vehicles such as LCVs was far more greater, whereas it has sharply increased to 13.5% between 1996-97.



TRAFFIC CONTROL
Nearly all roadways are built with devices meant to control traffic. Most notable to the motorist are those meant to communicate directly with the driver. Broadly, these fall into three categories: signs, signals or pavement markings. They help the driver navigate; they assign the right-of-way at intersections; they indicate laws such as speed limits and parking regulations; they ; advise of potential hazards; they indicate passing and no passing zones; and otherwise deliver information and to assure traffic is orderly and safe.200 years ago these devices were signs, nearly all informal.
In the late 19th century signals began to appear in the biggest cities at a few highly congested intersections. They were manually operated, and consisted of semaphores, flags or paddles, or in some cases colored electric lights, all modeled on railroad signals. In the 20th century signals were automated, at first with electromechanical devices and later with computers. Signals can be quite sophisticated: with vehicle sensors embedded in the pavement, the signal can control and choreograph the turning movements of heavy traffic in the most complex of intersections. In the 1920s traffic engineers learned how to coordinate signals along a thoroughfare to increase its speeds and volumes. In the 1980s, with computers, similar coordination of whole networks became possible.In the 1920s pavement markings were introduced. Initially they were used to indicate the road’s centerline. Soon after they were coded with information to aid motorists in passing safely. Later, with multi-lane roads they were used to define lanes. Other uses, such as indicating permitted turning movements and pedestrian crossings soon followed.
In the 20th century traffic control devices were standardized. Before then every locality decided on what its devices would look like and where they would be applied. This could be confusing, especially to traffic from outside the locality. In the United States standardization was first taken at the state level and late in century at the federal level. Each country has a Manual of Uniform Traffic Control Devices (MUTCD) and there are efforts to blend them into a worldwide standard.
Besides signals signs and markings, other forms of traffic control are designed and built into the roadway. For instance, curbs and rumble strips can be used to keep traffic in a given lane and median barriers can prevent left turns and even U-TURNS.
Indian Road Freight Industry

Organised Vs. Unorganised Sector

Fig 3.
The road freight industry stands out unique with the majority of the market share held by the unorganized sector. Out of the entire market size of approximately Rs. 38,000 crores, Rs 6000 crores is with the organized sector and the remaining with the unorganized sector. Fig. 3 indicates that organized sector has only a miniscule 14%share of the total road freight transportation industry.








CONCLUSION

Even though 70% of emissions are due to road transportation, it plays a vital role by transporting people, goods and thereby develops tourism. it is the cheapest mode of transport. But still in rural areas road facilities are to be developed further. Minor village roads are in development process.


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PRIVATE SECTOR BANKS by RAJI

ANALYSIS OF PRIVATE SECTOR BANKS






SUBMITTED BY:
RAJI.S
1ST SEMESTER MBA
ICM
TRIVANDRUM



ABSTRACT
PRIVATE SECTOR BANKS
The financial reforms launched during the early 1990s have dramatically changed the banking scenario in the country. New prudential norms, such as capital adequacy prescriptions, identification of bad debts, provision requirements, etc., were enforced; and interest rates were deregulated. . RBI permitted new banks to be started in the private sector as per the recommendation of Narashiman committee. The Indian banking industry was dominated by public sector banks. But now the situations have changed new generation banks with used of technology and professional management has gained a reasonable position in the banking industry.

























1. INTRODUCTION
Banks are institutions that deal with money, their business is finance, and their stock in trade is currency and credit. Banking is called the “LIFE BLOOD” of trade and commerce. It acts as a vehicle for socio-economic transformation and also as a catalyst to economic growth. It plays an important role in mobilizing the nation’s savings and in channelising them into high investment priorities and better utilization of available resources.The Indian banking has registered rapid expansion during the post nationalization period in terms of branch network, deposit metabolism and credit deployment.
INDIAN BANKING SYSTEM




2. PRIVATE SECTOR BANKS
Private Banks are banks that are not incorporated. A private bank is owned by either an individual or a general partner(s) with limited partner(s).
Indian private sector banks are incorporated in India and their shares and ownerships is held by business houses individuals. Majority of these banks are old generation private sector banks which have a small balance sheet size, limited regional operation and traditional style of management and business activities.
New generation private sector banks, incorporated post 1994 are technology driven and have a modern style of functioning, thus achieving a level of parity with that of foreign banks operating in India. Some of these have expanded to enable country wide operations, on account of mergers and acquisitions.
The first private bank in India to be set up in Private Sector Banks in India was IndusInd.The first Private Bank in India to receive an in principle approval from the Reserve Bank of India was Housing Development Finance Corporation Limited, to set up a bank in the private sector banks in India as part of the RBI's liberalisation of the Indian Banking Industry. It was incorporated in August 1994 as HDFC Bank Limited with registered office in Mumbai and commenced operations as Scheduled Commercial Bank in January 1995.The largest private sector bank is ICICI.
List of Private Banks in India
• Bank of Punjab
• Bank of Rajasthan
• Catholic Syrian Bank
• Centurion Bank
• City Union Bank
• Dhanalakshmi Bank
• Development Credit Bank
• Federal Bank
• HDFC Bank
• ICICI Bank
• IDBI Bank
• IndusInd Bank
• ING Vysya Bank
• Jammu & Kashmir Bank
• Karnataka Bank
• Karur Vysya Bank
• Laxmi Vilas Bank
• South Indian Bank
• United Western Bank
• Axis Bank
FUNCTIONS
In modern times banks performs a number of functions. The functions of private banks are divided into two categories:
i) Primary functions, and
ii) Secondary functions including agency functions.
i) Primary functions:
The primary functions of a bank include:
a) Accepting deposits; and
b) granting loans and advances;
a) Accepting deposits
The most important activity of a bank is to mobilize deposits from the public. People who have surplus income and savings find it convenient to deposit the amounts with banks. Depending upon the nature of deposits, funds deposited with bank also earn interest. Thus, deposits with the bank grow along with the interest earned. If the rate of interest is higher, public are motivated to deposit more funds with the bank. There is also safety of funds deposited with the bank.
b) Grant of loans and advances
The second important function of a bank is to grant loans and advances. Such loans and advances are given to members of the public and to the business community at a higher rate of interest than allowed by banks on various deposit accounts. The rate of interest charged on loans and advances varies depending upon the purpose, period and the mode of repayment. The difference between the rate of interest allowed on deposits and the rate charged on the Loans is the main source of a bank’s income.
i) Loans
A loan is granted for a specific time period. Generally, banks grant short-term loans. But long term loans, that is, loan for more than a year, may also be granted.
The borrower may withdraw the entire amount in lump sum or in instalments.However, interest is charged on the full amount of loan. Loans are generally granted against the security of certain assets. A loan may be repaid either in lump sum or in instalments.
ii) Advances
An advance is a credit facility provided by the bank to its customers. It differs from loan in the sense that loans may be granted for longer period, but advances are normally granted for a short period of time. Further the purpose of granting advances is to meet the day to day requirements of business. The rate of interest charged on advances varies from bank to bank. Interest is charged only on the amount withdrawn and not on the sanctioned amount.
Modes of short-term financial assistance
Banks grant short-term financial assistance by way of cash credit, overdraft and bill discounting.
a) Cash Credit
Cash credit is an arrangement whereby the bank allows the borrower to draw amounts upto a specified limit. The amount is credited to the account of the customer. The customer can withdraw this amount as and when he requires. Interest is charged on the amount actually withdrawn. Cash Credit is granted as per agreed terms and conditions with the customers.
b) Overdraft
Overdraft is also a credit facility granted by bank. A customer who has a current account with the bank is allowed to withdraw more than the amount of credit balance in his account. It is a temporary arrangement. Overdraft facility with a specified limit is allowed either on the security of assets, or on personal security, or both.
c) Discounting of Bills
Banks provide short-term finance by discounting bills, that is, making payment of the amount before the due date of the bills after deducting a certain rate of discount. The party gets the funds without waiting for the date of maturity of the bills. In case any bill is dishonored on the due date, the bank can recover the amount from the customers.

ii) Secondary functions
Besides the primary functions of accepting deposits and lending money, banks perform a number of other functions which are called secondary functions. These are as follows -
a) Issuing letters of credit, traveller’s cheques, circular notes etc.
b) Undertaking safe custody of valuables, important documents, and
Securities by providing safe deposit vaults or lockers;
c) Providing customers with facilities of foreign exchange.
d) Transferring money from one place to another; and from one
branch to another branch of the bank.
e) Standing guarantee on behalf of its customers, for making
Payments for purchase of goods, machinery, vehicles etc.
f) Collecting and supplying business information;
g) Issuing demand drafts and pay orders; and,
h) Providing reports on the credit worthiness of customers.
ECONOMIC FUNCTIONS
The economic functions of banks include:
1. Issue of money, in the form of banknotes and current accounts subject to cheque or payment at the customer's order. These claims on banks can act as money because they are negotiable and/or repayable on demand, and hence valued at par. They are effectively transferable by mere delivery, in the case of banknotes, or by drawing a cheque that the payee may bank or cash.
2. Netting and settlement of payments – banks act as both collection and paying agents for customers, participating in interbank clearing and settlement systems to collect, present, be presented with, and pay payment instruments. This enables banks to economise on reserves held for settlement of payments, since inward and outward payments offset each other. It also enables the offsetting of payment flows between geographical areas, reducing the cost of settlement between them.
3. Credit intermediation – banks borrow and lend back-to-back on their own account as middle men
4. Credit quality improvement – banks lend money to ordinary commercial and personal borrowers (ordinary credit quality), but are high quality borrowers. The improvement comes from diversification of the bank's assets and capital which provides a buffer to absorb losses without defaulting on its obligations. However, banknotes and deposits are generally unsecured; if the bank gets into difficulty and pledges assets as security, to raise the funding it needs to continue to operate, this puts the note holders and depositors in an economically subordinated position.
5. Maturity transformation – banks borrow more on demand debt and short term debt, but provide more long term loans. In other words, they borrow short and lend long. With a stronger credit quality than most other borrowers, banks can do this by aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions (e.g. withdrawals and redemptions of banknotes), maintaining reserves of cash, investing in marketable securities that can be readily converted to cash if needed, and raising replacement funding as needed from various sources (e.g. wholesale cash markets and securities markets).




3. FOREIGN BANKS
Foreign banks are banks incorporated abroad but granted license by RBI to conduct banking business in India through their Indian branches. While the foreign banks in India outnumber the private sector banks, the branch network of the former is smaller and confined mostly to the metropolis and big commercial centres.Their operations are technology driven and a good part of their business comprises foreign exchange,trade finance and merchant banking, which augments their income and income per branch and per worker.
Foreign banks have brought latest technology and latest banking practices in India. They have made Indian Banking system more competitive and efficient. Government has come up with a road map for expansion of foreign banks in India
the road map has two phases. During the first phase between March 2005 and March 2009, foreign banks may establish a presence by way of setting up a wholly owned subsidiary (WOS) or conversion of existing branches into a WOS. The second phase will commence in April 2009 after a review of the experience gained after due consultation with all the stake holders in the banking sector. The review would examine issues concerning extension of national treatment to WOS, dilution of stake and permitting mergers/acquisitions of any private sector banks in India by a foreign bank.
List of Foreign Banks in India
• ABN-AMRO Bank
• Abu Dhabi Commercial Bank
• Bank of Ceylon
• BNP Paribas Bank
• City Bank
• China Trust Commercial Bank
• Deutsche Bank
• HSBC
• JPMorgan Chase Bank
• Standard Chartered Bank
• Scotia Bank
• Taib Bank

By the year 2009, the list of foreign banks in India is going to become more quantitative as number of foreign banks is still waiting with baggage to start business in India.











4. GENERAL FEATURES
This is the time when banks are offering new and innovative services, frequently in the market. The content of promotional tools should help the customer in making most valuable decision. This can be firmly said that well-designed promotional strategies are very important to promote banking services effectively. In marketing any product or service, customer satisfaction has been given the prime importance. The most frustrating aspect of bank marketing are lack of management support, lack of inter-departmental cooperation, crisis management, government intrusion and advertising & media problems
Winning new customers costs 10 times more than simply holding onto existing ones. The case should be taken in the marketing of financial services very seriously. While formulating marketing strategy, a bank should focus attention on (i) consumer sovereignty, (ii) attitude, (iii) responsiveness and personal skills of bank staff, (iv) revitalizing the marketing department, (v) top management support to the marketing department, (vi) participation of marketing personnel in key bank decisions .
ENTRY REGULATION
The requirements for the issue of a bank license vary between jurisdictions but typically include:
1. Minimum capital
2. Minimum capital ratio
3. 'Fit and Proper' requirements for the bank's controllers, owners, directors, and/or senior officers
4. Approval of the bank's business plan as being sufficiently prudent and plausible.
5. INDUSTRIAL ATTRACTIVENESS
• e-banking and mobile banking provides easy access of money
• Branch openings have been at a higher rate during 2000-2010 than 1990- 2000.Opening of large number of new branches provides many job opportunities.
• ATM, zero balance account, credit card and debit card facilities also attracts the consumers.
BANKING CHANNELS
Banks offer many different channels to access their banking and other services:
• A branch, banking centre or financial centre is a retail location where a bank or financial institution offers a wide array of face-to-face service to its customers.
• ATM is a computerised telecommunications device that provides a financial institution's customers a method of financial transactions in a public space without the need for a human clerk or bank teller. Most banks now have more ATMs than branches, and ATMs are providing a wider range of services to a wider range of users. For example in Hong Kong, most ATMs enable anyone to deposit cash to any customer of the bank's account by feeding in the notes and entering the account number to be credited. Also, most ATMs enable card holders from other banks to get their account balance and withdraw cash, even if the card is issued by a foreign bank.
• Mail is part of the postal system which itself is a system wherein written documents typically enclosed in envelopes, and also small packages containing other matter, are delivered to destinations around the world. This can be used to deposit cheques and to send orders to the bank to pay money to third parties. Banks also normally use mail to deliver periodic account statements to customers.
• Telephone banking is a service provided by a financial institution which allows its customers to perform transactions over the telephone. This normally includes bill payments for bills from major billers (e.g. for electricity).
• Online banking is a term used for performing transactions, payments etc. over the Internet through a bank, credit union or building society's secure website.
• Mobile banking is a method of using one's mobile phone to conduct simple banking transactions by remotely linking into a banking network.
• Video banking is a term used for performing banking transactions or professional banking consultations via a remote video and audio connection. Video banking can be performed via purpose built banking transaction machines (similar to an Automated teller machine), or via a videoconference enabled bank branch.












6. CONCLUSION
Since the early 1990s, banking system worldwide have been going through a rapid transformation.TheRBI has given licenses to new private sector banks as part of the liberalisation process. Many banks are successfully running in the retail and consumer segments but are yet to deliver services to industrial finance, retail trade, small business and agricultural finance.In India considerable growth has taken place in the private banking sector in last two decades. They are successful in rendering a wide range of services. The private banking sector has to play a vital role in the development of our economy.

INSURANCE INDUSTRY-PRIVATE SECTOR by SWARNA LATHA

ASSIGNMENT

ON

INSURANCE INDUSTRY

(PRIVATE)



Submitted to

Prof. JAYAMOHAN NAIR








Submitted by

SWARNALATHA.K
I Sem. MBA
ICM IMK, Poojappura

ABSTRACT

Insurance Industry provides protection against financial losses resulting from a variety of perils. By purchasing insurance policies, individuals and businesses can receive reimbursement for losses due to uncertainty. The insurance industry consists mainly of insurance carriers (insurers) and insurance agencies and brokerages. In general, insurance carriers are large companies that provide insurance and assume the risks covered by the policy.

Insurance of any type is all about managing risk. It is as a social device to reduce or eliminate risk of life and property. Insurance may be classified into four viz, Life, Fire, Marine and Miscellaneous Insurance.
Insurance is a federal subject in India. There are two legislations that govern the sector- The Insurance Act- 1938 and the IRDA Act- 1999. The insurance sector in India has completed a full circle from being an open competitive market to nationalization and back to a liberalized market again. With largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India.

This analysis on the Insurance industry covers the topics Principles of Insurance, Functions, Various Insurance Policies, Players in the Industry, Contribution of the industry to the economy and the Future or Trend of the industry.


CONTENTS

TOPIC
PAGE NO.

1. INSURANCE

• Meaning

• Definition

• Types of Insurance


3

3

4

2. HISTORY OF INDIAN INSURANCE

5

3. PRINCIPLES OF INSURANCE

8

4. FUNCTIONS OF INSURANCE

9

5. INSURANCE POLICIES

12

6. PLAYERS IN INDIAN INSURANCE SECTOR

13

7. EMPLOYMENT

15

8. CONTRIBUTION TO GROWTH

17

9. FUTURE OF INSURANCE SECTOR

18

10. CONCLUSION

19




INSURANCE


Meaning

Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual.

Definition

Insurance may be defined as “a contract, whereby one person in consideration of a certain sum known as premium agrees to pay on the happening of an event or on the expiry of a period a sum of money or to compensate the loss to the other.”

It is a contract whereby, in return for the payment of premium by the insured, the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events.

The risk, which can be insured against include fire, the peril of sea, death, incident, & burglary. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved.




Types of Insurance

Insurance business is divided into four classes:
1. Life Insurance
2. Fire Insurance
3. Marine Insurance
4. Miscellaneous Insurance.
The Life Insurers transact life insurance business while General Insurers transact the rest.













HISTORY OF INDIAN INSURANCE


The history of the Life insurance sector in India dates back to 1818, when the Oriental Life Insurance Company was formed in Calcutta.
Some of the important milestones in the life insurance business in India are:
• 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.
• 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses.
• 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public.
• 1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs.5crore from the Government of India.

The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British.

Some of the important milestones in the general insurance business in India are:
• 1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business.
• 1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices.
• 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up.
• 1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973.
• 107 insurers amalgamated and grouped into four company viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.

The insurance sector has opened up for private insurance companies with the enactment of Insurance Regulatory and Development Authority Act, 1999. A large number of companies are competing under both life and general Insurance. The FDI in this sector is 26% and the proposals have to be cleared by IRDA established to protect the interest of holder of Insurance policy and act as a regulator and facilitator in the industry.
Various types of policies and instruments are coming up in the market to attract more customers. Most of the population of India is not insured, hence there is a lot of scope in this sector and a number of companies are planning to enter the sector.
INDIAN INSURANCE: SECTOR REFORM

Formation of the Malhotra Committee in 1993 initiated reforms in the Indian insurance sector. The aim of the Malhotra Committee was to assess the functionality of the Indian insurance sector. This committee was also in charge of recommending the future path of insurance in India.
The Malhotra Committee attempted to improve various aspects of the insurance sector, making them more appropriate and effective for the Indian market.
The recommendations of the committee put stress on offering operational autonomy to the insurance service providers and also suggested forming an independent regulatory body.
The Insurance Regulatory and Development Authority Act of 1999 brought about several crucial policy changes in the insurance sector of India. It led to the formation of the Insurance Regulatory and Development Authority (IRDA) in 2000.
The goals of the IRDA are to safeguard the interests of insurance policyholders, as well as to initiate different policy measures to help sustain growth in the Indian insurance sector.
PRINCIPLES OF INSURANCE

1. Insurable Interest
Insurable interest means that the person opting for insurance must have pecuniary interest in the property he is going to get insured and will suffer financial loss on the occurrence of the insured event. This is one of the essential requirements of any insurance contract.
2. Principle of Utmost Good faith (Uberrimae Fidei)
Like in other contracts, the insurance contract must be based on good faith. If the insurance contract is obtained by way of fraud or misrepresentation it is void.
3. Material Facts Disclosure
In the Insurance contract, the proposer is required to disclose to the insurer all the material facts in respect of the proposed insurance. This duty of disclosing the material facts also includes those material facts which he is supposed to know.
4. Principle of Indemnity
According to this principle, the insurance contract should be such that in case of loss due to the eventualities mentioned in the contract, the insured should be neither better off nor worse off after receiving the insured amount. The main object of this principle is to ensure that the insured is not able to use this contract for speculation or gambling.
FUNCTIONS OF INSURANCE

The functions of Insurance can be classified as:
1. Primary Functions
2. Secondary Functions
3. Other Functions
The primary functions of insurance include the following:
• Provide Protection - The primary function of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for the losses of risk.
• Collective bearing of risk - Insurance is a device to share the financial loss of few among many others. Insurance is a mean by which few losses are shared among larger number of people. All the insured contribute the premiums towards a fund and out of which the persons exposed to a particular risk is paid.
• Assessment of risk - Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. Risk is the basis for determining the premium rate also.
• Provide Certainty - Insurance is a device, which helps to change from uncertainty to certainty. Insurance is device whereby the uncertain risks may be made more certain.

The secondary functions of insurance include the following:
• Prevention of Losses - Insurance cautions individuals and businessmen to adopt suitable device to prevent unfortunate consequences of risk by observing safety instructions; installation of automatic sparkler or alarm systems, etc.

• Small capital to cover larger risks - Insurance relieves the businessmen from security investments, by paying small amount of premium against larger risks and uncertainty.

• Contributes towards the development of larger industries Insurance provides development opportunity to those larger industries having more risks in their setting up. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery.
The other functions of insurance include the following:
• Means of savings and investment - Insurance serves as savings and investment, insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insured's For the purpose of availing income-tax exemptions also, people invest in insurance.


• Source of earning foreign exchange - Insurance is an international business. The country can earn foreign exchange by way of issue of marine insurance policies and various other ways.

• Risk Free trade - Insurance promotes exports insurance, which makes the foreign trade risk free with the help of different types of policies under marine insurance cover.


HOW DOES INSURANCE WORK?

Insurance is a technique wherein a number of people, who are exposed to similar risk, participate in the scheme and contribute in the shape of periodic premiums. Such premiums are received by the insurer who is able to pay out of the premiums received by him, for the losses of some of those who have participated in the scheme.






INSURANCE POLICIES


The Indian insurance companies offer a comprehensive range of insurance plans. The most common types include: Term life policies, Endowment policies, Joint life policies, Whole life policies, Loan cover term assurance policies, Unit-linked insurance plans, Group insurance policies, Pension plans, and Annuities. General insurance plans are also available to cover Motor insurance, Home insurance, Travel insurance and Health insurance.
Due to the growing demand for insurance, more and more insurance companies are now emerging in the Indian insurance sector. With the opening up of the economy, several international leaders in the insurance sector are trying to venture into the India insurance industry.












PLAYERS IN INDIAN INSURANCE SECTOR


Insurance companies play a key role in India's financial sector. With India's population becoming more affluent and globalized, insurance is growing rapidly. This increasing market is creating considerable competition among Indian insurance companies in an industry that 20 years ago was relatively small.
Till 01.04.2000, Insurance industry in India comprised mainly of only 2 state insurers namely:

Life Insurers
• Life Insurance Corporation of India (LIC)
General Insurers
• General Insurance Corporation of India (GIC) (with effect from December, 2000, it has been made a National Re-insurer)
GIC had four subsidiary companies, namely:
1. The Oriental Insurance Company Limited
2. The New India Assurance Company Limited,
3. National Insurance Company Limited
4. United India Insurance Company Limited.

To date, India's Insurance Regulatory and Development Authority (IRDA), has granted registration to 12 Private life insurance companies and 9 Private General insurance companies.

Private Life Insurers

• Allianz Bajaj Life Insurance Company Limited
• Birla Sun-Life Insurance Company Limited
• HDFC Standard Life Insurance Co. Limited
• ICICI Prudential Life Insurance Co. Limited
• ING Vysya Life Insurance Company Limited
• Max New York Life Insurance Co. Limited
• MetLife Insurance Company Limited
• Om Kotak Mahindra Life Insurance Co. Ltd.
• SBI Life Insurance Company Limited
• TATA AIG Life Insurance Company Limited
• AMP Sanmar Assurance Company Limited
• Dabur CGU Life Insurance Co. Pvt. Limited

Private General Insurers
• Bajaj Allianz General Insurance Co. Limited
• ICICI Lombard General Insurance Co. Ltd.
• IFFCO-Tokio General Insurance Co. Ltd.
• Reliance General Insurance Co. Limited
• Royal Sundaram Alliance Insurance Co. Ltd.
• TATA AIG General Insurance Co. Limited
• Cholamandalam General Insurance Co. Ltd.
• Export Credit Guarantee Corporation
• HDFC Chubb General Insurance Co. Ltd

EMPLOYMENT

The insurance industry had about 2.3 million wage and salary jobs in 2006. Insurance carriers accounted for 62 percent of jobs, while insurance agencies, brokerages, and providers of other insurance-related services accounted for 38 percent of jobs.
The majority of establishments in the insurance industry were small; however, a few large establishments accounted for many of the jobs in this industry. Insurance carriers tend to be large establishments, often employing 250 or more workers, whereas agencies and brokerages tend to be much smaller, frequently employing fewer than 20 workers.



Many insurance carriers’ home and regional offices are situated near large urban centers. Insurance workers who deal directly with the public are located throughout the country. Almost all of those working in sales work out of local company offices or independent agencies. Many others in the industry work for independent firms in small cities and towns throughout the country.

























CONTRIBUTION TO GROWTH


The Indian Insurance sector is having a dream run. Today people have become very conscious about their future and so they are spending nearly 6 times on life insurance than they did before. The number of life insurance policies in India is the largest in the world and this sector contributes nearly 4 % in the GDP. The Indian insurance companies recorded a growth nearly 20% in premium in dollar terms, compared to the world market growth rate of only 3%.

Currently, the Indian insurance sector size is estimated at Rs.500 billion.

On account of intense marketing strategies adopted by private insurance players, the market share of state owned insurance companies like GIC, LIC and others have come down to 70% in last 4-5 years from over 97%.

The private insurance players despite the sector is still regulated has been offering Rate of Return (RoR) to its policy holders which is estimated at about 35% as against 20% of domestic insurance companies.

Private insurance companies offer many policies and the premium amount as well as the maturity period is much competitive as against those of government insurance companies. The private sector insurance players have started exploring the rural markets in which until recently, the state owned companies had the monopoly.
FUTURE OF THE INSURANCE SECTOR


Indian insurance sector is likely to register unprecedented growth of 200% and attain a size of Rs.2000 billion by 2011 from current level of Rs.500 billion.

The domestic insurance industry in India is estimated to be around US$ 60.5 billion by 2010, of which US$ 35 billion will come from rural and semi-urban areas. The life insurance market is expected to grow to US$ 35 billion while non-life insurance market will touch an estimated US$ 25 billion. The entry of foreign players has attracted an FDI of US$ 543 million.
The life insurance market premiums is like to be around US$100 billion by 2012, and its contribution to GDP is likely to rise by 6%.

A private sector insurance business will achieve a growth rate of 140% as a result of aggressive marketing technique being adopted by them against 35-40% growth rate of state owned insurance companies.

In rural markets, the share of private insurance players would increase substantially as these have been able to generate a faith among their rural consumers.




CONCLUSION


Since the Insurance sector has opened up for Private Insurance companies with the enactment of Insurance Regulatory and Development Authority Act, 1999, large number of companies are competing under both Life and General Insurance. Various types of policies and instruments are also coming up in the market to attract customers. To date IRDA has granted registration to 12 Private Life insurance companies and 9 Private General insurance companies, but a lot more insurance companies are emerging in the market.

Today the Indian insurance sector is having a dream run. The number of insurance policies in India is the largest in the world and it contributed 4% to the GDP. Currently the Indian insurance sector size is estimated at Rs.500 billion and is expected to attain a size of Rs.2000 billion by 2011.

The Private sector insurance business is expected to achieve a growth of 140%. Thus it can be clearly viewed that the Private sector insurance business will have a very good market in the future. The share of these private insurance players would increase in rural market also as they have been able to generate a faith among their rural customers. A well-developed and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability. Thus Insurance sector can enable investments in infrastructure development to sustain economic growth of the country.

CO-OPERATIVE BANKING INDUSTRY by DIVYA MOL

INTRODUCTION


Co-operation is a form of economic organization. The term of co-operation is derived from the Latin word ‘Co-operari’, which means ‘working together’. International Co-operative alliance defines “a co-operative society is an autonomous association of person united voluntarily to meet their common, economic, social and cultural needs aspiration through a jointly owned and democratically controlled enterprise”. The potential of the co-operative approach was perceived by our great leaders even before India become independent. The father of nation, MAHATHMA GANDHI had said, “The co- operative movement will be blessing to India”.

Co-operative societies are the organization established for doing business with social commitment. The Co-operative societies play an important role in the socio economic development of a country. A Co-operative is an organization where in persons voluntarily associate together as human beings on the basis of quality for the promotion of economic interest of themselves. A Co-operative society is an institution established for the abandonment of competition in production and distribution of middle men in all kinds.




Co-operative movement in Kerala

The Kerala state came into existence on 1st NOVEMBER, 1956 after the re-organization states on linguistic basis. The geographical area of the state mainly consist of three parts, namely the former princely states of Cochin and Travancore and Malabar area of erstwhile Madras province ,in tune with the national policy. Travancore and Cochin states in July 1949. On account of historical reasons the above three regions had separate Co-operative societies act in their areas.

The former princely states had legislative powers. Therefore even prior to 1919, when Co-operation was transferred to the provinces, some of the princely stated separate Co-operative legislations. Accordingly Cochin and Travancore states had separate Societies Acts confining to their respective states.


Kerala Co-operative societies Act of 1969

When Kerala state was newly organized in 1956, merging the Travancore Cochin state Malabar area of the former Madras state, two different Co-operative laws were in operations viz. Travancore Cochin Co-operative Societies act of 1951
In T.C area. Hence from the very inception of the state there was the necessity for a uniform legislation, for the states, further activities of the co-operative movement was fast expanding and diversifying. Hence certain changes in existing laws were also in evitable to suit the present stages of development of co-operative movement. Accordingly the government then in power took initiative to bring the new legislation. But some how other it was prolonged and could no materialize. Finally in 1969, the present Act called Kerala Co-operative Societies Act was passed (Act 21 of 1969). Frequent change of Government was one of the reason s for the in ordinate delay in passing the Act. This Act came into effect on 15/05/1969 by a notification of the Government (No:23315/c.3/69 AD. DT 12/05/1969). The rules framed under the Act came into force in July 1969, replacing the rules under earlier enactment by the notifications of the Government No: 35649/69 AD.dt 14/07/69.

Service Co-operative Bank

After independence in India, there was general tendency of the nation towards development. People were enthusiastic and full of new ideas about the method of doing things in a more efficient and speedy way to achieve, the objectives of domestic planning and socialistic pattern. However the National Development Council reviewed the co-operative programmed in 1958 and called for organization throughout the country for service co-operatives a term, which has obtained wide attention after the Nagpur session of the Indian National Congress.

The term service co-operative was caused by our late Prime Minister Pt.Jawaharlal Nehru in connection with the controversy that arose around Co-operative farming. The term service co-operative has been borrowed from the United States. Where farm service co-operative seek to organize on co-operative basis. The term service co-operative was first used in 1957 by the Indian delegation to china on agrarian co-operative.

The word “co-operative” means “togetherness or join together”. The fundamental principle of co-operation is ‘each for all and all for each or self help and mutual help’. Self help made effective by organization is called a co-operative society. Co-operative services as an organizational for the economically weaker producers, farmers, workers and consumers for strengthening themselves and protecting themselves against the exploitation by the stronger. Co-operation is described as method of promoting economic progress and social justice and offer unlimited possibilities of people’s participation in economic reusagence.


PERIOD OF THE STUDY

The five-year period was selected for the purpose of the study beginning from the financial year 2003-2004 ending on the financial year 2007-2008








CO-OPERATIVE PRINCIPLES

• Voluntary and open membership
• Democratic member control
• Member economic participation
• Autonomy and independence
• Education training and information
• Co-operation among co-operatives
• Concern for community

CLASSIFICATION OF SOCIETIES

Co-operative societies can broadly be classified in to two classes namely Credit Co-operative and Non-Credit co-operatives. Credit co-operatives can again be classified into two such as Agricultural Credit Societies and Non Agricultural Credit Societies. Agricultural Credit Societies can further be classified into two categories namely those institutions dealing with short term and medium term agricultural credit and those institutions dispensing long term agricultural credit. The short term credit structure consists of primary Agricultural Credit Societies at the village, Central or District Co-operative bank at the district level. State Co-operative bank at the state level and National federation of State co-operative banks at National level. The long term credit structure consist of primary co-operative Agricultural and Rural development banks at the taluk level and State Co-operative Agricultural and Rural development banks at the state level and National Co-operative Agricultural and Rural development banks federation at the national level.

Co-operative institutions which are engaged in the activities of providing credit for non-agricultural purposes such as for financing artisans., small traders and providing financial assistance to small scale and cottage industries which are organized in the town or urban areas. The co-operative urban banks, employee’s credit societies and housing societies are included under the Non-agricultural credit Co-operatives.

Non Credit societies consist of producer’s society’s consumer societies and miscellaneous types of societies. Among Non credit organization under producers society there are two classes namely Agricultural producers and Non-Agricultural producers.

The primary consumer stores organized by students, employees and public, District wholesale co-operative stores, University Central stores and their federations at state and national levels are come under the classification of consumer co-operatives.

Co-operative unions do not come under any of the above categories. Circle c-operative union, State co-operative union, National co-operative union and International co-operative alliance are co-operative institutions charged with the responsibility of conducting the propaganda on co-operative principles and practice, Managing co-operative training colleges and centers and imparting co-operative education and training. Hence they are not economic organizations.

FEATURES OF CO-OPERATION

Voluntary organization

It is purely voluntary organization. Members join with their own free will. There is no compulsion or coercion what so over either to join the society or to live the society. In order to fulfill their common economic interest, members join the organization.

Organization of the poor

It is an organization of the poor. Usually it is persons of limited means that became members in a co-operative society. It originates among the economically week people. Co-operation is said to be a boon to the week sections of the community.

Equality

It is one of the important watch worse of co-operation. In a co-operative society everybody is equal. Nobody is superior or inferior. All of the members have equal rights and responsibilities. “One man One vote” is the policy adopted, irrespective of the shares held them. There is no question of rich or poor, higher caste or lower caste, educated or uneducated. Everyone is treated alike.

Democratic control

The affairs of co-operative society are democratically managed. The general body consist of members determines all major policies and programs of the organization. The managing committee elected by general body attends day to day matters. All decision is taken on democratic live.

Less stress on profit

Unlike a private enterprise, profit is not the motive of a co-operative organization. It stands for better service to its members. Profit is not the yard stick to measure the success of a society. The net profit if any is considered as surplus is distributed among the members on the basis of their dealing with the organization.

No rule for exploitation

In a co-operative society, there is no rule for exploitation. Actually co-operation aims at prevention of exploitation. It avoids middlemen. In a co-operative, everybody is treated well and nobody is cheated. Equitable distribution of surplus, limited interest on share capital etc are purposely adopted by the co-operatives as principles to avoid exploitation. Co-operation believes that exploitation is the route course of all evils and hence wants to route it out.

Each for all and all for reach

The basic principle of co-operation is each for all and all for each. The interest of an individual is well safe guarded in the group of which intern is expected to take care of the individual. in a co-operative organization affairs are carried us in an unselfish spirit which no other organization can claim “Self help and mutual help” which is mend for cultivating self reliance among the members.

MERITS

• The first and foremost merit of co-operation is that it seeks to remove the evils of capitalism. It stands between capitalism and communism.
• Co-operation is a weapon of persons of moderate means; promotion of economic interest by a person of moderate means handed may be difficult. But when such persons unit that may be possible.
• Co-operation helps the growth of real democracy. It is the training ground for persons to posse’s real democratic spirit. The supreme authority in a co-operative society vest in the general meeting where everyone has one vote and no more
• Co-operation is not only a business proportion to help people realize the economic end. Each for all and all for each is its motto.
• Thrift, self help and mutual help are the watch of worse of co-operation.






DEMERITS


• Although it is agreed by the ardent exponents of co-operation, i.e., it is an effective weapon for the poor to fight poverty. Experience has shown that the poorest people remain outside the movement.
• Capital is too small to serve the big enterprises. It is for disreason, that the capitalism their even were co-operation is a successful propagation.
• Co-operation can hardly be successful amongst the illiterate, who fail to realize the value of common Endeavour urgings sacrifices for his own individual benefit.
• Co-operation is not a political system. The conflict will be great if the capitalist have a larger voice in the government.
• Co-operation may succeed only in the fields were association into groups is greater advantage that individual action.


SOURSES OF FUNDS

Commonly a co-operative society works with owned fund/ internal and borrowed funds /external funds

Own funds

• Share capital
• Entrance fees
• Reserve funds and other Reserves

External resources


• Deposits from members for non members
• Borrowings from members for non members
• Grants and subsidies from government

Employee structure

The final authority is vested upon its general body. The day to day management of the society is entrusted to a Board of Directors. Comparing of 7 or 9 members. The number of board of directors are different in different co-operative banks. The board of directors elects the president and wise president, and the chief Executive of the society.



Generally a service co-operative bank has the following employees,

• Secretary
• Accountant
• Senior clerks
• Junior clerks
• Peon
• Attender
• Security

MAJOR PRACTISES

The main aim of the service co-operative bank is accepting of deposit and lending money. There are different types of deposits. The are,




Fixed deposit

When a fixed sum of money is deposited in bank for a definite period, it is called fixed deposit. Period may range from 30 days to any length of time.

Saving deposit

Savings deposits are the deposits or a convenient scheme adopted by the bankers to mobilize scattered savings of the public and to direct them towards proper invests. It is preferable to low income groups.

Home safe deposits

It is intended for children and housewives. Under this system the bank provided a small box or pot to the depositor. Key is kept in the hands of the employee of bank. At frequent intervals the competent authority visits the depositor’s house and collect the amount and credited to their account.

Nithyanidhi deposits

The bank provides nithyanidhi or daily collection deposits from businessman.



Cash certificate deposits

It is just like fixed deposits. The minimum period of cash certificate in 6 years. Just as fixed deposit a certificate of such deposit will be issued by bank.

Various types of loans and advances are given by a service co-operative bank.

AGRICULTURAL LOANS

Short term and medium term loans are usually given to members for agricultural purposes, which include rising of crops and maintenance of land. The loans are given for a period of 12 months. The loans can be used for purchasing seeds, pesticides and even for meeting labor change. Mostly given agricultural loan is Kissan credit card loan.

NON-AGRICULTURAL LOAN

Non agricultural loan includes medium term loan, gold loan and ordinary loan.

Medium term loan

MT loans issued for the purpose of land reclamation, repairing of wells and tanks for irrigation and other purpose.


Gold loan

The gold loan issued by this bank against the security of gold ornaments. This type of loans has greater demand among members.

Ordinary loan

Ordinary loans are given only for productive purpose such as improvement on land and business activities. Period of such loans are up to one year.


Different types of diversified activities are done by a co-operative bank. They are,

• Neethi store
• Consumer store
• Neethi gas
• Vasthralayam
• Festival market
• Medical store etc

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
------------------------------------------------------
Power3 130
Railways 66
Highways 49
Ports 11
Civil Aviation 9
Other 55
------------------------------------------------------
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.