Saturday, August 2, 2008

What is Infrastructure

Very often, I am confronted with two questions from most of my friends: (i) What do you mean by infrastructure and (ii) what is PPP as both these terms are a part of my dissertation title.

During my discussion with friends and professionals, I have realized that most of us were at pains in defining these terms. At best, we could describe them based on our understanding. In this blog, I am trying to describe the construct 'Infrastructure'.

Infrastructure has been used by many organizations with different connotations. In fact, it has become an umbrella term over the years. Let us look at some of the definitions of infrastructure in India which have been collated from planning commission documents mainly.

1. Rakesh Mohan Committee 'The India Infrastructure Report' (1996): Electricity, gas, water supply, telecom, roads, industrial parks, railways, ports, airports, urban infrastructure, and storage as infrastructure.

2. Central Statistical Organisation (CSO): Electricity, gas, water supply, telecom, roads, railways, ports, airports, and storage as infrastructure.

3. Insurance Regulatory and Development Authority (2000): Road, highway, bridges, airport, port, railways including BOLT, road transport system, water supply project, water treatment system, solid waste management system, irrigation project, industrial parks, sanitation and sewerage system, generation-transmission-distribution of power, telecom, project for housing, or any other public facility as may be notified in the official gazette

4. C. Rangarajan Commission’s (2001): Based on three characteristics of infrastructure sectors - Natural monopoly, non tradability of output and creating externalities on society: Railway tracks, signalling system, stations, Roads, bridges, runways and other airport facilities, T&D of electricity, Telephone lines, telecommunications network, Pipelines for water, crude oil, slurry, waterways, port facilities, Canal networks for irrigation, sanitation or sewerage,

Another set of three additional characteristics - high-sunk costs, non rivalness (up to congestion limits) in consumption, and possibility of price exclusion - led to indentification of Rolling stock on railways, Vehicles, aircrafts, power generating plants, production of crude oil, purification of water, ships and other vessels.

5. RBI, a credit facility: developing, operating and maintaining, or developing, operating and maintaining any infrastructure facility that is a project in any of the following sectors, or any infrastructure facility of a similar nature:
  • a road, including toll road, a bridge or a rail system;
  • a highway project including other activities being an integral part of the highway project;
  • a port, airport, inland waterway or inland port;
  • a water supply project, irrigation project, water treatment system sanitation and sewerage system or solid waste management system;
  • telecom services whether basic or cellular, including radio paging, domestic satellite service (i.e. a satellite owned and operated by an Indian company for providing telecom service), network of trunking, broadband network and internet services;
  • an industrial park or special economic zone;
  • generation or generation and distribution of power;
  • transmission or distribution of power by laying a network of new transmission or distribution lines;
  • construction relating to projects involving agro-processing and supply of inputs to agriculture;
  • construction for preservation and storage of processed agro-products perishable goods such as fruits, vegetables and flowers including testing facilities for quality;
  • construction of educational institutions and hospitals;
  • any other infrastructure facility of similar nature.

6. Income Tax Department: electricity, water supply, sewerage, telecom, roads & bridges, ports, airports, railways, irrigation, storage (at ports) and industrial parks/

7. World Bank: Power, water supply, sewerage, communication, roads & bridges, ports, airports, railways, housing, urban services, oil/ gas production and mining sectors as

8. The Economic Surveypower, urban services, telecommunications, posts, roads, ports, civil aviation, and railways under infrastructure

9. RBI for technical commercial borrowings (2007): power, telecom, railways, road including bridges, sea port and airport, industrial parks and urban infrastructure (water supply, sanitation and sewage projects)

Planning commission (2008):
  • Electricity (including generation, transmission and distribution) and R&M of power stations,
  • Non-Conventional Energy (including wind energy and solar energy),
  • Water supply and sanitation (including solid waste management, drainage and sewerage) and street lighting,
  • Telecommunications,
  • Road & bridges,
  • Ports,
  • Inland waterways,
  • Airports,
  • Railways (including rolling stock and mass transit system),
  • Irrigation (including watershed development),
  • Storage,
  • Oil and gas pipeline networks