Economic Infrastructure in India part 16

 Okay, here are the comprehensive notes from the lecture on Economic Infrastructure, covering all the points mentioned.

Topic: Economic Infrastructure in India

I. Introduction & Recap

• Previous Lecture Recap: Discussed the Indian Service Sector, its share in national income, and growth rates.

• Current Lecture Focus: Economic Infrastructure (ఆర్థిక అవస్థాపన సౌకర్యాలు).

II. Types of Infrastructure

• Infrastructure is broadly divided into two categories:

  1. Social Infrastructure (సామాజిక / సాంఘిక అవస్థాపన సౌకర్యాలు): Focuses on human development and quality of life. Often provided free or subsidized by the government without a primary profit motive.

     • Examples:

       • Education (Govt. schools, free education)

       • Health (Govt. hospitals, free/subsidized treatment)

       • Rural Development (Village roads, community halls, tank desilting)

       • Urban Development (Road widening, footpaths, traffic signals)

       • Sanitation

     • Facilities: Building schools, hospitals, rural roads, etc., constitutes social infrastructure facilities.

  2. Economic Infrastructure (ఆర్థిక అవస్థాపన సౌకర్యాలు): Directly supports economic activities and production. Government may provide these services but often charges users.

     • Examples:

       • Transportation (రవాణా): Railways, Roads, Waterways, Airways (Govt. charges fares/fees).

       • Energy (Power generation, distribution)

       • Communication Networks

       • Irrigation

     • Facilities: Building railway tracks, ports, power plants, highways, etc., constitutes economic infrastructure facilities.

III. Make in India 2.0

• Context: Initiative launched to boost domestic capabilities and global competitiveness.

• Focus Areas: Identified 27 sectors (initially mentioned 15 manufacturing + 12 services = 27 total) for focused development to increase domestic production and reduce import reliance.

• Objectives:

  • Increase the share of manufacturing in GDP.

  • Create jobs.

  • Attract foreign investment ("Come to India, Invest in India, Make in India").

  • Boost exports.

  • Reduce import dependency by finding domestic alternatives.

  • Make India a global manufacturing hub.

• Government Support:

  • Streamlined approval processes (aiming for 12-hour clearance).

  • Providing incentives to investors (domestic and foreign).

• Targeted Sectors for Import Substitution (Examples Listed):

  • Furniture, Fisheries, Electronics, EV Components & Integrated Circuits, Robotics, Drones, Air Conditioners, Agri-Produce, Agrochemicals, Ethanol, Televisions, Medical Devices, Leather Footwear, Auto Components, Steel, Ceramics, CCTVs, Sporting Goods, Ready-to-Eat Foods, Aluminium, Textiles, Set-top Boxes, Toys, Gym Equipment.

IV. Foreign Direct Investment (FDI) Policy

• Telecom Sector: 100% FDI now allowed via the Automatic Route (no prior government approval needed). Previous caps (49%, 74%) removed.

• Insurance Sector: FDI limit increased from 49% to 74%. (Noted as important for exams).

• LIC: Mentioned FDI limit as 20% (Needs verification against current rules).

• Public Sector Banks/Financial Institutions: Generally have stricter FDI limits.

• Investment Routes:

  • Automatic Route: Investment allowed without prior government approval.

  • Government Route: Requires prior government permission.

• Investment Types:

  • Greenfield Investment: Setting up a completely new facility/operation.

  • Brownfield Investment: Investing in or acquiring an existing facility/operation.

• Exam Relevance: FDI limits are frequently asked (e.g., past question on multi-brand retail). The 74% insurance limit is a key recent change.

V. Tourism and Hotel Sector

• Classified under Economic Infrastructure.

• Significance:

  • "Sunrise Sector" with high employment generation potential.

  • Can create jobs with relatively less capital investment compared to heavy industry.

• COVID-19 Impact: Sector was severely hit; international and domestic travel plummeted. Hotel occupancy dropped significantly.

• Government Revival Efforts:

  • Focus: Attracting tourists (domestic & international) post-pandemic.

  • Infrastructure Development: Building tourism infrastructure in places like Lakshadweep (as an alternative to Maldives, mentioned contextually).

  • Operational Restoration: Airports restored to full capacity (Dec 2021). Hotel industry showing recovery (from Dec 2021).

  • Financial Support: Reduced taxes/tariffs for hotels.

  • Free Tourist Visas: Announced 5 Lakh free visas (first-come, first-served, one per person, validity mentioned till March 31, 2024 or exhaustion).

  • Medical Tourism: India ranked 10th among top 46 destinations.

• Specific Schemes:

  • NIDHI (National Integrated Database of Hospitality Industry): A portal consolidating information for tourists.

  • SAATHI (System for Assessment, Awareness and Training for Hospitality Industry): Training program for hospitality staff, focusing on skills, safety, and hygiene awareness (in collaboration with Quality Council of India - QCI).

  • UDAN (Ude Desh ka Aam Nagrik): Regional air connectivity scheme. UDAN 3.0 specifically focuses on connecting tourist destinations at affordable fares.

  • LGSCATSS (Loan Guarantee Scheme for Covid Affected Tourism Service Sector): Provides loan guarantees (personal loans mentioned) for tourism businesses/individuals impacted by COVID, facilitating access to working capital (via NCGTC).

VI. Real Estate Sector

• COVID-19 Impact: Significant downturn due to Work-From-Home (WFH) culture reducing demand for office spaces and urban rentals. Economic slowdown affected overall demand.

• Government Revival Efforts:

  • Stamp Duty Reductions: By various state governments.

  • RERA Act: Mentioned in context of regulation/support.

  • Interest Subsidies: Under schemes like PMAY-Urban (CLSS component), especially for affordable housing (up to ₹3.5 lakh subsidy on loans up to ₹45 lakh cited).

  • Loan Moratorium: Provided relief from EMI payments for 6 months (March-Aug 2020).

  • Loan Restructuring: Option offered post-moratorium for borrowers still facing difficulty, allowing renegotiation of terms (up to 2 years extension possible).

• Impact: These measures helped the sector recover gradually.

VII. IT-BPM Sector (Information Technology - Business Process Management)

• Significance: Major contributor to the digital economy and service exports. Large employer.

• NASCOM Data: India has one of the world's largest IT workforces.

• Growth: Resilient sector. Growth noted as 2.1% (2020-21) and 15.5% (2021-22), showing strong recovery.

• Exports: Primarily to USA (~62%) and Europe (~17% excluding UK).

VIII. E-commerce Sector

• Growth: Rapid expansion, accelerated by the pandemic.

• Reach: Penetrating Tier-3 and Tier-4 towns beyond major metros (Meesho, Trell, Shop101 examples).

• Impact: Facilitates access to goods, supports MSMEs, drives the Gig Economy.

• Growth Stat: High growth figure of 69.4% mentioned for 2021-22. Share in Tier-1/2 city retail grew to 61.3% (21-22).

• Potential: Seen as a "Sunrise Opportunity Sector".

IX. Industrial Corridors

• Concept: Large, integrated infrastructure projects connecting major economic centers, designed to stimulate industrial and manufacturing growth along the route. Includes high-quality roads, rail, ports, power, etc.

• Goal: Planned industrialization, attracting investment.

• Development Body: National Industrial Corridor Development Programme.

• Total Approved: 11 corridors.

• Examples: DMIC (Delhi-Mumbai, first in 2006), CBIC (Chennai-Bengaluru), AKIC (Amritsar-Kolkata), VCIC (Vizag-Chennai), BMEC (Bengaluru-Mumbai), Hyderabad-Nagpur, Hyderabad-Warangal, Hyderabad-Bengaluru, OEC (Odisha), DNIC (Delhi-Nagpur), ECEC (East Coast - broader corridor).

X. Export Processing Zones (EPZ) / Export Promotion Zones

• Purpose: To promote exports by providing fiscal incentives and infrastructure support in designated areas.

• History: First EPZ in Asia established in Kandla (Gujarat) in 1965 (initially FTZ).

• Incentives: Tax exemptions, streamlined procedures, duty-free imports for export production.

• Goal: Reduce production costs, enhance global competitiveness.

• Key Locations: Kandla, Santacruz (Mumbai), Falta (WB), Chennai, Noida, Cochin, Visakhapatnam.

XI. Special Economic Zones (SEZ)

• Concept: An advanced version of EPZs. Geographically delineated areas treated as foreign territory for trade/tariff purposes, offering extensive benefits.

• Legislation: SEZ Policy (2000), SEZ Act (2005, effective Feb 2006).

• Objectives: Boost economic activity, exports, investment (foreign & domestic), employment, and infrastructure development.

XII. National Investment and Manufacturing Zones (NIMZ)

• Concept: Large integrated industrial townships (minimum 5000 hectares), larger than SEZs, focused on boosting manufacturing.

• Features: World-class infrastructure, eco-friendly technologies, skill development centers. Designed to attract significant domestic and foreign investment.

• Location Strategy: Often located in backward regions or along industrial corridors.

• Examples: Ahmedabad-Dholera (Guj), Shendra-Bidkin (Mah), Manesar-Bawal (Har/Raj), Khushkhera-Bhiwadi-Neemrana (Raj), Dighi Port (Mah), Dadri-Noida-Ghaziabad (UP), Pithampur-Dhar-Mhow (MP).

XIII. National Manufacturing Policy (NMP) 2011

• Launched: Nov 4, 2011.

• Key Goals (Original Target: 2022):

  • Increase manufacturing share in GDP to 25%.

  • Achieve 12-14% annual growth in manufacturing.

  • Create 100 million additional jobs in manufacturing.

  • Enhance global competitiveness.

  • Skill development for workforce.

XIV. E-Biz Project

• Launched by: DIPP (now DPIIT).

• Type: Government-to-Business (G2B) Portal.

• Purpose: Create a "One-Stop Shop" online platform for businesses to access various government services, licenses, clearances, and information easily. Aims to improve the Ease of Doing Business.

XV. Final Remarks & Exam Strategy

• Service sector topics covered include infrastructure, tourism, IT, E-commerce, Real Estate, etc.

• Exam weightage for services might be moderate (3-4 questions suggested).

• Focus on key definitions, schemes (NIDHI, SAATHI, etc.), policies (NMP, SEZ Act), recent data (FDI limits, growth rates), and examples (corridors, zones).

• Economic Survey is a primary source for updated data. Keep an eye on new survey releases for the latest figures.