Economic Survey 2022 – Detailed Analysis Chapter 8

Table of Contents

INDUSTRY AND INFRASTRUCTURE

overall health of the industrial sector along with a sectoral analysis for major sectors like Steel, Coal, MSMEs, Textiles, Electronics and Pharmaceuticals.
highlights the developments of the infrastructure sector broken down in sectors Roads, Railways, Civil Aviation, Ports, Inland Waterways, Telecom, Petroleum, Crude and Natural Gas and Electricity.

Overview of Industrial Sector

Share of the industrial sector in the nominal GVA (at current prices) in 2020-21: 25.9 percent.
In 2020-21, electricity, gas, water supply and other utility services was the only sub sector experiencing a positive growth.
Growth of the industrial sector: 22.9 percent in the first half of 2021-22 vis a vis the corresponding period of 2020-21.
Predictions for 2021-22 as per advance estimates: Growth at 11.8 percent and increase in industry’s share in GVA to 28.2 percent.
Index of Industrial Production (IIP):
IIP recorded a negative growth of 8.4 percent in 2020-21 due to the impact of the pandemic.
Significant improvement in performance in 2021-22: In April-November 2021-22 the IIP grew by 17.4% as compared to (-15.3%) in the corresponding period of the previous year.
Index of Eight Core Industries (ICI): Grew 13.7 percent during April-November 2021-22 as compared to (-11.1) percent in the corresponding period of last financial year.
Reasons for growth – improved performance in the steel, cement, natural gas, coal, and electricity.
Fertilizers and crude oil registered a negative growth.
Capacity utilization (CU): Decreased substantially during the first quarter of 2020-21 due to severe restrictions imposed during the COVID-19 pandemic. It was, however, less severe during the second wave of COVID-19 (Q1:2021-22) due to flexible lockdown measures.
RBI’s Business Expectation Index (BEI): Remained stable with only a slight downturn in the second quarter of 2020-21 owing to the onset of the pandemic. Since then, it has been on an upswing.

Gross fixed capital formation (GFCF): Aggregate GFCF (at constant prices) and industrial GFCF grew by 5.4 per cent and 3.7 per cent respectively in 2019-20.
Gross bank credit to the industrial sector recorded a growth of 4.1 percent in October 2021 (Y-o-Y basis) compared to a negative growth of 0.7 growth in October 2020.
Certain industries such as mining, textiles, petroleum, coal products and nuclear fuels, rubber, plastic, and infrastructure have shown consistent improvement in credit growth.
FDI in Industries:
- Highest ever annual FDI inflow of US$ 81.97 billion (provisional) in the 2020-21 reflecting a growth of 10 percent as compared to the previous year.
- Performance of Central Public Sector Enterprises: Net profit of operating 256 CPSEs during 2019-20 at Rs. 93,295 crore.
- Government notified the new Public Sector Enterprise (PSE) Policy in February 2021 for strategic disinvestment of public sector enterprises.
Its key features include-
Classification of CPSEs into-
- Strategic Sectors: where only a bare minimum presence of CPSEs is to be maintained.
- Non-Strategic Sectors: which will be privatized or otherwise closed.
- Certain CPSEs exempt from the scope of the Policy such as those setup as not-for-profit companies under the Companies Act, 2013 or those supporting vulnerable and weaker sections of society.
INFRASTUCTURE: vehicle for social and economic transformation.
National Infrastructure Pipeline (NIP): launched to provide world-class infrastructure across the country and improve the quality of life for all citizens
Total Viability Gap Funding (VGF) amount of Rs. 2943 crores disbursed between 2014-15 to 2020-21.
National Monetisation Pipeline (NMP): Total indicative value of NMP for core assets of the Central Government has been estimated at Rs 6.0 lakh crore over 4-year period (5.4 percent of total infrastructure investment envisaged under NIP).

Sectoral Developments

Road Transport:
- Road network (National and State Highways, District, Rural, Urban and Project Roads) of over 63.71 lakh km of roads as on March 2019, second-largest in the world, after the United States.
- Increase in pace of road construction in 2020-21 to 36.5 kms per day from 28 kms per day in 2019- 20 (rise of 30.4 percent).
Increase in public expenditure by 29.5 percent in 2020-21 compared to the previous year.
Railways: Third largest network in the world under single management and with over 68,102 route kms.
Traffic: During FY21, IR carried 1.23 billion tonnes of freight and 1.25 billion passengers.
Safety: Train accidents has come down from 59 in 2018-19 to 55 in 2019-20 (pre-Covid) and further to 22 in 2020-21.
Capital Expenditure increased to Rs. 2,15,058 crores during 2021-22 (BE).
Initiatives to upgrade Indian railways (IR):
Adopting indigenous new technology such as KAVACH, Vande Bharat trains and redevelopment of stations.
Kisan Rail: as of December 2021, 1,841 Kisan Rail services, transporting approximately 6.0 lakh tonnes of perishables including fruits and vegetables.
Projects connecting difficult terrain such as Rishikesh -Karnaprayag line as also the rail network to connect all capitals of northeast states.
Wi-fi facility: As of December 2021, total 6,087 Railway Stations equipped with Wi-Fi facility

National Rail Plan: Plans to increase the modal share of railways in freight to 40-45% from the present level of 26-27%, achieve 100% electrification of its network by December 2023 etc.
Civil Aviation: one of the fastest growing aviation markets in the world.
Domestic traffic more than doubled from around 61 million in 2013-14 to around 137 million in 2019-20, registering a growth of over 14 percent per annum.
Initiatives to boost the aviation sector:
- introduction of air transport bubbles or air travel arrangements with specific countries, disinvestment of Air India, privatization and modernization/ expansion of airports, boost to the regional connectivity scheme – UDAN, incentivization of maintenance, repair and overhaul (MROs) operations.

Ports:
- Capacity of 13 major ports increased by 79 percent to 1,560.61 MTPA by the end of March 2021 since March 2014.
- Traffic handled at major ports declined by 4.57 percent between 2019-20 and 2020-21, on account of the worldwide disruptions in international trade due to the pandemic.
- Average turnround time at major ports reduced from 62.11 hours in 2019-20 to 55.99 hours in 2020- 21.
- Indian fleet is just 1.2 percent of world’s fleet in terms of capacity and carries only 7.8 percent (for 2018-19) of India’s EXIM trade.
Initiatives taken by the government:
- Scheme providing subsidy support to Indian shipping companies in global tenders floated by Ministries and CPSEs over five years to promote flagging of merchant ships in India.
- Sagarmala, a National Programme aimed at port modernization & new port development, connectivity enhancement, port-led industrialization, coastal community development, coastal shipping, and Inland water transport.
Major Port Authorities Act 2021 enacted for inter alia regulation, operation, and planning of major ports.
Captive Policy for Port Dependent Industries prepared to address the challenges of renewal of concession period, scope of expansion, and dynamic business environment.
Maritime India Vision 2030 (MIV 2030) released as a blueprint to ensure coordinated and accelerated growth of India’s maritime sector in the next decade.
Inland waterways: Initiatives take no Regulatory amendment through the Inland Vessels Act, 2021, which replaced Inland Vessels Act, 1917 to promote economical, safe transportation and trade through inland waters.
Jal Marg Vikas Project from Varanasi to Haldia stretch of Ganga-Bhagirathi-Hooghly River System for augmentation in navigation capacity of National Waterway-1 (NW-1).
Completion of construction of multi-modal terminals at Varanasi and Sahib Ganj.
Multimodal terminal at Haldia and the Navigational Lock at Farakka achieved substantial progress.
Telecom: India is the world’s second-largest telecommunications market.
Total telephone subscriber base in India: 1200.88 million in March 2021.
Rural-Urban share: 45 percent of subscribers were based in rural India and 55 percent in urban areas in March 2021.
Narrowband-Broadband share: with only 4 percent of subscribers having narrowband and 96 percent with broadband connections in June 2021.
Average wireless data usage: increased to 14.1 GB per data user per month in Q1:FY22 from just 24 GB per month in Q1:FY18.
Initiatives:
- Bharat Net project: 5.46 lakh km Optical Fiber Cable has been laid and a total of 1.73 lakh Gram Panchayats (GP) have been connected by Optical Fiber Cable (OFC). In addition, 4173 GPs have been connected over satellite media.
- Comprehensive Telecom Development Plan (CTDP) for the North-Eastern Region and Comprehensive Telecom Development Plan for Islands to provide mobile connectivity in the uncovered villages and along National Highways in the North-east.
- Petroleum, Crude and Natural gas: India depends on imports to meet more than 80 per cent of its requirements.
- Production of Crude oil and condensate, Natural Gas and petroleum products and Processing of Crude Oil all decreased during the year 2020-21 in comparison to 2019-20.
- This can be attributed to declining production from old and marginal fields, unplanned shutdown and operational losses from few producing wells and lower demand of petroleum products due to COVID-19.
Initiatives:
- Lakshya Bharat Portal launched for promoting transparency: It requires all oil and gas organizations to upload details of various items procured by them including the future requirements.
- Ujjawala 2.0 launched on pan India basis to provide additional one crore LPG connections along with free first refill and stove.
- Measures taken to develop the national gas grid and city gas distribution network.
Electricity:
- Total installed power capacity and captive power plant (industries having demand of 1MW and above) was 459.15 GW in 2021, registering a growth of 2.87 percent since last year.
- Renewable energy – Solar, Wind, Biomass, and small hydro energy constitutes over 24.71 percent of the country’s installed power capacity and around 10.7 percent of the electrical energy generation for year 2020-21.
Energy losses in transformation, transmission, and distribution during the year 2019-20 was at 20.46 percent for all India (highest for the Northeast region – 29.98 percent).
Initiatives:
Green Energy Corridor (GEC) launched aimed at synchronizing electricity produced from renewable sources, such as solar and wind, with conventional power stations in the grid.
Government has mandated electricity distribution companies to undertake quarterly energy accounting through a certified energy manager to minimize losses.