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Infrastructure

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‘Infrastructure’, in general, is understood as the elementary structure or service required for an economy to function. It is recognised as the vital ingredient for economic development. In India, there existed no uniform definition of the term as different organisations used to include different sectors or industries or areas under “infrastructure”. For instance, as on date, there are almost 14 definitions of infrastructure, as given by various organisations. To move towards a uniform definition, the Cabinet Committee on Infrastructure on 1 March 2012 approved the framework for using a harmonised master list of infrastructure sub sectors.

The interpretation of the term ‘infrastructure’ as given by some of the organisations /commissions is detailed here.


National Statistics Commission

The National Statistical Commission headed by Dr C. Rangarajan identified six characteristics of infrastructure sector, namely (a) Natural Monopoly (b) High Sunk Costs (c) Non-tradability of output ( Non tradable good or service is one which is produced and sold at the same location ) (d) Non-rivalness in consumption ( Non-rivalness implies that the cost of providing a good or service to an additional individual is zero ) (e) Price exclusion (Price exclusion means that the enjoyment of benefits is contingent on payment of user charges) and (f) Externalities. Based on the above features (except b, d and e), the Commission recommended the following sectors for inclusion in “infrastructure” in the first stage: (1) Railway tracks, signalling system, stations (2) Roads, bridges, runways and other airport facilities (3) Transmission & Distribution of electricity (4) Telephone lines, telecommunications network (5) Pipelines for water, crude oil, slurry, waterways, port facilities and (6) Canal networks for irrigation, sanitation or sewerage. On the basis of characteristics mentioned at b, d and e, the following were recommended for inclusion in infrastructure in the second stage: (1) Rolling stock on railways (2) Vehicles, aircrafts (3) Power generating plants (4) Production of crude oil, purification of water and (5) Ships and other vessels. The Commission recommended that the list should be finalised by the Ministry of Statistics and Programme Implementation on the basis of the characteristics identified above for defining infrastructure.


The India Infrastructure Report

Dr Rakesh Mohan Committee in ‘The India Infrastructure Report’ included Electricity, Gas, Water Supply, Telecom, Roads, Industrial Parks, Railways, Ports, Airports, Urban Infrastructure and Storage as infrastructure.


Central Statistics Office

The Central Statistics Office outlines six broad sectors as infrastructure; Transport, Energy/Power, Drinking Water Supply and Sanitation, Irrigation, Communication and Storage.


Reserve Bank of India

RBI has brought out a definition of infrastructure from the perspective of infrastructure lending and list of items included under infrastructure sector appears at Annex I of its Master circular on exposure norms.

For the purpose of external commercial borrowing funds, RBI has defined infrastructure to include power, telecommunication, railway, roads including bridges, sea port and airport, industrial parks , urban infrastructure (water supply, sanitation and sewage projects), mining. Exploration & refining and cold storage or cold room facility, including farm level pre-cooling for preservation or storage of agriculture & allied produce, marine products & meat.


Insurance Regulatory and Development Authority (IRDA)

The IRDA (Registration of India Companies) (Second Amendment) Regulations, 2008 has defined the term ‘Infrastructure Facility’. The details can be accessed at;

http://www.irda.gov.in/ADMINCMS/cms/frmGeneral_NoYearList.aspx?DF=RL&mid=4.2


Income Tax Department

Infrastructure facility is defined in Section 80-IA of Income Tax Act to include roads, including a toll road, bridge or a rail system; a highway project including housing or other activities being an integral part of the highway project; a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; port, airport and inland waterways; electricity, telecom and industrial park/SEZ.


SEBI

Schedule X of SEBI (ICDR) Regulations 2009 outlines the facilities identified as infrastructure sector.


Economic Survey

Economic Survey considers power (electricity generation), coal production, petroleum production (crude oil & refinery throughput), cement production, telecommunications, roads, ports, civil aviation and railways as infrastructure sector.


Empowered Sub-Committee of the Committee on Infrastructure

The Empowered Sub-Committee of the Committee on Infrastructure has given the following definition of infrastructure

  1. Electricity (including generation, transmission and distribution) and R&M of power stations,
  2. Non-Conventional Energy (including wind energy and solar energy),
  3. Water supply and sanitation (including solid waste management, drainage and sewerage) and street lighting,
  4. Telecommunications,
  5. Roads & bridges,
  6. Ports,
  7. Inland waterways,
  8. Airports,
  9. Railways (including rolling stock and mass transit system),
  10. Irrigation (including watershed development),
  11. Storage,
  12. Oil and gas pipeline networks


Harmonised Master List of Infrastructure and its Sub Sectors

In view of the varying definitions, the Cabinet Committee on Infrastructure has now brought out a harmonised master list of 5 main infrastructure sectors and 29 infrastructure sub sectors. This is a guide to all agencies involved in the field of infrastructural development or financing in India. This is a flexible list to enable each financing agency to draw up its own list of subsectors out of the master list, with proper justification for inclusion/non-inclusion of a particular sub sector.

Any new sub sector will be included in the master list only if it satisfies the six characteristics of infrastructure (namely natural monopoly, high sunk costs and asset specificity, non-tradability of output, non-rivalness in consumption, possibility of price exclusion, and presence of externalities) and after one or more of the three parameters (namely its importance to the scheme of economic development, its ability to contribute to human capital and the specific circumstances under which it has developed in India) has been evaluated. The harmonised master list of 29 infrastructure sub sectors can be viewed at the following link.

http://pib.nic.in/newsite/erelease.aspx?relid=80634

The Ministry of Housing & Urban Poverty Alleviation has sent the proposal for consideration of “Institutional Mechanism (IM) under the Harmonized Master List of Infrastructure sub-sectors”, constituted by Ministry of Finance to consider assigning ‘Infrastructure Status’ to Affordable Housing Sector.The status of the same is awaited.

On 7 October 2013 an updated harmonized list of 33 infrastructure sub-sectors were notified by the Ministry of Finance which can be seen here. This was further modified and pruned on 13th October 2014 by deleting fertiliser (capital investment) and by substituting “Common infrastructure for industrial parks, Special Economic Zones, tourism facilities and agricultural markets” with “Common infrastructure for Industrial Parks and other parks with industrial activity such as food parks, textile parks, Special Economic Zones, tourism facilities and agricultural markets”. The updated list of 32 sub-sectors may be seen here.

The Union Budget 2017-18 announced that "affordable housing" will be given infrastructure status, which will enable these projects to avail the associated benefits.

References

  1. http://www.infrastructure.gov.in/
  2. http://www.rbi.org.in/
  3. http://www.irda.gov.in/
  4. http://www.sebi.gov.in/


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