SECTOR WISE ANALYSIS OF INDIAN ECONOMY

TRANSPORT

BY

HAJIRA

ZAMEER

MOIDEEN

ABHYAS

AJITHA

MANOJ

NISHAD

MODES OF TRANSPORT

ROADWAYS RAILWAYS AIRWAYS SEAWAYS(PORT)

INTRODUCTION Transport play an important role in day to day life as they link

production with consumption. Production itself becomes easy by transport, communication and trade as processing site is linked with the sites of raw material. Developed transport, communication and trade help goods and services being distributed in the local, national and international markets. They not only ensure movement of people, materials and communication but also movement of ideas, and skill from one region to another. So, the development of efficient transport and communication network reflects the development of economy and the country as a whole. These means are called lifelines of a nation‘s economy.

In the modern world, no country can prosper without the co-operation and help of other countries . For this movement of goods and material is essential among the countries .Movement of goods and materials among the countries is termed as trade. Trade provides with our necessities and also add to our amenities and comforts. Transport, communication and trade are essential for economic integration, social interaction and defence of the country as well as other countries.

The relationships between transport infrastructure investment and local economic impacts is still central to much of the argument for the non-sustainable trajectory of transport policies and we offer:

A full analysis of the economic case for roads, airports etc identifying the flaws in the case made by the promoter

A review of the very large global evidence that the case is generally weak and over-stated

An analysis of externalities and negative economic impacts on climate change, health, housing and congestion

An analysis of negative social impacts and the regressive nature of transport impacts (they transfer resources to wealthy groups and damage poorer groups)

The Need to Understand the Relationship between Transport and the Economy

Excessive time/money spent on moving people and goods [with annual GDP growth of 6.0-6.5%]

Economic losses from congestion/poor roads high at [120-300 billion rupees (equivalent to US$2.6-6.5 billion) a year].

Exports less competitive due to inefficient and unreliable transport/ logistics systems.

India’s infrastructure, a hindrance to business [2/3 respondents of 1999 CII survey].

Negative effects of poor transport felt by general pubic - social isolation/traffic accidents/motor vehicle emissions.

Improving Transport Services to Facilitate Economic Growth

TRANSPORT NETWORKTRANSPORT NETWORK

MEANS OF TRANSPORT

LAND WATER AIR

ROADWAYS RAILWAYS PIPELINESINLANDWAYS

OVERSEASWAYS

DOMESTICAIRWAYS

INTERNATIONALAIRWAYS

PUBLICUNDERTAKING

PRIVATEAIRLINES

ROADWAYS

Road Transport and Highways

Growing demand for door-to-door transport to boost road transport.

Increased demand for road transport due to the inherent competitive advantage of road transport. and partly due to failure of other modes, especially rail, to attract the demand (that would otherwise be more suitable for them).

Geographic coverage of India’s highway network, [0.66 km of highway per square km of land area] almost identical to United States’ [0.65] and much higher than that of China (0.16), Mexico (0.16), and Brazil (0.20).

Comparison very poor for India in terms of lane capacity/surface quality.

40% of India’s 661,000 rural villages not having all-weather access to markets and social services.

1990s - India’s economy grew by 6 to 7 percent a year, transport demand by 10 percent demand to continue at 10% growth rate.

The road sector, [80 percent share of land transport demand] grew @ 12 percent (freight) and 8 percent (passenger).

Rail transport demand growth slower at 1.4 percent (freight) and 3.6 percent (passenger).

This is not surprising: all over the world, rail transport stagnates as a result of intense competition from road.

Capacity of Infrastructure Support to expand to meet this high transport growth demand.

Increasing demand for high-quality of services further enhances the level of infrastructure support.

Demand for Transport and Transport Infrastructure

NETWORK OF ROADS IN INDIA - 33.2 lakh km. NETWORK OF ROADS IN INDIA - 33.2 lakh km.

On the basis of nature & surfacing - 1.Metalled (pucca)- 57%

2. Unmetalled (kuchcha) - 43% On the basis of construction & maintenance – (a.) Golden Quadrilateral Super Highway : (i) NHDP Phase- INHDP Phase- I :- 5,846 km., six lane, CONNECTING-Delhi ,Mumbai, Chennai and Kolkata (ii) NHDP Phase- II :- 7300 km. * NS Corridors – Srinagar to Kanyakumari * EW Corridors – Silchar(Assam) to Porbandar(Gujarat) (iii) Port connectivity and other projects - 1,157 km. (iv) NHDP Phase – III:- 4,015km., 4 lane ,-National Highway Authority of India (NHAI) is the implementing agency for

NHDP programme.-NHAI is implement 4 laning of 603km. Special Accelerated Road Development

Programme in the North Eastern Region (SARDP-NE) ,

ROADSROADS

(b.) (b.) NATIONAL HIGHWAYSNATIONAL HIGHWAYS -- -- As on March 31,2006 - 65,569 km. 2% of the total length of the road network CPWD constructs and maintains NationalHighways. 35%-single lane, 53%-2lane & 12%-4 lane or more.

(c.) (c.) STATE HIGHWAYSSTATE HIGHWAYS -- -- 1.28 lakh km. 97%of the length of state highway is metalled. The State Highways are constructed an

maintained by State Government.

(d.) (d.) DISTRICTS ROADSDISTRICTS ROADS – – 4,70,000 km. Districts authorities constructs and maintain the District Roads

(e.)(e.) OTHER ROADSOTHER ROADS - mostly kuchcha roads, 26,50,000 km

(f.) (f.) BORDER ROADSBORDER ROADS - - Border Road Development Board , World’s highest Roads from Manali (H.P.) to Leh of Ladakh (J&K)

MAP SHOWING INDIA’S NATIONAL HIGHWAYS

ROAD DENSITY -ROAD DENSITY -

The lowest density – 10 km.per 100 sq.km in J.&K

The highest density – 375 km.per 100 sq.km. in Keral

The national average of road density – 75 km. per 100 sq. km.

Essential for economic growth. Trade facilitation, export growth and globalization. Improve agricultural/industrial productivity. Improve living standards. Increase accessibility. Poverty reduction. Just in time inventory system, and fast service

delivery. Better private sector productivity. Better health, education and community services.

Importance of Highways

STRATEGIES AFTER 1998

Expressway development Extension of highways to rural areas Linkage to backward areas Uniform national free way systems Improve capacity to create new technologies, reduce costs, increase safety.

Year Length km

1991 571

2001 25000

Expressways

170,000 km highways being built, and 3000-4000 km of expressways annually.

Special Emphasis on Urban Roads By 2008, Beijing to have 5 ring roads (against

Tokyo planning 3 by 2011). Financing

Government/Local body financing Loans – National bonds 30% for road construction Foreign investments

PROBLEMS FACED BY ROAD TRANSPORT PROBLEMS FACED BY ROAD TRANSPORT ––

1.Inadequate

2 .43% of road are unsurfaced.

3. Highly congested in cities & Bridges are narrow.

4.Roadside amenities are not sufficient &Emergencies services are poor.

SEAWAYS

SHIPPING SECTOR

Shipping plays an important role in the transport sector of India’s economy.

Approximately, 90 % of the country’s trade volume (70 % in terms of value) is moved by sea.

India has one of the largest merchant shipping fleet among the developing countries and is ranked 17th in the world.

Indian maritime sector facilitates not only transportation of national and international cargoes but also provides a variety of other services such as cargo handling services, shipbuilding and ship repairing, freight forwarding, light house facilities, training of marine personnel, etc.

As on 1.10.2005 India has 704 ships with 8.31 million Gross Tonnage (GT) and 13.73 million Dead Weight Tonnage (DWT).

At present, the Government is holding 80.12 per cent of the share capital and the balance is held by financial institutions, public and others (NRIs, Corporate Bodies, etc.).

SCI has been signing Memorandum of Understanding with the Ministry of Shipping and has received "Excellent" rating consistently for 16 years, up to the year 2006-2007.

The SCI signed the MOU for the financial year 2008-2009 with the Ministry of Shipping, Road Transport & Highways, Government of India on 27 March 2008.

As on 01.06.2008, the share of SCI in total Indian tonnage in terms of GT is around 31% and in DWT terms 32%. Presently,

INDIAN PORT SECTOR

To review the demand-supply situation with respect to the port sector, identify physical, financial and policy constraints to sector development and suggest mitigation measures for the same

PORTS

India has 12 “major” ports (handling 76% sea-borne traffic) (2001) and 140 non-major ports in 9 States & 4 UTs. Aggregate capacity of major ports – 389.5 MTPA

Coastal shipping limited Rated capacities 50-60 % lower than ports elsewhere in Asia. Turnaround time high

Equipment use on berths low-about 30-35 percent. Handling costs high - productivity of equipment being low.

Mother container ships (Main line vessels) not able to call at Indian ports,

adding to transport costs of exports and imports. 61% of Indian export/import containers transshipped

offshore, in Colombo, Singapore and Salalah

Cargo handling at 4 major ports (2004-05) – 383.7 MTP A growth of 11.3%

Chennai, Mumbai, New Mangalore, Paradip, Tuticorin, Kolkata traffic growth >15%

Traffic growth of major and non major ports projected high container

JNPT (established 1990) growing at 25% p.a 55% (in TEUs) of India’s container traffic through JNPT New Mangalore (15 % p.a) and Paradip (11% p.a) also growing

fast.Non major Ports’ Share of Traffic

1991 – 92 2003 – 04 8% 25.4%

Gujarat non-major ports (60) handle 74% of non-major port trafficForecasts Traffic through Indian Ports projected to grow 4 to 6 times in 25

years

WORLD BANK SUPPORT

The World Bank has been a major investor in the transport sector in India.

Till 2007, it has provided 17 loans for improving the national and state highways and rural roads, as well as urban transportation in Mumbai.

It has also provided 18 loans for the railways.  At present, World Bank’s total loan commitments for the

transport sector in India are US$4.95 billion.

CHALLANGES

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.

TURN OVER

The turnover for the financial year 2006-07 was Rs. 4,210.00 crore and the net profit after tax was Rs. 1,015 crore and it has paid a divided of 85%.

The SCI's Turnover for the financial year 2007-2008 is Rs. 4,084 Crore and the Net Profit after Tax is Rs. 814 Crore and it has paid an interim Dividend of 45% for the year 2007-08.

The SCI is a pioneer in India with regard to :

a) STS operations for crude, POL and dry bulk cargoes, (b) Cryogenic operations (LNG/LPG), (c) Joint Ventures and other type of collaborations in shipping, and d) shipping consultancy services.

PERFORMANCE FOR THE YEAR 2007-2008:

Particulars 2007-08 Gross Operating Profit 2817.71 Indirect Cost of Operation excluding Int. & Depreciation

1548.96 Gross Profit Before Depreciation and Interest 1268.75 Net Profit Before Tax 903.94 Tax Provision 90.04 Net Profit After Tax 813.90 Equity Dividend 239.96 Net Profit to Paid Up Capital 288.31% No. of Round Voyages 614 Cargo Lifting (Lakh tons) 385.33 Net Worth 5632.10 Capital Employed 5079.0 Return on Capital Employed (PBIT/ Capital Employed) 19.01%

ACHIVEMENTS IN SHIPBUILDING & SHIPREPAIRS DURING LAST THREE YEARS

One No. 300 Ton Oil tanker Cargo vessel has been delivered during 2006-07.

One No. 300 Ton General Cargo vessel has been delivered to IWAI during 2006- 07.

117 Repairing of 3 Nos. of ships has been carried out during 2006-07

and delivered. The construction of 2 Nos. Self Loading Cargo Vessel & 1

No.Hydraulic Surface Dredger is under progress and the vessels are targeted to be

delivered during 2008-09. During the financial year 2008-09, the IWAI Project for

construction of 6 nos. Work Boats have been under progress and the Naval Project for

construction of 4 Nos. of 1000 Ton Fuel Barges has started.

AIRWAYS

Airways

Air travel is the fastest, most comfortable and prestigious mode of transport. Civil Aviation Department of controls and supervises the activities of airlines

and gives guidelines for safe operations of the airlines. It is estimated that every 100$ spent on air transport produces benefits worth

325$ to the economy. Source: The Economic Times

AIR SERVICES :- 1. Air India - 26 Air Craft 2. Indian Airlines - 54 Air Craft 3. Pawan Hans Helicopters 4. Private Air Lines (Scheduled & Non-scheduled)-70 International Airports :- 14 1.Delhi 8.Kochi 2.Mumbai 9.Hyderabad 3.Chennai 10. Guwahati 4. Kolkata 11. Bangalore 5. Amritsar 12. Thiruvananthapuram 6. Ahmedabad 13. Srinagar 7. Panaji 14. PuneAirports are managed by Airports Authority of India.

Feedback-based interaction between Air Transportation System and an Economy

Highlights

Air transport sector contributes over 0.2% to the country’s GDP, which is Rs. 4,226.21 billion in 2005-06 is less than China which is 18.6% of GDP.

Domestic air cargo traffic has been growing at CAGR of 12.57% from 2001-02 to 2006-07, whereas international air cargo has moving at CAGR of 13% from 2001-02 to 2008-09. During 2006-07, total air cargo Traffic is estimated to be over 1.56 tons against 1.8m tons during 2009-09, registering a growth rate of 14.65%.

Growth was driven by buoyant economy, rise in exports of gems and Jewelry, special chemicals, high value pharmaceuticals and International air cargo traffic at all Indian airports has been rapidly

increasing.

Nations GDP Grows by 6.7% in2008-2009

Evolution of the air transportation system and its interaction with economic activity (S shaped)

Description

In the S-shaped growth, the growth is exponential at first, but then gradually slows because the system becomes constrained by the available resources. Examples of S-shaped growth behavior include adoption of new technologies and population growth models in ecology where resources are constrained by fixed carrying capacity.

“Future economic growth will be jeopardized (To expose to loss ) unless Governments and other authorities invest substantially more in the infrastructure necessary to support the air transport industry.”

-Director-General of IATA,

Efficient transportation of high value and time-sensitive export cargo opens upmany new export opportunities.

The evolution of the air transportation system has three distinct stages:

Start-up development phase: is characterized by the relatively expensive air transportation services which serve an enabling role for certain types of economic activities.

The growth phase: the growth phase characterized by continued reliance of economy on air transportation as the demand is stimulated and air travel becomes mainstream.

The saturation phase: the effective cost of air travel increases thereby decreasing the attractiveness of air travel as a transportation mode.

Issues and Challenges

Major Indian Airports Running Out of Capacity. High Waiting Time and Congestion in Airports. High Fuel Cost. Taxation. Aviation Security. Lack of Human Power.

Path forward

Things to Look ForwardTechnology Vision 2020Global airlines traffic to increase in lieu of the good performanceAllowing of Private Participation & FDIs in construction & maintenance of air traffic infrastructureAir transport supports US$3 trillion of global economic activity. That is 8% of global GDP and 29 million jobs

ChallengesInfrastructureAvian FluTackling the rise in Fuel PriceWaving of Tax Exemption on leasing from governmentWith the advent of LCC, other airlines too reducing their price significantlyCosts pressures (ATF Prices & Staff Cost)

Warehousing

The warehousing discharges an important role in business. It creates time utility by bridging the time gap between production and the consumption of goods.

Warehousing refers to the systematic storing of goods with the goal of making them available on demand.