Infrastructure Finance Chapter-1 Introduction To Infrastructure Finance

Infrastructure Finance
CHAPTER-1
INTRODUCTION TO INFRASTRUCTURE FINANCE
Infrastructure in respect of this book consists of this plethora of activities, which

are available in public utility services and public works. To be more precise, the
gamut of infrastructure deals with:
 Roads and Bridges

 Railways
 Airways including port activity
 Sea port and yards
 Telecommunication
 Power sector, including generation and distribution.
Rakesh Mohan in the Indian Infrastructure report defines
“Infrastructure is generally defined as the physical framework of

facilities through which goods and services are provided to public.”
In fact, the World Bank in its agenda paper proposes that in relation to
infrastructure, the various states should manage infrastructure more like a business
and introduce competition wherever it is possible.
It strongly urges that the idea behind such a change is to promote public –
private partnership in financing such projects of infrastructure and increase the
stake of the user, the ultimate decider of the public property.
It is, however, envisaged that the government should continue in its

functioning relating to infrastructure but with the changed role.
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The Key Issues in Infrastructure
The key or primary issues in infrastructure relates to,
a. Fund Raising
The basic issues are generally to:
 Decide upon the assets allocation and therefore sources of funding
 Decides the mechanism of fund flow
 Create a mechanism through which the fund flows
 Post privatization issues including tariff and price fixation and sourcing
of working capital.
b. Modality of transfer of ownership of assets from government to private
partners
The modality of transfer of ownership includes amongst many,
 The process of transfer and its mechanism like divestment, leasing,
management buy-outs, assets transfer without title etc.
 The modality of finance and transfers like, Build Operate and Transfers
(BOT), Build Own Operate and Transfer (BOOT), and Own Actualize and
Transfers (BOAT).
c. Portfolio reconstruction of projects or public utilities for which
privatization is sought
The process serves two purposes:
 It creates a sound basis for the transfer of public property to private
hands,
 It creates a sense of economic reality in term of easing the burden on
exchequer as a result of such divestment of public property in whole
or in part.
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d. Project appraisal
Besides the financial realities, the project appraisal helps in ascertaining the
means through which the projects are being financed and the legitimacy of
such projects. As approach of UNEDO to bridge the gap between the social
need and the economic need id the must.
e. Implementations of projects
The implementation of the projects in infrastructure finance brings it back to
a full cycle. The process's acid test stands in the implementation and the
smooth function of the project thereafter.
f. Regulatory Authorities
Another essential aspect of financing the infrastructure, especially in the
case of public utility and project relating to it, is the method through which
the post project phase is regulated.
The financing of infrastructure therefore revolves around the modalities
of transfer of public property, arranging for their funding, creating a
regulatory framework in which they function and monitor the aftermaths of
the projects.
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CHAPTER-2
Risks and Returns Analysis of Infrastructure
The discussions of risks and return in infrastructure pertain to very important

issues in infrastructure. The Risk of any infrastructure projects consists of the
following.
1. The project risks including domestic and foreign risks

The projects, which are undertaken in infrastructure, are exposed to both
domestic and foreign risks in terms of funds and business risks. The
arrangement of the foreign collaborators for the purpose of the fund raises
the counter party risk in foreign exchange risks one may cite the example of
Dhabol Power Plant in Maharashtra, where one of the major foreign parties
i.e., Enron landed in a huge financial crises leading to a closure of the
project.
2. The risk arising out of fund mechanisms
The funds are raised in the projects from two sources. The first is generally
the equity participation. This is the least risk oriented fund because, in such
case the domestic or foreign fund generally get invested in fixed assets
thereby reducing the cost expectations of the capital. The other form id the
debt borrowings, which are done from the international funding agencies.
Since, in many cases these are on a counter purchase agreement, the
government provides a buffer in terms of foreign exchange.
3. The risk pertaining to the portfolio allocation of projects
In case an infrastructure project has more than one component, which has
viability in the acceptance of as project, it becomes pertinent for the project
evaluators to take into consideration all such components. For example, if a
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highway is being considered between two cities and the road passes through
more than one important junction of both the cities, it might well is in place
that these junctions can have shopping malls which can generate additional
revenue in addition to toll that can be lived on the commuters of the roads.
The Return aspects of infrastructure are associated with,
1. The economic return of assets.
The concept of economic return is essential to any project whether it is
infrastructure or otherwise. The excess of total revenue over the total costs
make up the earnings in the project. Thus, when the life of the project and
therefore the viability of the project come into question it is the economic
rate of return, which makes the most important evidence in favor of the
project.
2. The explicit return in term of tariff.
Deciding the tariff is one of the most crucial problems in any infrastructure
projects. Since, the tariff is the major component in the flow of fund of the
project, it also becomes the most critical point of evaluation .since, and tariff
bears a lot of cross subsidy it becomes difficult to come to the consensus
about the rate. The common methods of tariff determination are as follows.
Joint cost method: Under this method the cost is assumed to arise out of
joint cost of the facilities that an infrastructure project enjoys.
Cost function determination: The other acceptable method may be to
determine a cost function taking into consideration all the components that
effectthe cost of the project output.
3. The inclusion of accounting profit and the effect thereof.
The accounting profit has its own importance in the process of determination
of return of the project. Since it is post depreciation and post interest profit,
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which when assessed, it gives the real picture in terms of actual revenue
generated in the project undertaken. This serves immensely when the
question of continuation of the project is to be determined.
The project risk associated with infrastructurebasically cover three aspects of
risk
 The project completion risk, which include uncertainties in supply of
inputs, and the third party risk like environment or legal risk.
 The risk arising out of the fund accruing in domestic market and
foreign market
 The risk pertains to the allocation of economic activity, socially
beneficial activity in project of the infrastructure.
The return aspects basically deal with the economic return of assets. In
terms of any project, the viability of projects stands on the basis of the
net present value or internal rate of return judgment.
Measurement of the impact on Distribution
Generally, the measurement of valve of the project in terms of its

contribution to saving and income redistribution is done on individual groups.
Such group may include projects, private business, government, workers,
consumer and other external sector.
Measurement of Gain and Loss
The gain and loss to an individual group or society as a result of a

project in case; of an output is the difference between the shadow price and the
market price, and, of financial transaction it is the difference between the prices
paid and value received.
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CHAPTER-3
Measurement of Risk and Returns
Like in any other financial deal, the conceptualization of risk and return in a
particular context is always a matter of great importance. The next more important
issue is to measure them. In fact, the financial analysts have not been any sure as to
what are the exact avenues open before the partiesthat deal with such issues.
The common convention is to use yardsticks, which are used successfully in

other related fields. The tow most common measures in both risk and return
measurement are accounting method and the economic approach.
1. Risk measurement in accounting method

The proposed method of measurement of risk through accounting method is
generally done through accounting rate of return. The idea behind this
approach is to find a ratio of earning and average investment. The larger the
rate, the lower is the risk.
2. Economic methods of risk measurement
The economic risk measurement, are more of micro normative in nature and
uses statistical justification for the purpose of ascertainment of risk. The
most common methods are that of using a time series data of profits
(earning) and find the standard deviation from the population mean
profit/earning.
A Traditional method of risk measurement of a project
The most common and widely used method of measurement of risk is

perhaps the payback period method. Payback period means the length of the time
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required to recover the initial cash outlay on a project. The idea behind this is that
the sooner a project pay off, the lesser riskier is the project.
The popularity of this method lies in the fact that it is easy to understand and
often handy to use. On the reserve, this ignores the fact that the period of time
through which the value of money compounds reduces the later cash inlays of a
project. Or in simple word, it ignores the time value of money.
However, there is a justification in the use of the payback period.
Return Measurement in Accountingmethod
The accounting returns are more of percolated earnings. In a true sense, they
are either gross or net depending on the nature of cost or expenses deducted from
them. For the purpose of infrastructure, the returns are more based on cost
allocation, rather than the occurrence of such cost. This is in tune with the fact that
pace at which the cost moves and the pace at which the project is completed may
not match each other. Thus, the time-cots over run lead to a reconciliation problem.
Going by the mercantile system of accounting, therefore, it is easy to keep track of
cost as they arise or maintain record on the transaction basis.
The Economic return measurement
The economic concepts of return are close to the total earnings which both
the total revenue and total cost are taken care of.
The marginal revenue measurement gives due importance when the

diminishing return are to be ascertained for a project.
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In the context of financial reality, however, the accounting return works out
better for short- term fund allocation and disbursement and the economic return for
the purpose of long-term capital budget assessment.
Measurement of risk and return using a portfolio approach
An alternative way to measure risk and return could be using the method of
portfolio return measurement approach. The idea behind use of such method would
be that the most of infrastructure projects whether already existing ones or are in
the process of being worked out, have a portfolio of activity. If we look at any state
transport organization, we will see that they have a series of activities which
includes, says (a) Fleet maintenance (b)Booking and ticketing (c)Bus terminals
(c)filling station and (e) Tyres maintenance (re-trading)
We need to make some basic assumptions in respect of infrastructure

finance.
 The first assumption is that each of the individual activity which will be
considered, need to have a return or their return should be measurable.If
there are multiple projects under the single umbrella then each one of them
should be able to meet the above said condition.
 The second assumption is that the total probable risk in investment,
considering all the component of the portfolio, should be one.
 The third assumption is that the individual units in the portfolio should have
a sale value and therefore, lead to a capital gain (loss).
 The fourth assumption , is relating to a common return cut off rate at which
fund can be invested in all the components of the portfolio of the
infrastructure
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CHAPTER-4
Methods of Financing the Infrastructure projects
The infrastructure projects are marked by their huge cost and long period of
completion. Since, most of the infrastructure projects are associated with public
utility; it becomes quite difficult to ascribe a commercial motive to them.
Nevertheless, infrastructure projects may be broken down to smaller projects

which can then be ascribed with more tangible commercial value.
General methods of financing of infrastructure
The general methods of financing a project of infrastructure consist of:
a. Equity Participation of the Government

Such equity participation could possibly be in form of either direct
participation or a budgetary allocation.
b. Borrowings from Institutional Financers
The more probable way of funding could be to get the project funded
through either a domestic or an international financer like World Bank or
DFID etc.
c. Public bond issue with redemption option
Some of the infrastructure projects have gone in for bond issuance with a
limited life and redemption. This method had worked out quite well in case
of Narmada project and Konkan Railway Corporation.
d. Leasing of Infrastructure
Since most of the infrastructure as noted earlier involve ahuge amount of
fund, the private participation in terms of fund is very low. Hence, the
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government takes up the task of developing and constructing such projects

like that of roads and bridges and then turn off to the private parties. Since,
buying such projects will be infeasible, the private parties take it on an
operational lease for a period of time. This has two definite advantages. One,
it reduces the immediate financial burden on the state and second, it creates
an off balancesheet item for the lessee, there by not disturbing its financial
position.
e. Contracting to sale with fund back up
This method of funding has become popular only in early nineties. The
process is popularly known as securitization. The idea behind this is to
convert a tangible asset into a fund-based security through a special purpose
vehicle (SPV). Once the assets are converted into fund based instrument
they are sold to the public and cash recovered. The system rationalizes the
commercial reality without disturbing the welfare motif.
The methods mentioned above with a few operational formalities make the
process of creation and maintenance of infrastructure projects a reality.
Since, the moot issue in infrastructure finance is to transfer the ownership
from the public toprivate hand, the modalities adopted reflects the same.
Some common modalities and techniques that can be seen across the globe
are stated below:
I. BOOT (Build, Own, Operate and Transfer)
Since most of the infrastructure projects have a huge fund requirements to
initiate, this method advocated that the government comes forward to fund
the project through its own exchequers or special assistance from World
bodies like Worlds Bank or DFID etc. once the project is completed, it is
then formally owned by the state. The state then operate this project till
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break-even is reached or a suitable cost is recovered. This enables the project

to become commercially viable. Thereafter, bids are sought from private
participants to own the project and run it on commercial basis. Generally,
such a transfer of the ownership is done for the stipulated period of time
until the cost of the project is completely recovered. The project thereafter is
reverted back to the state. Common examples of the BOOT arrangement are
toll roads and bridges.
II. BOAT( Build, Own, Actualize and Transfer)
In case of building up of infrastructure like power and water supply, which
are fundamentally in the utility sector and also have a commercial viability,
the state may like to keep it in its own kitty for a while to generate some
fund. Under such circumstances, the state keeps the project until it starts to
generate profit. Such profits are actualized and then the project is transferred
to the private party who run the project on a commercial line. The modality
of transfer depends upon the state willingness to share the equity and
ownership of the project. For certain utility sector projects, it becomes
essential that the state retain its part ownership so that it can exert pressure
on the performance of the private party that takes up the project to operate it
commercially.
III. BOLT(Build, Own, Lease and Transfer)
In case a project has a very high social cause and high cost to complete the
project, it becomes difficult for the state to does the balancing act. Since
such projects are costly to complete, they burn a hole in the state exchequer.
The need to transfer it to private party to recover the cost is essential.
However, the social cause keeps the debate alive whether or not to transfer
the project to private hand. In case of the financial lease the agreement never
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gets terminated. In case of an operational lease, the project is sometimes

reverted back to the state after which it runs in a manner it desires to.
IV. BOT (Build, Own and Transfer)
In case the state has to create assets, which have a high commercial value, it
can create it and transfer the ownership to private party through bid and sale
offer. This ensures immediate cash inflow and recovery for the exchequer.
Off soot projects of main stem projects like road and railways are most
suitable to be funded in this way.
Capital market and infrastructure financing
The unconventional nature, which is inherent to the infrastructure finance,

makes the conventional financer difficult to finance these projects. Financing the
projects in infrastructure requires deep understanding in legal, regulatory and
institutional arrangement in which the project promoters will operate.
The use of private financein the infrastructure projects requires well-

developed domestic capital market. There is a need to tap the domestic marketsince
most of the infrastructure projects generate revenue in domestic currency.
It has been estimated by the Rakesh Mohan committee that the total funding
requirements for the infrastructure to be financed from the domestic capital market
would raise from the current Rs.250 billionto Rs.420 billion by2000-1 and Rs.720
billion by 2005-6.
Since there is a huge gap between the demand and supply of fund provision,
it provides very interesting challenges to various component of the capital market.
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Deepening and widening of the market in debt instrumentsthrough financial

innovations are expected to improve the efficiency of the infrastructure project
finance.
Since the capital market (both debt and equity) are risk averse, it would do
well if rating agencies are involved in the infrastructure projects in order to bring
in transparency in the dealing of the project.
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CHAPTER-5
Reforms Measures in Infrastructure in India
Infrastructure as we understand, serves as the backbone of any national

economy. Since, it acts as the vehicle of development it is all pervasive in terms
of its existence. This gives the infrastructure a monopolistic stature.
The development of infrastructure includes a high upfront cost. The

risks in infrastructure projects are high as the pay back periods are long. Bulky
investment and externalities makes infrastructure projects difficult to complete
and operationally viable.
Since, the new infrastructure projects and its maintenance involve huge
cost; it creates an enormous pressure on the state exchequer.
In the face of the new realization in economic terms, world over, a wave
of privatization has taken over in the field of infrastructure.
The reasons for the reforms taking place in the infrastructure sector
may be enumerated as:
 Since, most of the countries are passing through a stringent economic

situation; the need for funding huge investment in infrastructure through
private participation is arising.
 Since, many infrastructure projects investments are not found to be very
effective in terms of return – risk realities, the states are not willing to
take them up in face of financial crunch that they are feeling.
 With the advent of new technology, introduction if competition
horizontally and unbundling of services vertically is now possible. This is
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giving a chance to charge for the marginal use of infrastructure and

enables private to participate.
 Integration of capital market world over is giving a chance for the states
to raise fund from international market in a better and efficient way.
Most of the above reasons are driving the state to move commercial
framework of managing the still largely monopolistic infrastructure set-ups.
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CHAPTER-6
Power Sector
Amongst the various infrastructure issues that had kept the reform movement most
busy in India is the last decade, power sector it is the complex non-physical
existence of the major output of the sector i.e., electricity. Power as is well known,
plays a key role in the industrial and economic development of the nation. Power
alias electricity can nether be neither stored nor imported. The only ways of
increasing its supply is by increasing the existing capacity.
The reason why power sector reform required such a huge amount of efforts
and resource is because of the following reasons:
 Barring the few establishments most of the power utility sectors are state
owned and controlled giving it a social bias and making compliances with
commercial reality very difficult.
 India has high as 14% peak time deficit in power, which has led to a
multiple problems like low capital investment in the sector, loss of
resources and not to say about the loss due to non- sustainable industrial
growth.
 Most of the state runs electricity boards are bankrupt and are in desperate
need to rejuvenation in order to carry out their operations. They are ultimate
buyers of power in most of the cases but fail to pay the private generators
due to their financial bankrupt status,
 Power sector involves two aspects, 1.power generation (which has more
takers in private sector due to its commercially viable nature) and 2. Power
distribution and transmission (which has few taker despite the efforts put in
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by the government because it is the most logistically unmanageable and

commercially non lucrative aspect)
Industry structure
The power industry is divided into three parts. The first two parts are
concerned with generation and distribution and the third part is associated with
the regulatory authority
During the pre liberalization period, the power sector was predominantly
state owned with dots of private participation in West Bengal (CESE),
Maharashtra (BSES) and Gujarat (Ahmedabad electricity supply).
The major players in this generation of electricity are under the central
government, which include National thermal power corporation (NTPC),
National Hydro power (NHPC), nuclear power corporation (NPC), Deodar
valley corporation and NEEPCO.
In the state sector electricity boards are the major players. A few states
have undergone reform and have corporatized their SEBs. To start with is the
state of Orissa where the generation has come in the hands of newly formed
Corporate Orissa Power Generation Corporation and Orissa Hydro Power
Generation. In Haryana, it has come to Haryana VidyutUtpadan Nigam
(HVUN).
Reform Incentives in recent years
The reform measures in recent years in the power sector included a plethora
of activities in various parts of the industry.
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 Privatization drive: The most widely seen were the aspect of

privatization of the SEBs. The privatization actually followed to path. In
the first, place the corporatization of the basic structure of the SEBs and
in the second place the unbundling of the activity such as distribution and
transmission and then either corporatize or divest them in favor of the
private sector.
 Restructuring of the organization: The second set of the reform comes
in form of restructuring the organization within. The reorientation of the
work force and making it learner is one of the forefront issues.
Rationalizing of tariffs is also another area of reform, which had been
discussed earlier.
 Technological upgradation: Technological upgradation formed the third
pillar of the power sector reform. Metering of all connection to ensure
effective revenue flow, toning up of the collection mechanism by
computerization of system is amongst the forefront of all the states where
power sector reforms has taken place.
 Power tariff reforms of various states: The fourth pillar was the tariff
reform. The various states, which undertook “tariff reform” included
Orissa, TamilNadu, Andhra Pradesh and Maharashtra. Orissa had the
least hike in power by OREC i.e. 4p.c as against the 10p.c asked
byGRIDCO.
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Some cases of state level power sector reform
Some of the states have undertaken several measures of reform in the power sector
out of two reasons. In the first place the obvious reason of fund shortage and in the
second places the need for reducing the bureaucratic control over the system.
Andhra Pradesh
The state of Andhra Pradesh has gone in for very definitive changes in the
power sector. The first step towards this was to divide the state electricity
board into two corporate entities, i.e., Andhra Pradesh generation limited
(Agency) and Andhra Pradesh transmission company limited(Transco). The
major tariff decision rested with the Transco in association with the Andhra
Pradesh electricity regulatory authority that was established in 1999.
Karnataka
The state of Karnataka has progressed well in the path of power sector
reform. The Karnataka state electricity board (KSEB) has established a 100
percent subsidiary, Karnataka power corporation ltd (KPCL).KPCL is to
look into the new projects and expansion programmer of the power sector in
the state. The state has already drafted a reform bill for the power sector and
will soon bring in legislation to corporatism the generation sector of power
in the state.
The state has entered into an MOU with the central government to
privatize the power distribution in seven zones giving at least 51 percent of
stake to the private sector. The power ministry has agreed to allocate Rs.5-6
billion annually to the state in order to facilitate the process.
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The state has established electricity regulatory commission with the

initiation of the Karnataka Electricity reform Act in sept .1999.
Maharashtra
The state of Maharashtra had started working on the path of power sector
reform. The power finance corporation is providing technical and financial
assistance to the government of Maharashtra for the purpose of reform.
Maharashtra government has engaged IL&FS as a consultant to for
privatization of distribution in parts of the state specially Navy Mumbai,
Dayana and Jaigarh. The state has also constituted the electricity regulatory
commission known as MSERC in order to monitor the privatized power
distribution and generation system.
Orissa
The fund-starved state could not obviously take the brunt of the SEBs
draining the state exchequer; as a result the state took bold step in reforming
the power sector.
The Orissa state electricity board was recognized into three companies.
The first two were power Generation Company namely Orissa Power
Generation Company (OPGC) and Orissa Hydel Power Corporation
(OHPC). The distribution had been given to the Grid Corporation of Orissa
(GRIDCO), which has been divided into four distribution companies,
WESCO, NESCO, SOUTHCO and CESCO. GRIDCO has privatized all the
distribution companies with 21 percent in favor of the private parties. The
first three have been taken up by BSES and the last in the queue by AES.
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They purchase power from OPGC, OHPC and NTPC in bulk supply
agreements.
West Bengal
The state of west Bengal had very old experience of private party
ownership in power distribution. CESE, the flagship company of RPG group
had been working as a distributor to the city of Kolkata and its suburbs. It
also works as an adjunct independent power producer in case of failure of
the SEB to supply power to it. The state has of late setup a recognition
committee to study the power sector. The committee has submitted its report
to the state government.
The state has also setup the State Rural Energy Development Corporation
as an independent company under the Companies Act to manage distribution
for rural and agricultural consumers segments with assistance of rural
cooperatives.
Most of the SEBS has taken to these two forms of reform either fully or in
part. Besides, each state that had gone in for the reform, has also established
an electricity regulatory commission, in order to bring in moderation in the
practices of the privatized power sector and regulate their activities.
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CHAPTER-7
Telecommunication
Telecommunication or telecom sector in India is run by the state. Prior to1985, the
telecommunication was the responsibility of the department of post and
telecommunication. Later in that year, it was divided into two parts, department of
post (DOP) and Department of Telecommunication (DOT).
The Department of Telecommunication reports to the ministry of

Communication (MOC). Earlier DOT used to look after planning, coordination and
control of the Telecommunication sector. Today after the establishment of TRAI
(Telecom Regulatory Authority of India- under Ministry of Communication) looks
after the licensing and regulation of the private party in privatized circles of
telecommunication both of basic and cellular services.
Despite being a profitable organization DOT does not have to pay taxes to the
government but receives budgetary support for it’s funding. Whereas the corporate
that are established under the MOC have to pay tax and depend upon its revenue
for fund.
Besides, the DOT has control on Indian Telephone Industries Ltd (ITI),
Hindustan Teleprinters Ltd (HTL) and the Telecommunication Consultants India
Ltd (TCIL).
The department of the telecommunication has been corporatized in the year

2000-2001 and has been renamed as Bharat Sanchar Liam limited (BSNL).
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The private sector participation from the nineties has been in manufacturing
jelly filled cable and mobile phone services. Selected cities have given to the
private operators for the voice and non-voice telecommunication services.
The Industry Scenario
Bharat Sanchar Nigam Limited (BSNL), the largest Telecommunication
Provider inIndia has 35000 electronic exchanges with about 20mn working
Connections as on the year 2002 first quarter. It has a customer base of 3.6 million
and has an asset base of rs.93579 Crore during the same period. Besides basic
Telecommunication to the domestic and commercial users it has 9.26 lakhs public
call offices (PCO) and 250000 internet connections. The ratio of PCO connection
to population of access is about 550.
The Tele density of India is about 2 fixed lines per 100 persons as against the
Teledensity average of fixed line per 100 worldwide. In terms of cellular
penetration of 0.1 percent the average worldwide is 1 to 2 percent.
Services provided by the Industry.
In India, the services provided by the telecom industry can be divided into
following category:
i. Basic services: Which is generally voice communication? This is provided

through DEL. The voice communication is again divided into the local,
interstate and international communication. The tariff for the first two
categories are determined by Ministry of Communication where as that of
the last one is generally determined by the international players which
include their revenue sharing concepts.
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ii. Value added and voice communication: This includes three services mainly
radio paging, electronic mail, cellular services and VSAT network.
 Paging service: This is a mode of wireless service where subscriber’s pager
(instrument) is programmed to respond to a unique frequency number.
Different service providers use different frequencies I order to avoid
interference. In India, there about 10 million pager user in various cities
which have the services available?
 Electronic mail or e-mail: This is one of the most popular systems of data
transfer in electronic form through the communication network. The data are
passed in packets ensuring full confidentially and provide internet
redundancy if the rout is dysfunctional. The destination network station
assembles the packets, decodes the original file and transmits it to the
addressee’s computer mail box. There are over 5 million computers over a
country and 50 million users of e-mail alone in India.
 Cellular services: It is a method of two way communication through a
portable hand set. The service provider divides the areas of service into cells
which has a radio base station (RBS) and is controlled by a central switching
station (CSS) monitoring the entire area of the service. As a user moves
from one cell to another the signals are relayed to the next cells RBS, thus
the call remain uninterrupted. The growth rate of cellular telephony is about
50 percent in India.
 VSAT Net work: VSAT stand for very small aperture terminal which is
linked through satellite enables the user to transfer voice and data transfer
communication facility. The real time data transfer in business especially in
stock exchange (NSE and BSE) has boosted the user base of VSAT. Tata
group is setting up a network of 150VSAT in the country.
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Revenue and Earning of the industry
The revenue of the industry depends on the two factors. The first factor is the
nature of the service the second is the revenue sharing arrangement between the
operators. In the case of local and interstate calls the revenue is directly
proportional to the DELs. This is enabled through metering of call. The tariffs are
sensitive to the number of calls made per DEL.
Since the various service providers inter uses each other’s network facility
there is revenue sharing plan between them. For example MTNL uses the
DOT/BSNL’s network for local and STD and VSNLs gateway for ISD.MTNL
share approximately 22percent of its revenue with DOT/BSNL and VSNL.
VSNL does not receive any direct payment from the users (except in case of
internet services).
The plans of growth of telecom sector in India
Telecommunication is one of the most important pillars of development of any

nation state. It is towards this that most of the developed nations spend about 5
to10 percent of their GDP towards development of their telecommunication system
i.e., both basic and value added services.
The Indian telecom journey into a modern era started in the early nineties.
During the eighth five years plan the pivotal role of the government was to
improve penetration and the quality of the telecom services. As against a target of
7.5 million DEL actual 8.5 million DEL has been achieved.
Though, the target of village public telephone (VPTs) in quantitative terms have
not met the target set due to problems of privatization and the abrupt increase in
26
the number of villages to be covered, yet about 0.33 million VPTs were provided
.The ninth five year plan is expected to see a growth of 23.7 million new come
from BSNL and MTNL.
The plan also envisages a target of 1.8 million lines trunk capacity. The role of
the private operators will be critical in this as the government wants to set up
0.14mn route kilometer in the plan period.
The key features of the new telecom policy are:
 Domestic monopoly of DOT for long distance calls will end by January
1,2000.
 Role of TRAI was clarified as an arbitrator in dispute between the parties
concerned including the government.
 The new policy also allows the new players to lay their own cable network
and inter exchange network and services between the players.
 DOT to be corporatized by 2001 (It has already been corporatized as BSNL).
A separate department of telecom services will be found to separate policy
and licensing functions of DOT.
 It also aims at privatization of 15 circles for basic services as 6 circles of
cellular services as soon as possible.
 DOT (BSNL)/MTNL will act as an third cellular operator. A forth cellular
operator will be decided by the TRAI.
 Both DOT and MTNL will be required to obtain licenses and pay license
fee. However the government will reimburse to them a sum equal to the
license fee since they provide for social obligation and this will be looked
upon as a budgetary support.
27
Call back option
Due to disparity in international calls from various origins, it has led to the
business of ‘call back’ to flourish at the cost of the telecom service provider. How
this system work and what does is its impact. Let us examine.Let there be a three
parties, an origin, and Bintermediary and C destination.
A calls B, supplies number of C and hangs up.
B call C and conference with A.
This logic will work if cost of A to C is less than the cost of A to B and cost of
B to C and cost of small duration between A and B.
We often find companies advertise call rates from India to USA at rs.30-Rs.40
per minutes, which is 50 percent of VSNL rates. The net impact is that, the Indian
service provider losses revenue.
International tariffs trend
As international calls volumes have risen, per call tariff has declined. This is
due to competitive pricing amongst various private operators, especially in
developed nations like USA, UK etc. As a result, an overseas outgoing call made
from India to USA costs a caller about Rs85 per minute whereas an Incoming calls
from USA to India can be made for Rs. 25 per minute. Besides, advanced
technology and internet telephony has reduced the call rates drastically.
28
CHAPTER-8
ROADS
Roads in India are divided into three groups for the purpose of management.
a) National Highways (NHs)

b) State Highways (SHWs)
c) District and Village Roads
The NHs is the responsibilities of the central government and the others are the
responsibility of the state governments.
The National Highways Authority of India established by an act of the parliament

in 1988 is the responsible for the development, maintaining and managing the
National Highways.
The overall responsibility of the roads rests with the Ministry of Surface Transport
(MOST).
The National Highway connects the major cities and hauls long distance traffic,
whereas the state highways provide for the meter state transport facility. Together
they provide the major back bone of transport in India.
In Asian region, India has the third place with 62.09 per 100 sq km of area only
after Japan with 294.56 per100 sq.km of area. Philippines comes a close third with
53.57 per 100 sq.km of area. In fact U.S.A. has only 63.39 per 100 sq. km of area
of road density.
29
The growth rate of road network has also been quite phenomenal. The NH has
grown by 55 percent over the period of 1951 to 2001. During the same period the
state high ways have grown by 118 percent.
Key issues in Roads Sectors
Quality and adequacy of roads:
The quality of roads services has been sub optimal. Out of the total 165,000 km
length of NH and SH only 2 percent has four lanes, 34 per cent has two lane and
the remaining 64 percent are single lane. The NH has 5 percent of its total length as
four lanes.
Growth of roads:
There has been serious distortion in the growth of roads. Through rural roads have
been given importance yet 50 percent of village remain to be connected. The
National Highways has only grown 1.7 percent of the state highways.
Ribbon Development:
The ribbon development along with the lines of NHs in the form of shops and
establishments, advertisement holdings and civic facilities leads to traffic
congestion and lower speed of traffic and increased level of pollution. Since the
management and control NHs in any municipal are lies with the Municipal
Committee, a consensus approach need to be developed in order to avoid such
ribbon developments? NHs and bypasses should be planned with proper alignment
so that continuity is maintained in respect of highways and vehicles ready to use
the highways and the bypasses.
30
Maintenance of Road:
Maintenance of roads is as important as there expansion and upgradation. In fact,

roads deplete in condition almost as fast as they are upgraded or created. Poorly
maintained roads lead to high cost in surface transportation and have a cascading
effect on the price of road transport sector.
The fund required for maintenance alone for the next ten years of the NHS. SHs
and main roads would be about Rs. 113.5 billion.
The maintenance of roads and allied activities require periodic monitoring and
regular sample survey on an agreed methodology. Equipment such as Automatic
Road analyzer can be introduced in order to reduce cumbersome process delay.
Lack of coordination amongst various utilities service:
The NHs and SHs harbor multiple facilities alongside. It would be in place if an
inter utility code of conduct is established and followed with rigor to ensure better
service by the utilities.
Approach of Road building:
The approach of road building should be commercial. NAHI should be given more
power to execute contract on more commercial line in order to ensure better private
party participation.
31
Funding of the Road projects
The conventional methods of funding include:
1. Budgetary support from the Central and the state Government:
The most conventional method of funding of the roads has been through the
allocation done in the government budget. The support system of the government
had been quite huge in terms of fund allocation in the first few five-year plan
periods.
2. Road taxes:
A substantial amount of revenue is generated by the government through road

taxes in India. As a percentage of the GNP it is almost 2 to 3 percent.
3. Central Road Fund:
The government sets aside 3.5 pauses per liter of the customs duty excise levied on
motor spirit and diesel for the purpose of central road fund. This sum to a merge
sum of Rs. 100 million per year and this is used every year for the purpose of the
development and maintenance of the state roads.
4. Toll fee for uses of Bridges:
Any bridge on NH, which has more than Rs. 10 million of investment can go for a
toll collection as a part of pay back to the protect and raise resources for its
maintenance. The central government raises annually a sum of almost Rs. 400
million which accrues to the National Highways.
32
The non-conventional and alternate funding options are:
1. Allocation of existing taxes for the purpose of road building:
Funds accrued to the government through taxes should be used for the purpose of
road maintenance and development. This will create a base of accountability for
the fund used.
2. Levy of specific charges for the use of high ways:
The government can think of living toll on specific roads in the same method the
bridges are done. In fact most of the developed nations have this system. Today
however, the NHs builds with private part participation are having toll collection.
3. Declaration of road sectors as an industry and approaching capital

market to fund it:
The government should think of declaring the road sector as an industry and
encourage private participation in owning public roads. In this method, the fund
raising capacity of the private party will increase and at the same time the
accountability on performance will increase.
Maintenance of Highways
As discussed earlier it is often found that the maintenance of road especially

highways always takes a back seat in the planning. It is however important to note
that the amount of assets wasted in terms of roads is substantial in India. Hence,
the maintenance of road on an on-going basis is a must besides the improvement of
roads. Laws should be amended to give proprietorship right of road to NAHI in
case of high ways and protect encroachment of land of high ways.
33
In this respect, the government should provide mechanism of identifying

commercialization of roads and seek private party participation in building of the
roads and related infrastructure. A comprehensive legislation in this regard need to
be formed to overcome the current problem of funding, ownership of land,
alignment problem of multiple services within this sector.
34
CHAPTER-9
SEA PORTS AND AIRPORTS
Amongst the entire physical infrastructure required for a nation, sea and airports
find a very significant area of reference. Since both these infrastructure act as
physical gateways to both goods and human being for any nation, it serves as a
primary backbone to the earning of the nation in term of foreign exchange and its
interface of international trade.
SEA PORTS, SOME KEY ISSUES AND PROBLEMS:
There are about 11 major seaports in India along the 6000 km long coat line of
India. These ports are primarily governed by the central government. The sea ports
to conduct regulatory as well as commercial functions of the port. The ports have
trusts, which are represented by all the major interested parties. Besides, the state
governments administer 139 intermediate and minor ports.
The basic objectives of seaports (hence forth referred to as ports)

are enlisted as below:
1. Provide unimpeded navigation to ships and other forms of maritime

transport.
2. Offer shelter and safe accommodation to vessels.
3. Provide facilities and services for quick, efficient and cost effective transfer
system and vice versa.
4. Arrange for smooth aggregation and dispersal of cargo between port and
hinterland and
35
5. Offer various services and facilities required by ships and cargo, namely
bunkers, fresh water supply and all other kind of securities including fire
fighting.
Capacity of the ports
The capacity of a port is expressed in terms of aggregate capacity of individual

berths and depends on the type of commodity handled at the berth. The capacity of
a is rated at the time of commissioning by considering various parameters. Which
are constantly assessed?
Berth capacity is determined by two methods. The first method takes in

consideration the berth’s size and length and the size of vessels it can handle. This
is measured in terms of ‘Deadweight Tonnage’ of the vessel that can be served by
the berth.
The total capacity of berth as on March 31, 1997 was about 2151 tones.
KEY PROBLEMS AREAS OF INDIAN PORTS
 Operational constraints due to frequent break down of cargo handling

equipment’s due to obsolescence.
 Inadequate facilities for dreading of berths and channels at certain ports and
inadequacy of container handling facilities.
 Inefficient and non-operational developments of port equipment and

improper maintenance
 Insufficient development of port equipment.
 Labor intensive operation methods of handling bulk commodities.
36
 Poor interdepartmental communication between customs and port authority.
The Indian Civil airline and aviation can be broadly divided into three parts:
a. Operational
b. Infrastructural
c. Regulatory and developmental
Air Port Infrastructure
The airport infrastructure is maintained by the Airport Authority of India (all)

which came in to force from 1st of April 1995 after the merger of the International
Airports Authority of India and the National Airports Authority. It looks after 5
international airports. 87 Domestic Airports and 28 civil enclaves.
Domestic airports are of two kinds. The first ones include those, which have
custom and immigration facilities for the limited international operations by
national carries and have foreign tourist and cargo charter flights. These include
airports at Hyderabad, Ahmedabad, and Coimbatore to name a few.
Development in Infrastructures
The major infrastructure of civil aviation is the air ports. Towards these end a lot of
developments are taking place. The AII is investing about Rs.4.4 billion to develop
model airports in 12 cities with state of art equipment. A sum of Rs. 16 billion has
been earmarked for the development of the Chatrapati Sivaji Airport at Mumbai.
It is being tried to develop international airport by embarking on the international

airfare in the city of Kozhikode and some places in Rajasthan. The AII has also
drawn up Rs. 40 billion plans to expand and modernize its airspace strategy in the
coming years.
37
Civil Aviation Policy
The Ministry of Civil Aviation has come out with a new policy to augment private
party participation and provide better air services to the nation. The key points of
this policy can be enlisted as below:
 There will be no entry barrier to the industry. The only ground on which
private parties will be allowed to enter is their sound financial position.
 Foreign airlines will not be allowed to hold any equity directly in any airline
in India. Those airlines, which have already foreign airline holding equity,
are asked to disinvest them as soon as possible.
 The airline operator will have the choice of the aircraft nature and size.
 The projection of the air traffic has been projected on five-year bases in
order to facilitate the private operators to build appropriate strategies.
 All scheduled operators are required to develop 10 percent of their capacity
to North East, J&K, Andaman and Nicobar Islands and Lakshadweep.
Disinvestment of Indian Airlines
The ministry of Disinvestment has geared itself for the disinvestment of Indian
Airlines. It has agreed to disinvest 40 percent of the equity of the corporation. The
strategic partner with IA can have 40 percent stake with only 26 percent cap to
foreign airlines. The response has been very encouraging with ‘who is who’ in the
industry lining up for the strategic partnership. This includes amongst other, British
Airways, Jet Airways, Tata Sons, Mittal Group, Qantas of Australia to name a few.
The ministry has decided to let the market decide its price of the stock instead of
doing it itself.
38
CHAPTER-10
RAILWAYS
INDIAN Railways is the second largest in the world under single management
with are track length of 107360kms. The total route length of Indian Railways is
about 62729 of which 13517 (21 percent) is electrified. It has 6984stations spread
across the country.
The railway carries with about 4363 (62 percent) Diesel locomotives, 2519 (37
percent) electric Locomotive, 85 (1.2 percent) steam locomotives summing to a
total of 6967 locomotives.
In its fleet services, railways have272127 wagons (units) and 33848 coaches.
Indian railways are the largest employer of the world with 15, 83,100 personnel in
its role. The railways provide management services. It operates 11000 trains daily
including 7500 passengers trains and carries 1.20 million freight traffic and 11
million passengers daily.
Financial condition of Indian Railways
Indian railways are a monopoly run by the Government of India under the ministry
of Railways (MOR). It is primarily supported through its own fund generation and
gets government grants where ever necessary in order to manage its affair. The
primary sources of earning for Indian railways are (a). Passenger and freight tariff,
b. commercial utilization of railways property.
Indian railways had earned Rs.16668 crore of freight revenue and Rs.6633 of
power revenue during the period 1996-97 if the India railways had spent Rs 10515
(45 percent) on staff, Rest .1377 crore (5percent) on fuel, Rest 8526 crore (36
39
percent) on stores, Rs.2241 crore (9 percent) on DRF and Rs. 1469 crore (5
percent) on lease charges.
Commodities all of which are essential in the nature for serving the core
sector of the economy contribute ninety five percent of its freight traffic.
Fifty percent staff cost increase and recommendation of pay hike by the fifth
pay commission has effected the generation of IR internal resources.
Concerns for cross subsidization of passenger by freight services
The utilitarian concept, Which IR has to carry, make it heavily skewed in

favor of passenger transport. The network of IR is so active across the country,
that, it is the most feasible mode of transport across the mainland of India. Besides,
it is perhaps the cheapest transport mode for long distance for the passengers. This
low price is possible only through the cross subsidization of passenger traffic by
freight traffic. Bearing almost 150 percent subsidy the passenger tariff justification
is becoming difficult for IR purely on an economical term it aggregates to Rs.2800
crores during 1997-98.
Functional Area of Concern for Indian Railways
The functional areas of railways include passenger services, suburban services,

track renewal, rolling stock maintenance and safety.
 Passenger services
The overriding priority on the freight traffic has led to undermining the
passenger services in the railways. There is huge shortfall in the stock for the
provision of the Indian railways services. The poor investment, excess
pressure on the currently available assets has resulted in unreliability of the
40
assets as well as the running trains with lesser number of coaches. The
overall impact had been poor passenger services.
 Suburban services
About 60 percent of the total numbers of the passengers are daily commuters
from the suburban areas of the metropolis of Delhi, Chennai and Kolkata.
The railway suffers a loss of Rs.217 crore per year from these suburban
services due to heavy subsidization of the fare. The result had been poor
services and ill maintained assets.
 Track renewal
Despite the importance that the track has in the railways system it
maintenance and safety has become a major problem for IR due to paucity of
fund. The arrears of phase wise track renewal and maintenance rose from
9595 km in the Vll to 10957 lms in the lX plan period. This had affected the
system and the capacity of the IR.
 Rolling stock maintenance
Like any other assets, the maintenance of the rolling stock is to importance
to the IR. However, the percentage allocation of expenditure on workshops
and machinery and plants vis-à-vis rolling stock has decreased from 17.93
percent during VI plan to a merge 2.77 percent in the proposed lX plan, by
and large this need to be changed as the quality of service depends on these
factors to a greater extent.
 Safety
Indian railways had put relentless effort in the safety of the traffic. Despite
this due, the reasons of poor investments in the assets safety had become one
of the major areas of concern for it.
41
Technological reform
Indian railways are among the few governmental organization that went in for
huge amount of technological upgradation with success. Its wide computers
reservation and enquire system is one of the best examples in which it has
integrated modern technology for better and effective management of its services.
It has also upgraded its signaling system and track and rolling stock. However the
dearth of fund as always was a major blockhead in the implementation of the
technology in IR. Only under the plan of new line and gauge conversion a sum of
Rs.18500 crore and Rs.8045 crore respectively is required.
Financial restructuring
On the financial front the IR needs to focus on the following issues:
 Increasing cost efficiency in the operation.

 Reduce burden on fund by improving purchase procedure
 Reducing the wage of assets in case they are commercially viable of
generating revenue
 Strategic assessment of the rolling stock to find commercial usage for them
 Resort to lease method of asset allocation to generate revenue
 Approach capital market to induce fund
42
CHAPTER-11
SPECIAL ISSUES IN INFRASTRUCTURE
MANAGEMENT
Infrastructural management requires to be addressed on various grounds some of

which are general whereas other is specific. The common issues involved in the
infrastructure management include the legal framework, the issues of corporation,
the issues relating to environmental concern and the issues relating to the urban
infrastructure. Which are very particular and specific?
Corruption and governance in infrastructure project
The World Bank which is the biggest funding agency of the infrastructure projects
had found that the financial and technical support it provides to the various
developing countries are wasted due to frame work of governance and corrupt
practices involved in them. Since, the reforms in the infrastructure sector require
the government to make huge structural adjustment in terms of laws and
administrative interface, the chances of the corruption factor increase. This is due
to the simple reason that most of the transactions take place through the interface
of the government offices which acts as a vacillator of the process of establishing
of such infrastructure project.
Notwithstanding the concerns of the World Bank, corruption and poor governance
leads to the following phenomena in respect to an infrastructure project and to
almost all other related issues in general.
43
A. The quality of project is seriously compromised as the parties who enter the
contract bypass the general guide line laid down for the purpose due to
kickbacks involved.
B. The private parties try to recover the addition cost that is involved in
procuring the deal through bribe from the project which leads to higher cost.
C. Poor enforcement of obligation as the system is bypassed through unfair
means.
D. Absolute loss of transparency and therefore the users of such infrastructure
resort to unfair means to bypass the system.
Problems in pollution control and environmental checks in India in

general and for infrastructure projects in particular
a. Lack of proper enforcement
Through there are quite a number of laws and legislation, enforcement of these
laws have always been a problem. The general problems are embodied in the law
itself. The deterrent and punishment of these laws are difficult to impose besides
being too mild in nature. Since, most of the laws are reactive in nature, the damage
is already done.
b. Monitoring problems due to lack of manpower
Since monitoring is done on a yearly basis and sometimes once in many years, the
law’s effect is hardly visible. The poor manpower and lack of training to deal with
ever changing demand on issues relating to environment and pollution control has
led to poor enforcement of law.
44
c. Inadequate funding:
Monitoring of environment and pollution requires fund allocation. The pollution

controls boards in India are generally have paucity of fund. This leads to a high
level of defaults in terms of pollution and environmental degradation. The
infrastructural projects also do not build in the cost of pollution control while
planning the projects. It is often observed that these costs are build up only on
external pressure build on the projects. This not only delays the projects but also
increase the tariff that arises to the end users of such projects.
d. Political Interference:
The political interference in case of the infrastructure projects are politically

moved and seldom have any direct economic need. The pressures of the political
parties become acute.
45
CHAPTER-12
CASE STUDY
I have take rites ltd as a case study because rites ltd one of the public company
which are done great job in the field of infrastructure sector in India as well as
abroad. And on more take ppp projects as case study.
Rites ltd.
Rites limited were incorporated in India in 1974 under the companies act, 1956 for
rendering consultancy services for railways in India and abroad. It was
incorporated as a private limited company with the name of “rail India technical
and economics service private limited” was converted into public limited company
on February 5, 2008. The company soon transformed itself from a railway
consultancy firm to the activities connected with other modes of transport, with
multidimensional activities. Today rites ltd. is a multi-disciplinary organization
engaged in various areas related to consultancy at home and abroad ranging from
concept to commissioning as well as project management.
It is a PSU, international multi- disciplinary consultancy organization rendering

comprehensive professional services in various sectors including highways,
railways, bridges, metro rail, urban transport & development, airports, inland
waterways and port sectors. It undertakes consultancy business along with export,
lease of locomotives, rolling stock, project management consultancy etc.
46
The company has been accorded the” MINI RATNA GRADE-1” status by the
govt. of India by the virtue of operational efficiency and financial status. It is an
ISO 9001: 2000 certified.
RITES have had operational experience in over 62 countries across Africa,

southeast, Middle East and Latin America.
RITES is an ISO 9001-2008 certified company and is the first public sector
undertaking in which finance & accounting division got the ISO certification
in the year 2002. Fin & accounts division has made out quality and procedure
manuals to comply with the ISO certification requirements and are presently
in use.
RITES Ltd. Is a multi- disciplinary organization & It has business

operations in the following area:
 Consultancy
 Export
 Lease
 Inspection
 Operation and management
 Project management
 EPC-Turnkey
 Concession business
 Training and capacity building
 Procurement services – material system management
47
 SECTORS OF OPERATION:
Sectors Of Operations
 Railways  Ports & Water Resources
 Highways  Ropeways
 Bridges & Tunnel  Information Technology
 Geo Technology  Financial Services
 Airport  Urban Development
 Buildings  Urban Transport
48
CHAPTER-13
CONCLUSION
In today’s world, infrastructure finance is used everywhere. In our country, people

travel through various means of transport like roadways, railways, airways,
seaways, etc. as these are the part of infrastructure finance.
It also has some negative impacts on people, but if we used all the resources
according to rules & regulation there would be less chances of negative impacts in
country.
So, we should remember that we should follow all rules & regulation & work for
the good sake of country & make infrastructure a better source.
49
CHAPTER-14
BIBLIOGRPHY
 INFRASTRUCTURE FINANCE
An Indian Perspective
Abhijit Dutta
50

Infrastructure Finance Chapter-1 Introduction To Infrastructure Finance

Uploaded by

Infrastructure Finance Chapter-1 Introduction To Infrastructure Finance

Uploaded by

Infrastructure Finance

INTRODUCTION TO INFRASTRUCTURE FINANCE

Infrastructure in respect of this book consists of this plethora of activities, which

 Roads and Bridges

“Infrastructure is generally defined as the physical framework of

It is, however, envisaged that the government should continue in its

The Key Issues in Infrastructure

The key or primary issues in infrastructure relates to,

Risks and Returns Analysis of Infrastructure

The discussions of risks and return in infrastructure pertain to very important

1. The project risks including domestic and foreign risks

Measurement of the impact on Distribution

Generally, the measurement of valve of the project in terms of its

Measurement of Gain and Loss

The gain and loss to an individual group or society as a result of a

Measurement of Risk and Returns

The common convention is to use yardsticks, which are used successfully in

1. Risk measurement in accounting method

A Traditional method of risk measurement of a project

The most common and widely used method of measurement of risk is

However, there is a justification in the use of the payback period.

Return Measurement in Accountingmethod

The Economic return measurement

The marginal revenue measurement gives due importance when the

Measurement of risk and return using a portfolio approach

We need to make some basic assumptions in respect of infrastructure

Methods of Financing the Infrastructure projects

Nevertheless, infrastructure projects may be broken down to smaller projects

General methods of financing of infrastructure

The general methods of financing a project of infrastructure consist of:

a. Equity Participation of the Government

government takes up the task of developing and constructing such projects

break-even is reached or a suitable cost is recovered. This enables the project

gets terminated. In case of an operational lease, the project is sometimes

Capital market and infrastructure financing

The unconventional nature, which is inherent to the infrastructure finance,

The use of private financein the infrastructure projects requires well-

Deepening and widening of the market in debt instrumentsthrough financial

Reforms Measures in Infrastructure in India

Infrastructure as we understand, serves as the backbone of any national

The development of infrastructure includes a high upfront cost. The

 Since, most of the countries are passing through a stringent economic

giving a chance to charge for the marginal use of infrastructure and

by the government because it is the most logistically unmanageable and

Reform Incentives in recent years

 Privatization drive: The most widely seen were the aspect of

Some cases of state level power sector reform

The state has established electricity regulatory commission with the

The Department of Telecommunication reports to the ministry of

The department of the telecommunication has been corporatized in the year

The Industry Scenario

Bharat Sanchar Nigam Limited (BSNL), the largest Telecommunication

Services provided by the Industry.

i. Basic services: Which is generally voice communication? This is provided

Revenue and Earning of the industry

The plans of growth of telecom sector in India

Telecommunication is one of the most important pillars of development of any

The key features of the new telecom policy are:

Call back option

A calls B, supplies number of C and hangs up.

B call C and conference with A.

International tariffs trend

a) National Highways (NHs)

The National Highways Authority of India established by an act of the parliament

Key issues in Roads Sectors

Quality and adequacy of roads:

Maintenance of roads is as important as there expansion and upgradation. In fact,

Lack of coordination amongst various utilities service:

Approach of Road building:

Funding of the Road projects

The conventional methods of funding include:

1. Budgetary support from the Central and the state Government:

A substantial amount of revenue is generated by the government through road

3. Central Road Fund:

4. Toll fee for uses of Bridges:

The non-conventional and alternate funding options are: