- The Economic Survey of 2022 employs geospatial data gathered from satellites, smart devices, drones, and other anonymous data sources to map the long-term development and impact of India’s infrastructure boom.
Focusing on many infrastructural aspects including electricity generation, operational airports, metro projects, and even the net sown area across the country, the survey documents how several public welfare schemes combined with a sprawling infrastructure growth are becoming an enabler for the economy, and will also be critical in aiding the recovery after almost two years of the pandemic.
Firstly, the survey compares the night-time luminosity between 2012 and 2021. Extensive data gathered from satellites offers an insightful representation of the expansion of electricity supply, one of the biggest successes of the government that began with the promise of taking electricity to every village in India.
The night-time luminosity is also a testament to the increasing economic activity, more rural areas graduating to become rurban (rural+urban areas), and the growth of ribbon developments between urban hubs, especially on the outskirts of the city.
Interestingly, the luminosity data is validated within the same chapter for the National Capital Region via the comparison between the urban density of 2001 and 2021.
In 2014-15, India’s total power generation, including renewable energy sources, was a little around 1,100 billion units, registering a growth of 8.84 per cent from the previous year.
For 2015-16, the growth was at 5.69 per cent, 5.80 per cent for 2016-17, 5.35 per cent for 2017-18, 5.19 per cent for 2018-19 before dipping to 0.95 per cent in 2019-20 and declining by 2.45 per cent in the pandemic year of 2020-21. However, for 2021-22, the growth is estimated to be more than 9 per cent, thus reversing the red from the pandemic years.
Various schemes are undertaken by the Ministry of Power, such as UDAY and Ujala, have significantly contributed to the power expansion, as evident by the night-time luminosity maps.
Two, the highway network. In August 2011, India’s national highway network was around 72,000 kilometres. However, by 2021, this almost doubled to 140,000 kilometres. Already, the Union Minister for Road Transport and Highways has said the Government is expeditiously developing a national highway network of two lakh kilometres by 2025.
In the same event, in November 2021, the construction of 65,000 km of national highways is being done under the Bharatmala Phase 1 and 2. There is a plan to develop around 35,000 km of highways under Bharatmala Phase-1 with an overall capital expenditure of over Rs 10 lakh crore, of which 20,000 km is already under construction.
The ministry has been working overnight to construct and develop new highways, thus registering some staggering numbers. During the financial year of 2020-21, the Road Transport and Highways Ministry had constructed 8,169 kilometres of National Highways from April 2020 to 15 January 2021, i.e. with a speed of around 28.16 kilometres per day. During the same period in the preceding financial year, a total of 7,573 kilometres of roads were constructed, with a speed of 26.11 kilometres per day, according to the data made available by the ministry.
One of the greater successes within this staggering highway network was the connectivity established between the rural clusters and urban centres, as evident by the maps in the survey.
Three is the number of operational airports. As per the survey, between November 2016, and December, 2021, the number of operational airports more than doubled from 62 to 130.
States like Uttar Pradesh, Gujarat, Maharashtra, Madhya Pradesh, Karnataka, and more importantly, the North-East. A lot of this development and the growth in the number of airports had to do with the UDAN programme, launched in 2016, with an aim to boost regional connectivity. As of November 2021, a total of 395 routes had been commenced under the UDAN programme.
Four is the increase in the network of commercial bank branches. Between March 2011 and March 2021, the number of commercial bank branches across India increased from around 74,000 to more than 122,000. The increase in the spread of the commercial bank network is a testament to the financial inclusion the government has been striving for since its first day.
Be it the Jan Dhan Yojana that has over 400 million account holders today, or the several pension and insurance schemes, or the much spoke about MUDRA programme which offers entrepreneurs collateral-free loans up to Rs. 10 lakhs, the increased density of banks, especially in rural areas, in the long-term, would be the foundation for a $5 trillion economy.
Lastly, urban development is viewed through the prism of population density. The survey looks at the population density and the contrasts between 2001 and 2021 for the National Capital Region. Compared to 2001, in 2021, population clusters with 50,000 to 150,000 people and 25,000 and 50,000 have emerged. Also, a huge growth has been mapped in the number of clusters with a population between 1,000 and 10,000, especially in what are now known as the economic hotspots of Noida and Gurgaon. A similar story is playing out in India’s innovation capital, Bengaluru.
To sum it up, the survey does an excellent job to map the infrastructure boom in India, and how it is integral to the long-term development of the country. Ideally, the derivations from the geospatial data must be studied in tandem with the national infrastructure pipeline worth Rs. 100 Lakh Crore to understand its potential and importance for the country’s economy across the 2020s.
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.