Economic Report_GoldenQuadrilateralProject

by Sagar Das on Tuesday 19 April 2011, 11:42 PM | Category: Miscellaneous| View: 2275 views
 
 
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INTRODUCTION
In December 2000, the Government of India approved Phase I of the National Highway Development Program (NHDP), the most ambitious highway improvement program since independence in 1947. The key component of this phase of the NHDP was the Golden Quadrilateral Program, under which the four national highways most directly linking the four largest metropolitan cities in the country: NH2 (Delhi-Calcutta), NH8 (Delhi-Mumbai), NH4 (Mumbai-Chennai), and NH5 (Calcutta-Chennai) were to be upgraded to international-standard access-controlled 4- or 6-lane dual-carriageway highways with grade separators, access roads, etc.
 
The Golden Quadrilateral is a highway network connecting India's four largest metropolises: Delhi, Mumbai, Chennai and Kolkata, thus forming a quadrilateral. Four other top ten metropolises: Bangalore, Pune, Ahmedabad, and Surat, are also served by the network. The largest highway project in India, initiated by Atal Bihari Vajpayee, it is the first phase of the National Highways Development Project (NHDP), and consists of building 5,846 km (3,633 miles) of four/six lane express highways at a cost of 60,000 crores (US$13 billion).
 
Actual implementation of the Golden Quadrilateral Project began in 2002, by the end of which year contracts for most sections had been awarded, and was substantially, though not completely, accomplished by the target completion date of December 2004: by 2006, 70 per cent of the project had been completed. The Golden Quadrilateral marked a distinct shift in India's road-building strategy. Prior to the approval of the NHDP, India had concentrated its road-building budget on expanding all-weather access rather than improving quality or capacity. Prior to the NHDP, virtually all of the 600,000 km that was added to India's road network in the 1990s consisted of .very low-standard roads to reach more of the rural areas which had before been outside the reach of all-weather access. High standard arterial highways were largely neglected. (World Bank 2005:2). The highways upgraded under the Golden Quadrilateral project were therefore India's first set of international-quality arterial high-ways, and the Golden Quadrilateral project thus led to a sharp increase in highway quality for the areas it connected over and above any other road improvements that may have taken place. The vast majority of the Golden Quadrilateral (GQ) is not access controlled, although safety features such as guardrails, shoulders, and high-visibility signs are used. As of 31 October 2010, 5,806 km (3,608 mi) of the entire work has been completed and work on remaining 40 km is under progress. In September 2009, it was announced that the existing four-laned highways would be converted into six-lane highways. The project was reported at various stages to be behind schedule mainly due to land acquisition constraints and disputes with contractors which had to be re-negotiated. The GQ project is managed by the National Highways Authority of India (NHAI) under the Ministry of Road, Transport and Highways. The Mumbai-Pune Expressway, the first controlled-access toll road to be built in India is a part of the GQ Project though not funded by NHAI, and separate from the main highway. Infrastructure Leasing & Financial Services (IL&FS) has been one of the major contributors to the infrastructural development activity in the GQ project.
Important Cities
 
Current Status
 
The length of Golden Quadrilateral in each State
The completed Golden Quadrilateral will pass through 13 States of India:
AndhraPradesh – 1,014 km (630 mi)    UttarPradesh – 756 km (470 mi)    Rajasthan – 725 km (450 mi) Karnataka – 623 km (387 mi)              Maharashtra – 487 km (303 mi)      Gujarat – 485 km (301 mi)
Orissa – 440 km (270 mi)                        WestBengal – 406 km (252 mi)     TamilNadu – 342 km (213 mi)
Bihar – 204 km (127 mi)                         Jharkhand – 192 km (119 mi)         Haryana – 152 km (94 mi)
Delhi – 25 km (16 mi)
The Golden Quadrilateral highway system, like many projects of this magnitude, is running somewhat behind schedule in its implementation. Although portions are largely complete, there are still large swaths which are in poor repair, or are only a single lane wide. The official statistics have the Golden Quadrilateral at somewhere near 96% complete, but some of the sections remaining are being held up by contractual issues, either with regional governments who don't want to cede the land, or with providers, so it is uncertain how long it will take to complete the remainder of the system.
 
The Golden Quadrilateral, it is hoped, will help push the economic gains made in the cities more into the surrounding country. Small towns the highway passes through will likely expand in order to provide services to the constant flow of traffic making their way past. A strong highway system will also allow more people to live outside of the city core, effectively creating a commuter belt and weekender region for those with more financial mobility.
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Counter-cyclical public spending on infrastructure is an effective tool to create jobs. With weak demand in the private- sector, governments serve as employers of last resort in an effort to sustain both jobs and aggregate demand. Investments in infrastructure are often in economic sectors (improving transportation in particular, including roads, railways and waterways) and social sectors (education, water, sewage, and other services). This lays the foundation for long-term development and deals with immediate social needs. Bringing forward planned infrastructure investments or improving the efficiency of the implementation of works budgeted in public investment programmes are common features of fiscal stimulus packages and can be implemented rapidly
According to the World Bank, infrastructure spending announced for 2009 represented on average 64 per cent of the total stimulus packages in emerging market economies, and 22 per cent of the total stimulus in high-income economies. The time-lag in implementation of such projects can be a challenge, with the boosted infrastructure investments unable to produce the expected results when a timely response to the crisis is required. An ILO survey of employment and social protection measures taken by 54 countries confirmed the importance of infrastructure in fiscal stimulus packages : 87 per cent of the countries allocated additional fiscal spending on infrastructure plans have often been approved. Wherever feasible, decentralized public investment should be favoured. Local investments and their impact on development strategies lead to more job creation, greater ownership, and can rapidly boost local economies. This is particularly relevant in times of crisis. It is of crucial importance to assess the overall labour outcome of these investments in terms of direct, indirect and induced employment, not only to assess their short-term effects, but also to assess the longer-term impact on growth and its distributional effects. As many infrastructure projects in low and medium-income countries are co-financed by IFI, these institutions should make all efforts to allow for larger labour content in infrastructure development.
 
Several factors highlight the potential of broadband infrastructure as an important area of public investment during economic downturn, including:
(1) Delivering immediate employment and aggregate demand effects and network effects.
(2) Bringing forward longer-term aggregate supply-side (spill over) effects which can improve the productivity of the entire economy.
(3) Crowding in' private investment when access to private financing is decreasing and more expensive.
 
Investments in broadband networks should also be a key part of the overall development strategies in developing countries. Achieving distributional policy objectives of reducing digital divide and facilitating regional development through increased competitiveness are rationales for possible public intervention in broadband infrastructure. Programmes based on increasing public investment in infrastructure, and emergency employment programmes all face challenges in targeting and reaching the intended beneficiaries.
Whereas in boom times the public sector's efforts use categorical targeting mechanisms by focusing on population groups with difficulties in finding jobs (such as young people and women with certain educational and socio-economic backgrounds), in a crisis, public support must target a much
wider range of the population. Regarding categorical targeting, generally the aim is to prioritize the employment situation of male and female heads of households at risk. There is also a need for geographical targeting, to ensure that programmes reach those areas most affected by the crisis. The policy challenge is to match the targeting of infrastructure investments with the targeting of employment creation, be it
by category or geographic area.
 
Impact of infrastructure spending
 
Investments in infrastructure are often in economic (improving transportation in particular, including roads, railways and waterways) and social sectors (education, water and sewage, and other public sectors). This lays the foundationfor long-term development and also deals with immediatesocial needs. The composition of infrastructure investmentsdepends largely on the immediate needs of the country. Improvingaccess through the maintenance and rehabilitationof roads is an efficient recipe, as the needs always exceed
regular budget allocations even in normal times.
In addition, a significant part of these works can be executed through small or medium-scale contractors or micro-enterprises therefore promoting them. Infrastructure investment with an employment focus has a strong employment multiplier effect. It creates direct jobs for those directly involved. The local resource-based approach guarantees a high indirect employment effect through the increased use of local goods and services. As a result, local consumption and demand is stimulated from higher local incomes with a resulting induced effect for the local economy.
The number of jobs really created by recent fiscal stimulus packages seems to be in line with those forecasted. However, this has to be taken cautiously because the definition of a job differs from one country to another. There is no uniform way to account for the direct employment created under a fiscal stimulus package, and most countries face problems in collecting reliable data. A consolidated effort is needed to better understand and document the effects, in order to provide improved guidance on the measures where multiplier effects are best, given the objectives of the particular country.
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Phases and Proceedings in the
Golden Quadrilateral Project
 
The project is comprised of the following phases:
Phase I: The Golden Quadrilateral (GQ; 5,846 km) connecting the four major cities of Delhi, Mumbai, Chennai and Kolkata. This project connecting four metro cities, would be 5,846 km. Total cost of the project is Rs300 billion (US$6.8 billion), funded largely by the government's special petroleum product tax revenues and government borrowing. As of 2 June 2008 5,669 km of the intended 5,846 km has been 4 laned.
 
Phase II: North-South and East-West corridors comprising national highways connecting four extreme points of the country. The North-South and East-West Corridor (NS-EW; 7,300 km) connecting Srinagar in the north to Kanyakumari in the south, including spur from Salem to Kochi(Via Coimbatore, and Silchar in the east to Porbandar in the west. Total length of the network is 7,300 km. As of September 2007, 20.37% of the project had been completed. It also includes Port connectivity and other projects — 1,157 km. The final completion date to February 28, 2009 at a cost of Rs350 billion (US$8 billion), with funding similar to Phase I.
 
Phase III: The government recently approved NHDP-III to upgrade 12,109 km of national highways on a Build, Operate and Transfer (BOT) basis, which takes into account high-density traffic, connectivity of state capitals via NHDP Phase I and II, and connectivity to centres of economic importance. Contracts have been awarded for a 2,075 km.
 
Phase IV: The government is considering widening 20,000 km of highway that were not part of Phase I, II, or III. Phase IV will convert existing single lane highways into two lanes with paved shoulders. The plan will soon be presented to the government for approval.
 
Phase V: As road traffic increases over time, a number of four lane highways will need to be upgraded/expanded to six lanes. The current plan calls for upgrade of about 5,000 km of four-lane roads, although the government has not yet identified the stretches.
Phase VI: The government is working on constructing expressways that would connect major commercial and industrial townships. It has already identified 400 km of Baroda-Mumbai section that would connect to the existing Baroda-Ahmedabad section. The World Bank is studying this project. The project will be funded on BOT basis.
 
Phase VII: This phase calls for improvements to city road networks by adding ring roads to enable easier connectivity with national highways to important cities. Additional, improvements will be made to stretches of national highways that require additional flyovers and bypasses given population and housing growth along the highways and increasing traffic. The government has not yet identified a firm investment plan for this phase.
 
NATIONAL HIGHWAY AUTHORITY OF INDIA (NHAI):-
The National Highways Authority of India (NHAI) is the national authority for the management of a network of over 60,000 km of National Highways in India. The Authority is a part of the Ministry of Shipping, Road Transport and Highways.
 
The NHAI was created with the promulgation of the National Highways Authority of India Act, 1988. The Authority was formally made operational in February 1995 as an autonomous body. It succeeds the erstwhile Ministry of Surface Transport.
 
RESPONSIBILITIES:-
It is responsible for the development, maintenance, management and operation of National Highways entrusted to it by the Government of India.
 
PROJECTS:-
On-ramps, off-ramps, and exits are largely absent except in certain areas, although safety features such as guardrails, shoulders, and high-visibility signs are used. The National Highways Authority of India has produced statistics to indicate that, as of September 2007, 96% of the entire work has been completed. However, these statistics appear to be misleading: in practice, roadworks are still a major feature of certain sections of the Golden Quadrilateral. For example, the statistics indicate that the Delhi to Mumbai section is 100% complete, whereas in reality there are a number of sections which are still single carriageway and in very poor repair (for example the stretch to Ahmadabad in Gujarat). The whole project is a few years behind schedule, due mainly to issues with the various states about giving up land for the national highway and the termination of several contracts which take 6 months to be issued. In January, 2008 it was announced that the project will now be expanded to cover 6,500 kilometers, some portions of which will be developed into eight lanes.
 
The GQ project is managed by the National Highways Authority of India (NHAI) under the Ministry of Road, Transport and Highways. The Mumbai-Pune Expressway, the first controlled-access toll road to be built in India is a part of the GQ Project though not funded by NHAI. Infrastructure Leasing & Financial Services (IL&FS) has been one of the major contributors to the infrastructural development activity in the GQ project.
Major Cities Where We Find Golden Quadrilateral
 
The completed Golden Quadrilateral will pass through many major cities throughout the length and breadth of India.
Delhi-Kolkata
Kolkata-Chennai
? Chennai-Mumbai
? Mumbai-Delhi
 
DELHI-KOLKATA ROAD
National Highway 2 or NH 2, commonly referred as Delhi-Kolkata Road is a busy highway that runs through Delhi, Haryana, Uttar Pradesh, Bihar, Jharkhand, and West Bengal states in India. The highway touches the cities of Faridabad in Haryana, Mathura, Agra, Etawah, Bhoganipur, Kanpur, Allahabad, Varanasi in Uttar Pradesh, Mohania in Bihar, Barhi in Jharkhand and Asansol, Durgapur, Baidyabati, Kolkata in West Bengal.
 
KOLKATA-CHENNAI ROAD
National Highway 6, commonly referred to as NH 6, is a busy highway that runs through south Gujarat, Maharashtra, Chhattisgarh, Orissa, Jharkhand and West Bengal state in India. The highway passes through the cities of Surat, Dhule, Nagpur, Raipur, Sambalpur, Kolkota. The road is the part of National Highway network of India, and it is officially listed as running over 1949 km from Hazira to Kolkata.
National Highway 5 (NH 5) is a major National Highway in India that runs along India's east coast through the states of Orissa, Andhra Pradesh and Tamil Nadu. The northern terminal is in Jharpokharia in Orissa and the southern terminal is in Chennai in Tamil Nadu. NH 5 is a part of the Golden Quadrilateral project undertaken by National Highways Authority of India.
 
CHENNAI-MUMBAI ROAD
National Highway 4 is the highway between Mumbai and Chennai. The highway, passing through Pune, Hubli-Dharwar and Bangalore, is also one of the busiest highways in India. This highway is part of the Indian government's Golden Quadrilateral Project.As a part of project this highway has been converted to four lane from two lane. The highway was known as P.B.Road ( Pune-Bangalore Road )in some parts of Karnataka state.
National Highway 7, commonly referred to as NH 7, is a busy highway that runs through of Uttar Pradesh, Madhya Pradesh, Maharashtra, Andhra Pradesh, Karnataka, and Tamil Nadu state in India. The highway touches the cities of Varanasi, Rewa, Jabalpur, Nagpur, Hyderabad, Bangalore, Kanyakumari. The road is a part of National Highway network of India, and it is officially listed as running over 2369 km from Varanasi to Kanyakumari. It is the longest national highway in India.
National Highway 46 is located in India. It runs from Krishnagiri to Ranipet in Tamil Nadu. It passes through Vellore and it is an important connecting road for vehicles travelling between Chennai and Bangalore.
 
 
Economic Benefits:-
This highway will interconnect many major cities and ports. It will give an impetus to truck transport throughout India. It will help in the industrial growth of all small towns through which it passes. It will provide vast opportunities for transport of agricultural produce from the hinterland to major cities and ports for export. In addition, it will provide job opportunities in its construction as well as demand for cement, steel and other construction materials.
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Similarity and Historical Evidence for the similar in
US and Other Economies
Over the long term, the rate of real economic growth (that is, adjusted for inflation) shapes the context of the choices that policymakers confront: the higher the growth rate is, the more the income that will be available to satisfy the needs and desires of the nation's citizens. For example, at the end of 30 years, the U.S. economy would have 45 percent more income if it grew at the 1948-1973 average rate of 3.9 percent per year as compared with the 1974-1997 average of 2.6 percent. Finding policies that encourage growth has proved difficult, however.
The key engine of long-term growth is growth in labour productivity—the output produced per hour of work. Labour productivity depends on the skills and knowledge workers have (human capital) and the materials and equipment available to them (physical capital). It also depends on less tangible factors such as technology, entrepreneurial talent, and the social and legal context in which firms operate. Accordingly, among the policies that promote economic growth are those that provide a hospitable environment for private investments in knowledge, equipment, and improved production processes.
All levels of government may also play a role in promoting growth through direct spending on certain categories of expenditures often classified as investments: public infrastructure (including roads, bridges, airports, transit, water supplies, and sewer systems), education and training (from preschool programs to elementary, secondary, and postsecondary education and on-the-job training), and research and development (R&D) in new science and technology. Federal spending on those categories of investment was $170 billion in 1997, accounting for 10 percent of total federal outlays—or about 2 percent of gross domestic product (GDP). Such federal spending is overshadowed by non federal spending in the same categories, however: in 1994 (the latest year for which comparable data are available), the federal total was $158 billion; similar spending by state and local governments and the private sector was more than $570 billion.
What Is Federal Investment?
In principle, the distinction between consumption and investment is clear: consumption yields immediate payoffs, while investment yields benefits over an extended period of time. In practice, many expenditures provide a mix of present and future benefits: college may be an enjoyable experience that also builds skills valued by future employers; an increase in law enforcement efforts may enhance people's sense of safety now and, by promoting business investment in productive activities and deterring people from becoming criminals, yield benefits in the future. The basic distinction remains, however: investments made today by individuals, businesses, voluntary organizations, and governments will help determine the nation's welfare in future years.
This paper focuses on those categories of federal investment that have the clearest connection to economic growth: infrastructure, education and training, and R&D. By contrast, the government undertakes many investments (both within and beyond those three categories) partly or wholly to serve other social goals and they should be judged in that light. Protecting endangered species and exploring the origins of the universe are examples of federal investments pursued largely for noneconomic reasons. And many public investments in human resources, even those in education and training, focus at least as much on increasing access (to health care, education, or job opportunities) as they do on economic benefits. Some of the studies examined in this paper consider the effect of federal investment not only on measured output (GDP), but also on the broader concept of “economic welfare.” The latter measure includes dollar values for unpriced goods and services based on estimates of what individuals would be willing to pay for them. The two concepts lead to similar evaluations of investment projects and programs in most cases, but not all. For example, a highway project could improve welfare (or be “economically efficient”) without adding to GDP if a significant share of its benefit is in the form of increased leisure time for commuters; conversely, it could increase GDP but nonetheless reduce welfare if it leads to a significant increase in air pollution.
 
Some examples of the level of infrastructure spending and impact on employment
 
Experiences with infrastructure in stimulus packages vary greatly. In the United States, infrastructure expenditures constitute only a small portion of the total potential fiscal stimulus from the American Recovery and Reinvestment Act. While grants by the Federal Government to State and local governments for infrastructure investments are estimated to be US$44 billion, infrastructure expenditures incurred up to 30 September 2009 amounted to US$4.44 billion or 2.6 per cent of the total fiscal stimulus during the period. The overwhelming bulk of the infrastructure expenditures was aimed at improving the country's transportation system. It is estimated that about 59,300 new jobs may have been created, either directly or indirectly. Compared to the loss in employment experienced by the favoured industries during the current recession, the likely gains appear to be quite modest in construction but more impressive in transit. However, given the scale of infrastructure expenditures in the American Recovery and Reinvestment Act, their potential to alleviate the current unemployment problem in the United States is quite limited. Furthermore, compared to the existing pattern of employment, additional employment resulting from the infrastructure investments would tend to favour men over women, whites over non-whites, those without college degrees over college graduates, and prime-age workers over workers of other ages. Indonesia launched a fiscal stimulus package worth 73.3 trillion Indonesian rupiahs (IDR) (US$7.6 billion) aimed at boosting aggregate demand. It included up to IDR12.2 trillion (17 %) for infrastructure development, including the improvement of highways, ports, bridges and irrigation systems. The Government's estimate of setting a job creation target of over one million workers was surpassed. A new diagnostic tool, developed under the leadership of the CMEA, with the technical support of the ILO, which is a dynamic social accounting matrix with an employment satellite account, will help to improve further policy decisions, by giving advice through the analysis of the impact of public investment on specific groups of workers and on the economy as a whole. The Egyptian Government committed about 15.53 billion Egyptian pounds (EGP) (US$2.82 billion) in the financial year 2008–09 to a set of rescue measures. It included a large number of front-loaded projects which were aimed to preserve and to stimulate domestic demand, to support the sectors affected by the crisis and, to accelerate the implementation of national projects seen as contributing to social welfare through increasing investment in public utilities infrastructure. The largest share of investment expenditure was allocated to water and sewage projects followed by roads and bridges as well as the building sector and the Egyptian railways. Estimates show that the complete stimulus package is expected to create between 661,420 and 729,650 new job opportunities, depending on the assumed levels of elasticity of household demand and export supply. Some components of public spending contribute not only to short-term relief, but also to economic growth and general development through the accumulation of physical and human capital : physical, in particular through the development and maintenance of useful public infrastructure (mainly transport and housing), and human through skills development of workers and the promotion of SMEs involved in implementation. Spending cuts in such forms of investment would have a serious negative impact on employment and recovery unless ways could be found to maintain services with reduced costs.
Trends in Federal and Non federal Investment Spending
In recent years, annual gross investment (that is, before subtracting the depreciation of past investments) by the federal government in infrastructure, education and training, and research and development has been close to its historic peak when measured in real, inflation-adjusted dollars; as a share of GDP or of all federal spending, however, it has declined significantly since the 1960s. Total investment more than quadrupled in real dollars between 1956 and 1968, as shown in Figure 1, thanks to initiatives such as the Interstate Highway System and the space program, and later the Great Society programs that began the federal government's involvement in supporting education for the poor. Real federal investment spending peaked in 1980, with increased funding for mass transit, rail, wastewater treatment, and various education and training programs. It dipped sharply thereafter, declining 20 percent by 1983, then rose fairly steadily through 1993. In proportional terms, federal investment has continued to decline relative to total federal outlays and GDP (see Figure 2). By 1996, investment spending had fallen to 10.7 percent of total outlays (roughly half of the 1966 peak of 19.9 percent) and 2.2 percent of GDP (down from 3.7 percent in 1967 and 3.4 percent in 1980). In itself, the relative decline is not evidence of underinvestment, since spending needs and priorities can shift as the economy grows and other circumstances change.
 
 

 
FIGU1. 
REA   Real FEDERAL INVESTMENT BY CATEGORY, 1956-1997


SOURSOURCE: Congressional Budget Office.

 
&l

F         2. 
FEDEFEDRAL INVESTMENTS AS SHARES OF GDP AND TOTAL FEDERAL        OUT OUTAYS, 1956-1997


SOURCE: Congressional Budget Office.
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