CA Foundation  >  Business Economics for CA Foundation  >  ICAI Notes of Ch 6.4 - Infrastructural Challenges

ICAI Notes of Ch 6.4 - Infrastructural Challenges - Notes | Study Business Economics for CA Foundation - CA Foundation

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Learning Objectives

  • understand how infrastructure plays an important role in the economic development of an economy.
  • know the various important infrastructural services.
  • understand various sources of energy.
  • understand the various problems related to energy.
  • know how various means of transportation and communication in India have developed over the years.
  • understand how means of transportation and communication provide an important link between production, distribution and ultimate consumers.
  • understand how over the years medical services have improved but still India’s overall health is low.
  • understand education system in India and the problems from which it suffers.

Infrastructure plays an important role in the economic development of an economy. It can quicken or impede the development of an economy. In this section, we will discuss five important infrastructural services viz. energy, transport, communication, education and health.


Energy is an important input for most of the production processes and consumption activities. It plays a crucial role in the economic development. Economic growth and demand for energy are positively co-related. A study shows a 3 per cent rise in industrial production in the world is accompanied by a 2 per cent increase in energy consumption. A similar relation is also observed  in India.

India is both a major energy producer and consumer. India currently ranks as the world’s seventh largest energy producer, accounting for about 2.49 per cent of the world’s total energy production. It is also the world’s fifth largest energy consumer, accounting for about 3.45 per cent of the world’s total energy consumption. However, it is noteworthy that India’s per capita energy consumption is one of the lowest in the world. In India, around 22 per cent of the population is below the poverty line and nearly 50 per cent of the population does not have the purchasing power to enter the market for commercial energy. This part of the population living mostly in rural areas depends upon non-commercial traditional sources of energy such as firewood, dung cakes and agricultural wastes. At present, nearly 27 per cent of the energy consumed is obtained from non-commercial sources or traditional sources. The rest is commercial energy and is obtained from oil and gas, coal, hydro-electricity and nuclear power. Production of nuclear power has started, but it is not much. There is a distinction between primary energy resources and final energy resources. When coal is consumed for generating electricity and electricity is consumed by industry, we call coal as primary energy resource and electricity as the final one. Coal, petroleum products and natural gas are both primary resources and final resources as they are consumed directly as well as indirectly, while electricity is, by and large, the only final energy resource.

Major users of electricity are industry (38 per cent), domestic (24 per cent), agriculture (22 per cent) and commercial establishment (9 per cent). We shall concentrate on electricity as it is the main mover of manufacturing industry.

4.0.0 Electricity: Electricity or power is the most important source of commercial energy. Over the planning era, the production and consumption of electricity has increased tremendously. Our total installed capacity of generating power was around 2300 Mega Watt (MW) in 1950-51. It increased to 74,700 MW in 1990-91, 117800 MW in 2000-01 and further to 175000 MW in 2008-09. Thus, over a period of 58 years, there has been 75 times increase in the installed capacity. We are roughly adding 4000-5000 MW every year.

4.0.1 Sources of Electricity: There are 5 major sources of electricity (1) water (2) coal (3) oil (4) gas and (5) radio active elements like uranium, thorium and plutonium. Electricity generated from water is known as hydro-electricity. Electricity generated from coal, oil and gas is called thermal electricity and electricity generated from radio-active elements is called atomic energy. Of the present capacity, 62 per cent is in the thermal and non-conventional energy sources other than wind 21 per cent in the hydel and wind 2.5 per cent is in the nuclear and rest is in the other sectors. In terms of generation of power, thermal plus non conventional energy source other than wind is contributing 73 per cent, hydel and wind around 13.5 per cent and nuclear 2.0 per cent and others are contributing 11.5 per cent. The central government, state governments and private sector all work together in the generation of power.

The Central Government operates through National Thermal Power Corporation (NTPC), National Hydroelectric Power Corporation (NHPC) and Nuclear Power Corporation of India Limited (NPCIL). State governments have their State Electricity Boards (SEBs). There also exist Central Electricity Authority and Central Electric Regulatory Commission.

4.0.2 Difficulties and Problems relating to energy

(1) Demand and Supply imbalances in commercial fuels : The demand for energy, particularly for commercial energy, has been growing rapidly with the growth of the economy, change in the demographic structure, rising urbanisation, social-economic development and desire for attaining and sustaining self reliance in the economy. The supply has not increased concurrently. Table 14 gives the trend of primary commercial energy demand and supply between 1960-61 to 2006-07 and projected requirement for 2011-12.

Table 14 Trends in Demand and Supply of Primary Energy (All in Mtoe)

Domestic Production of  commercial energy36.7847.6775.19150.01207.08259.56435
Net Imports6.0412.6624.6331.0789.03131.97111
Total commercial energy42.8260.3399.82181.08296.11391.53546
Non-commercial energy74.3886.72108.48122.07136.64147.56169
Total Primary energy demand117.20147.05208.30303.15432.15539.09715

Mtoe = million tonne of oil equivalent
Source: Planning Commission, Eleventh Plan – Vol.3

We can see from the table that in 2006-07, out of the 539 mtoe of primary energy demand, 391 mtoe demand was for commercial energy and 148 mtoe was for non commercial energy. Out of 391 mtoe demand for commercial energy, 259 mtoe was domestically produced and 132 mtoe was imported. Non commercial energy (148 mtoe) was produced and consumed domestically. Thus, we notice that one third of the demand for commercial energy was met through imports.

India needs to eliminate shortage of energy and enhance the availability of commercial energy resources if it has to sustain the projected 9 per cent growth in the Eleventh Plan. It is projected that by the end of Eleventh plan, net imports would reduce to 20 per cent of the total demand for commercial energy.

(2) Oil prices and inflationary pressure : Since 1973, oil prices have been rising in the international market. During 1973-2008, the Organisation of Petroleum Exporting Countries (OPEC) has increased the prices many folds. This has contributed to the inflationary pressure in India. Mineral oil is presently the major source of energy for transport, industry and agriculture. It is also used as household fuel. Therefore, rising oil prices has led to rising general prices in India.

(3) Growing oil imports bill : Since 1973, India’s oil imports bill has increased substantially. In 1973-74 India’s oil import bill was Rs. 1100 crore. It increased to Rs. 10,816 crore in 1990- 91 and to a record level of Rs. 3,20,000 crore in 2007-08. Petroleum, oil and lubricants (POL) constitute around one third of our import bill. The oil import bill is also responsible to a great extent for the existing large balance of trade gap.

(4) Transmission and distribution losses : One of the major problems faced by the power companies are transmission and distribution (T&D) losses. The T&D losses are very high in many of the SEB systems. These losses include substantial amount of theft of power. National average of this loss is around 23 per cent while in many states it is more.

(5) Sick SEBs : Many SEBs have become financially sick. A large portion of these losses is accounted for by almost free supply of power to agriculture. Besides, operational inefficiencies, high cost structure, lower power tariffs and large overdues have made SEBs sick.

(6) Operational inefficiency : Most of the thermal power plants are operating inefficiently. Plant load factor (PLF) measures the operational efficiency of a thermal plant. If total generating capacity is say 600 billion kilo-watt hours (kwh) and we are producing only 300 billion kwh, plant load factor here is 50. Plant load factor varies across the regions. It is lowest in North Eastern region (47.5 per cent in 2008-09) and highest in Southern region (83 per cent in 2008- 09). If we consider SEBs, central sector and private sector, we find that PLF was 71 per cent in SEBs, 84 per cent in central sector and 91 per cent in the private sector in 2008-09.

(7) Inadequate electrification : Till date, nearly 19 per cent of villages are not electrified. In many villages, there are a very few houses which are lighted. This is sad considering the fact that more than 60 years have passed since we got Independence and still our rural areas are without electricity.

4.0.3 Recent steps taken to meet the above problem

(1) In order to improve production of power, Electricity Act was passed in 2003 and Electricity Amendment Bills 2005 was passed in 2005. The focus is on improved investment in power sector and fixing of power tariffs on the basis of competition, efficiency, economical use of resources, commercial principles and consumers’ interests. Certain provisions of the Electricity Act 2003 were amended in 2007 by passing of Electricity (Amendment Act) 2007.

(2) To improve generation of power, Ministry of Power has launched the ‘Partnership in Excellence’ programme. Under the programme, 26 thermal stations with PLF less than 60 per cent have been identified. Steps will be taken to improve their efficiency.

(3) Steps are being taken to improve and add electricity-generating capacity of the plants.

(4) Government is encouraging the use of hydel and wind energy sources which do not rely on fossil fuels and avoid carbon emissions.

(5) Steps have been taken to turn around SEBs. These include, rationalization of tariff structure particularly the prices charged by the SEBs from various categories of consumers, monitoring of cost structure, optimum utilization of existing capacity.

(6) The greatest weakness in the power sector is on the distribution side. Aggregate Technical and Commercial (AT&T) losses of most State Power Utilities (SPUs) remain high. In order to redress the problem the Accelerated Power Development and Reforms Programme (APDRP) was initiated in 2002-03. Although at the national level the AT&T losses have not come down much, the losses have come down in towns where APDRP has been implemented. In order to reduce transmission losses, distribution reforms have been carried out. In 2002, power sector was privatized in Delhi. The experience of privatization in Delhi has been encouraging.

For example, there the quality of power has improved, load shedding has come down and the average response time for attending breakdowns has also come down.

(7) Government is encouraging private sector investment in power and for this it is finalizing guidelines. The key initiatives in this regard include permitting private sector to set up coal, gas, or liquid based projects of any size, allowing gradual entry in distribution, encouraging foreign equity and participation and permitting FDI in varying extent in different sub sectors of power and giving tax incentives etc.

(8) An All India Power Grid, also called National Grid is being developed by the year 2012. An integrated power transmission grid helps to even out supply-demand mismatches. The existing inter-regional transmission capacity is planned to increase from its present 20750 MW to about 37,700 MW by 2012.

(9) Nine sites were identified for the development of ultra-Mega Power Plants with capacity of 4000 MW each.

(10) Steps are being taken to provide access to electricity to all areas including villages and hamlets. For this, ‘Rajiv Gandhi Grameen Vidhyutikaran’ programme was started in 2005. The Scheme provides for free electricity connections to below poverty line (BPL) households. Rural Electrification Corporations is the nodal agency for this. Under the scheme, nearly 60,000 villages have been electrified and connections to 54 lakh BPL households have been released.

Besides the above, certain Steps have been taken to encourage conservation of energy. These include, giving energy conservation awards to deserving industries, encouraging use of Compact Fluorescent Lamps (CFLs) and promoting energy efficient equipments etc. The Bureau of Energy Efficiency (BEE) has taken initiatives to promote energy efficiency.


Today, along with energy, transport is the basic infrastructural requirement for industrialization. Transport provides a useful link between production centers, distribution areas and ultimate consumers. Important means of transport are railways, roads, water transport and air transport.

4.1.0 Railways : Indian Railways, Asia’s largest and world’s third largest rail network under a single management, has been contributing to the industrial and economic landscape for over 150 years. There are two main segments of railways - freight and passenger. The freight segment accounts for about 70 per cent of revenues and passengers thirty per cent of revenues. The total route length of railways is 63.5 thousand kilometers. Out of which 17.9 thousand kilometers is electrified. During 2008-09 it carried more than 6900 million of passengers and 832 million tonnes of freight traffic. Railways however, faces the following problems:

(1) The existing technology of both electric and diesel locomotive is very old.
(2) The railway network is smaller and inadequate vis-à-vis the requirements of the economy.
(3) The railways is facing the problem of financial crunch. The conventional methods of
increasing the net revenue, like raising of tariffs and expenditure control are inadequate
for generating the levels of investment required.
(4) Because of social responsibilities, railways is forced to operate a number of unremunerative
lines and suffer heavy losses. Often, essential goods like foodgrains, fruits and vegetables
have to be carried at a loss.
(5) Railways also suffers from over crowding and poor passenger services.

In order to meet the above challenges, railways is trying to improve resource management. Rational price policy, increased wagon load, faster turnaround time, Public-Private Partnerships (PPPs), double line freight corridor for efficient freight movements are some of the steps taken in recent years to improve railway’s performance.

4.1.1 Road: The Indian road network is the one of the largest networks in the world. At the beginning of the first plan, India had 1,57,000 kms of surfaced roads and about 2,43,000 kms of unsurfaced road. In 2002-2003, the total road length had increased to 24,83,300 kms. Out of which 14,20,500 kms is surfaced. Today, India has a network of 3.34 million kilometre. The National Highways which comprise only about 2 per cent of total length of roads now encompass a road length of 66,590 kms. and carry more than 40 per cent of the total road traffic. The rural roads network connects around 65 per cent all weather roads. Roads occupy a crucial position in the transportation matrix of India as they carry nearly 61 per cent of freight and 87 per cent of passenger traffic.

Problems of road transport : Following problems are faced in the case of road transport:

(1) The road length is inadequate considering the size of the country.

(2) A number of areas, particularly interior areas and hilly tracts remain to be linked with roads.

(3) Large tracts of rural roads are mud roads which cannot be used for plying heavy traffic.

(4) A number of urban roads are also poorly maintained. This is due to constraints of financial resources, organizational inadequacies, procedural delays, shortage of essential materials etc.

(5) Most of the State Road Transport Corporations are running on heavy losses.

This is because of rising cost of operations, inefficiency in operations and corruption. In order to overcome the above problems a number of steps have been taken. These include, undertaking the National Highways Development Project (NHDP) which involves developing Golden Quadrilateral (Mumbai, Delhi, Chennai and Kolkata), North-South and East-West corridors, Port connectivity and other projects, PPP in roads developments and rationalisation of taxes etc.

4.1.2 Water transport: Water transport can be divided into inland water transport and shipping. Shipping can again be divided into coastal shipping and overseas shipping.

India has about 14500 km of navigable waterways which comprise rivers, canals, backwaters creeks etc. About 45 million tonnes of cargo is being annually moved by inland water transport. Over the years, the importance of this mode of transport has declined considerably due to expansion of rail and road transport and navgational inadequacies. The government approved the Inland Water Transport Policy which includes a number of incentives to encourage private sector participation in inland water transport.

India has a long coastline of 7,517 kms, 12 major ports and 200 minor ports and a vast hinterland. Coastal shipping is very energy efficient and cheapest mode of transport for carrying bulk goods (like iron and steel, iron-ore, coal, timber etc.) over long distances. However, there had been a sharp decline in coastal shipping operations during 1960s and 1970s. The Gross Tonnage (GT) fell from 0.31 million in 1961 to 0.25 million in 1980. However, there was an improvement in the coastal shipping in 2001 as coastal tonnage rose to 0.70 million GT. There was further improvement in the ensuing year as coastal traffic increased to 116 million tonnes in 2002-03. It is estimated that by the end of Eleventh Plan this will further increase to 220 million tonnes. The main factors for poor growth of coastal shipping have been (1) high transportation costs (2) port delays (3) over-aged vessels (4) lack of mechanical handling facilities (5) imbalance in coastal traffic movement and (6) slow handling of the cargo at ports. These inflict heavy losses on shipping companies.

Almost 95 per cent of India’s global merchandise trade is carried through the sea route. India’s overseas shipping has improved over the planning period. The country has the largest merchant and shipping fleet among developing countries and ranks 20th in the world in shipping tonnages. As compared to 1.92 million Gross Tonnage (GT) at the time of Independence shipping tonnage was 8.6 million GT at the end of March 2007. The fleet at the end of March 2007 was 787 vessels (1.19 per cent of world fleet).

Since ports are very important for coastal and overseas shipping, special efforts have been made in the Five Years Plans for the development and modernization of existing ports and establishment of new ports. The total traffic carried by both the major and minor ports was 723 million tonnes during 2007-08. The 12 major ports carry about three-fourth of the total traffic, with Vishakhapatnam as the top traffic handler in each of the last seven years.

Problems faced by Indian ports : The main problem is low productivity. Major factors contributing to this are: 

  • Operational constraints such as frequent breakdown of cargo handling equipment due to obsolescence.
  • Inadequate dredging and container handling facilities. 
  • Inefficient and non optimal deployment of port equipment. 
  • Lack of proper coordination in the entire chain. 
  • Indian containers are costlier than other ports in the region for handling containers. The additional cost burden due to use of second and third generation vessels has been estimated at U.S. $ 250 million a year. Container delays at Indian ports cost U. S. $ 70 million a year.

4.1.3 Air transport: Air transports is the preferred mode of transport especially for long distance travel, business travel, accessing difficult terrains and for transporting high value and perishable commodities. In the civil aviation sector, there are three parts – operational, infrastructural and developmental. The first is the operational. There are 11 scheduled passenger operators and one cargo operator in the country with the combined fleet size of 407 aircrafts. There are also 99 non scheduled airlines operators who have 241 aircraft in the inventory. Indian Airlines and Air India were amalgamated with National Aviation Company Ltd. The brand name ‘Air India” was however retained. The merged entity along with its subsidiary companies, with more than 140 aircraft, would enter the list of top 30 airlines globally in terms of fleet size.

The private sector is now playing a crucial role in the development of both airline and airport sector. Its market share in the domestic traffic during 2006 reached 78.5 per cent from near 50 per cent share earlier. Jet airlines has emerged as the market leader with a share of 31.2 per cent, followed by Indian Airlines (21.5) per cent, Air Deccan (18.3 per cent), Air Sahara (8.8 per cent), Kingfisher (8.7 per cent).

Regarding infrastructural facilities, Airport Authority of India manages 92 airports, including five international airports at Delhi, Mumbai, Kolkata, Chennai and Thiruvananthapuram and 28 civil enclaves at the defense airports. Green field airports of international standards are also constructed at Hyderabad, Bangalore and Goa. Proposals to set up green field airports with private sector participation in Navi Mumbai, Kerala, Sikkim are also in the pipelines. An international green field airport is already operational in Kochi.

Regarding regulatory cum developmental aspect, the Department of Civil Aviation, Government of India, is responsible for it. International services are governed by bilateral agreements. Due to the monopoly nature of the airports and their economic importance, efforts are being made to set up an Independent Airport Economic Regulator for tariff setting and monitoring of performance against standards.

Non-availability of seats has been one of the major constraints faced by international passengers. For this, the airlines are trying to acquire more aircrafts. Government has adopted an overall liberal approach in the matter of grant of traffic rights under bilateral agreements with various foreign countries. Air India express has started operations on low cost pattern effective April 2005. These initiatives have had a marked impact on airline traffic. Domestic and international traffic grew by 21.8 per cent and 13.6 per cent respectively in the tenth plan. It is estimated that international and domestic passengers would increase by 16 and 20 percent respectively in the 11th plan. International and domestic cargo traffic is expected to grow at the rate 12 and 10 percent respectively in the Eleventh Plan. Domestic and international cargo recorded a growth of 12.6 per cent and 12.8 per cent respectively during the Tenth Plan.

Recent important developments in the airline and airport sector included:
(i) modernization and restructuring of Delhi and Mumbai airports launched through joint venture companies;
(ii) development of Greenfield air-ports at Bangalore and Hyderabad on a Build– Own–Operate– Transfer basis with PPP;
(iii) approval of modernization of 35 non-metro airports and 13 other airports to world-class standards in phases;
(iv) liberalization of FDI limit upto 100% through automatic route for setting up Greenfield airports;
(v) acquisition of modern and technologically advanced aircraft for Air India (AI) Ltd, Air India Charters Ltd (AICL), and Indian Airlines Ltd;
(vi) liberalization of bilateral air services agreement in line with the contemporary developments in international civil aviation sector;
(vii) adoption of a limited Open Sky Policy in international travel to meet the traffic demand during peak season; and
(viii) adoption of trade facilitation measures in custom procedures to facilitate speedy clearance of air cargo.


Communication means transmission of information. For the development of industries, commerce and trade in the country, communication is very necessary. The important means of communications are the postal services, telephone services, tele printers, radio and television etc. Telephone, tele-fax and e-mail have been gradually evolving and telex and telegraph are getting out of fashion.

4.2.0 Postal services: India’s postal system dates back to 1837 and today our postal network is the largest network in the world. Today, we have more than 1.55 lakh post offices and out of which around 1.4 lakh are in the rural areas. On an average, one post office serves 7174 persons and 21.12 sq. km area. Postal services suffer from many weaknesses such as inadequate number of post offices, use of outdated techniques, delays in reaching of posted material etc. A number of steps have been taken for resolving these problems. Such as speed post, business post, express parcel post, media post, speed post passport etc. services have been introduced. With a view to improve the speed and volume of money order transmission, 140 VSATs (Very Small Aperture Terminals) have been set up. They handle more than 1 million money orders a month. To provide better services, mechanization and computerization of postal operations is being progressively introduced. Presently more than 9600 post offices are computerized. Automatic mail processing centers (AMPC) have been set up at Mumbai and Chennai for faster processing of mails. Two more AMPCs are being set up in Kolkata and Delhi. E-post services were started in 2001 in some states. Under e-bill post, customers are able to pay multiple utility bills at post office counters. They are now being upgraded for multiple messaging to make them useful for corporate houses. Pick up of mails from the residence of the customers has been started all over the country. This is a major initiative to provide user-friendly services to its vast customer base. Direct post, which comprises of un-addressed postal articles like promotional items, has been introduced to provide the facility of direct advertising for increasing commercial activity in the country. ‘Logistics Posts’, ‘Retail Post Services’ are other new services which are now being provided. Post offices are also providing a number of financial products such as saving bank and saving certificate, postal life insurance, non life insurance products, mutual funds etc.

Besides the above, the Department of Posts has launched a pilot project “Project Arrow” with the aim of providing fast and reliable postal services to the consumers. In addition to the above, 161 mail business centres with the state of the art technology and modern mailing tools have been designated for collection, processing and delivery of bulk mail.

4.2.1 Telecommunications: Communications all over the world has progressed rapidly and the most important factor accounting for increased communication has been the development of telecommunications which include (i) the telephone service, and (ii) the telex service. At the time of Independence, India had a total of only 321 telephone exchanges with about 8200 working connections. There were only 338 long distance public call offices and 3324 telegraph offices. The growth of telecommunications has gained momentum after Independences and by March 2009 India had 414 million connections (basic and mode). With the present growth, the number of telephones is expected to reach 600 million by the end of 2012. As on March 2007, more than 5.6 lakh villages were connected using a village public telephone (VPT). Thus, 90 per cent of villages in India have been covered by the VPTs. At present, in the rural areas more than 2 lakh public call offices (PCOs) and 113 million phones have been provided.

Although India’s telephone network is the third largest in the world, the tele density continues to be low at about 35.65 per cent. While tele density in rural areas is 13.81 per cent, the urban tele density shot up to 83.66 per cent in March, 2009.

A type of revolution has taken place in the field of telecommunications in recent years. A number of value-added services like radio paging services, cellular mobile telephone service, electronic mail, public mobile radio trunked service, voice mail, video tax, video conferencing etc. have been started. Upto March 09, there were about 376 million subscribers of cellular mobile telephone services. The two PSUs in the telecom sector - Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) have been losing their market shares in fixed telephony. From 98.65 per cent share in 2001-02, their combined share declined to 85.31 per cent in December 2005. However, their share in mobile telephony has improved from 3.98 to 21.11 per cent over the same period. Apart from this, there has been significant growth in the internet connections and broadband subscribers. The internet connections increased from 0.01 million in 1995 to around 35 million in March, 2009 and broadband subscribers have increased from 0.49 lakh in December 2004 to more than 6 million in March 2009. Regulatory framework and functions are carried out by Telecom Regulatory Authority of India (TRAI) and now the National Internet Exchange of India (NIXI) has been set up to ensure that internet traffic originated and destined for India, is routed within India.


For good health, two things are essential:
(1) balanced and nutritional diet and
(2) medical care.

The general health standard in India is quite low. This is quite inevitable as nearly one fourth of the population lives below the poverty line. These people do not have nutritional diet, adequate medical care and hygienic conditions. As a result, the overall health conditions are poor in India. It is not that nothing has been done on the health front but they are far from satisfactory. The following table shows trends in health care in India since Independence.

Table 15 : Trends in Health Care

Health centers72557,3531,71,687
Dispensaries + Hospitals9,20923,55533,855
Nursing personnel18,0541,43,88715,72,363
Doctors (Modern)61,8002,68,700around 7 lakh

Under the various plans, health development programmes have been integrated with family welfare and nutritional programmes for vulnerable sections – children, pregnant women and nursing women. These programmes focussed on increasing health services in rural areas, intensification of the control of communicable diseases like small pox, malaria and leprosy, improvement in education and training of health personnel etc. Since sixth plan there has been a change in the whole approach towards health services. Under the new approach, the focus is not on providing hospitals but on providing better health and medical care services to the poor people. A community based programme on health care and medical services in rural areas was launched. Apart from developing rural health services, the control of communicable diseases is now being given the highest priority. Since diseases like, T.B., malaria, gastrointestinal infections are related with unhygienic sanitation, efforts have been intensified in providing hygienic conditions and opening new hospitals and strengthening existing hospitals especially in rural areas. As a result of these efforts, there has been a fall in the incidence of certain diseases like T.B, leprosy and polio. But a rise in the incidence of certain diseases like AIDS, blindness, cancer etc. has also been noticed. These require immediate attention, care and action. There are certain weaknesses of Indian health care which need immediate attention.

These relate to:

1. Unequal distribution of existing health institutions and manpower.

2. Mismatch between personnel and infrastructure.

3. Lack of an appropriate referral system.


Education plays an important role in the overall development of a human being and a society.

Therefore, stress on imparting education has been given in our Constitution which says education should be free for children below 14 years of age. Under the various plans, education facilities have been expanded at all levels in India and as a result, not only the literacy rate has risen but the percentage of children availing school education has also increased. India, now, has the second largest education system in the world. Eighty four per cent of rural habitation in India now have a primary school located with in a distance of 1 kilometre. The National Policy on Education (NPE) was made in 1986 and further modified in 1992.

It emphasizes 3 aspects in respect of elementary education: 

  • universal access and enrolment; 
  • universal retention of children up to 14 years of age;
  • a substantial improvement in the quality of education.

NPE had set a goal of expenditure on education at 6 per cent of the GDP. As against this target, the actual expenditure of central and state governments was 3.49 percent of GDP in 2004-05.

As a result of the efforts undertaken, Gross Enrolment Ratio (GER), which shows the proportion of children in the 6-14 years age group actually enroled in elementary schools, has increased progressively from 32.1 in 1950-51 to 96.9 in 2006-07. With the rate of increase in GER of girls higher than that of boys, the general gap in enrolment is declining. Drop-out rate at the primary has declined from 39 per cent in 2001-02 to 29 in 2004-05. The main vehicle for providing elementary education to all children is the ongoing comprehensive programme called Sarva Shiksha Abhiyan (SSA) launched in 2001-02. It aims at having all children in school by 2005 and universal retention by 2010. National Programme for Education of Girls at Elementary Level (NPEGEL) is an important component of SSA. This programme concentrates on education of girl child. Another important component of SSA is the Education Guarantee Scheme and Alternative and Innovative Education (EGS + AIE). This is specially designed to provide access to elementary education to children in school-less habitations and out of school children in 2004-05. Apart from the above, Mid-day meal scheme, Kasturba Gandhi Balika Vidyalaya (KGBV), Parambhik Shiksha Kosh (PSK) are other schemes for encouraging people for elementary education. The achievements of SSA till December 2008 are opening of around 277000 new schools, construction of more than 225000 school buildings, construction of more than 900000 additional classrooms, supply of free text books to 8.40 crore children and appointment of 9.66 lakh teachers.

Secondary education prepares students in the age group of 14-18 years for entry into higher education and employment. There has been an impressive growth in the area of higher education with an increase in the number of secondary and higher education school from 7416 in 1950-51 to more than 1,68,900 in 2006-07. The corresponding increase in total student enrolment has been from 1.5 million in 1950-51 to 39.44 million in 2006-07. Annual enrolment of women students rose from 2.45 million in 1997-98 to 4.04 million in 2004-05 constituting 40.4 per cent of the total annual enrolment.

University and higher education is also very important. However, it is available to a small percentage of population in the relevant age group. Moreover, it suffers from several weaknesses, such as increasing number of substandard institution, falling academic standards, outdated curriculum and lack of adequate support for research. There has been a significant growth in higher education during the academic year 2006-07. Enrolment in various courses at higher level in 2006-07 was 11.61 million as compared to 11.34 million in the previous year. Out of these women students constituted 40.55 percent.

Technical education including management education has expanded at a spectacular rate since Independence. At present there are more than 1200 recognised technical education institutions at the first degree level and 1215 polytechnics at the diploma level with more than 2 lakh students each. Number of institutions offering post-graduate courses is about 150 with an annual capacity of 10,000 students. There are seven national institutions on technology known as Indian Institute of Technology. These provide courses in engineering and technology. Besides these, there are 20 National Institute of Technology (NIT) consisting of 17 erstwhile Regional Engineering colleges and 3 other engineering colleges taken over by the Central Government and a number of other centers for specialised courses such as architecture, mining and metallurgy, industrial engineering and forge and foundry. These include Indian Institute of Science, Indian Institute of Science Education and Research (IISERs), National Institute of Industrial Engineering, Indian Institute of Foreign Trade (IIFT), National Institute of Foundry and Forge Technology, Indian School of Mines, School of Planning and Architecture and many more. There are six Indian Institutes of Management (IIMs) which are centers of excellence in management education. Apart from these, there are other private and government institutes which provide management education.

Not only this, there are quite a number of medical colleges imparting education in the area of medicines. All India Institute of Medical Sciences, Delhi University College of Medical Sciences, Post Graduate Institute of Medical Education & Research, Maharashtra University of Health Science, Sanjay Gandhi Postgraduate Institute of Medical Science are a few of them.

Recent expansion of higher education institutions include the following: Opening of 6 new IITs, passing of Ordinance for establishing 15 Central Universities, opening of new IIMs, setting up of two new IISERs, setting up of two new Schools of Planning and establishing new polytechniques etc.

For adult education, the National Literacy Mission (NLM) was launched in 1998 as a Technology Mission. It aimed at imparting functional literacy to non-literates in the country in the age group of 15-35 in a time-bound manner. Its objective is to attain a sustainable threshold literacy rate of 75 per cent by 2007. The Total Literacy Campaign (TLC) has been the principal strategy of NLM. NLM has accorded priority for the promotion of female literacy. The scheme of continuing education is now the flagship programme of the NLM. As more and more neo-literates emerge out of the literacy campaign, the thrust is on providing continuing and life long learning to these people. For this purpose, a number of Continuing Education Centres (CECs) are being opened up.

4.4.0 Problems of India’s Education system 

The education system in India suffers from the following problems:

1. Unplanned expansion of higher education.
2. Inadequate number of institutions which can impart education through correspondence or in the evening .
3. Low standard of education.
4. Large number of unemployed educated people.
5. Large-scale migration of educated people to the developed western countries.
6. Lack of infrastructure in many rural schools – absence of rooms, blackboard, teachers, water etc.
7. Neglect of primary education.

4.4.1 Suggestions for improving the education system

1. Restrictions should be introduced on higher education. Only those who satisfy certain conditions should be admitted to post graduate courses.
2. Education should be made job-oriented.
3. Expansion of education should be carefully planned since it is costly.
4. In rural areas emphasis should be on agriculture and vocational education.
5. Technical education should be properly planned.
6. Efforts should be made to stop brain drain i.e. highly educated people going abroad in search of jobs.
7. The standard of education should be raised.
8. The reasons for high rate of dropout especially among girls should be found and dealt with.


Important infrastructural services are energy, transport, communication, education and health. Energy is a vital input for most of the productive activities. In India, still half of the population uses non-commercial sources of energy obtained from fuel wood, animal dung, biogas, crop residue etc. Commercial energy is obtained from coal, petroleum, water, sun and wind, etc. Demand and supply gap, operational inefficiencies, growing oil prices, T&D losses etc. are the challenges faced by the economy vis-a-vis energy. Steps taken to meet these challenges include, increasing capacity of plants, carrying out reforms for reducing T&D losses, turning around SEBs, using new sources of power and so on.

Railways, roadways, water ways and airways constitute the transportation system of any economy. Considering the size of India, these facilities are inadequate and need enhancement and improvement. Communications all over the world have progressed rapidly and the most important factor behind this has been the growth of telecommunication. Radio paging, cellular mobile telephones, electronic mail, voice mail, video-conferencing have revolutionised the world and have replaced old means of communication such as telegram and telex. India along with the other countries has benefited from these progresses but still it has a long way to go.

The general health of Indian people is not satisfactory. There is lack of proper balanced and nutritious diet and medical care. Although over the years many developments have taken place on the health front but considering the size of the population in India these are inadequate both qualitatively and quantitatively.

Education is an important ingredient in the development of an individual and a society. In India, education system suffers from, high percentage of dropouts, inadequate number of educational institutions, lack of infrastructure in many rural schools, outdated co-curriculum and so on. For improving the education system in India it is important that the above problems are addressed adequately.

The document ICAI Notes of Ch 6.4 - Infrastructural Challenges - Notes | Study Business Economics for CA Foundation - CA Foundation is a part of the CA Foundation Course Business Economics for CA Foundation.
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