Page 248 - DECO502_INDIAN_ECONOMIC_POLICY_ENGLISH

Indian Economic Policy

Notes • It may be observed that the consumption of power by domestic consumers has increased rapidly,
However, consumption of electricity by railways and for public lighting as a proportion of total
consumption has declined.
• Power development during the last 50 years has been significant. The total installed generating
capacity from all sources — utilities and non-utilities—had increased from 2,300 MW in 1950 to
1,43,800 MW by 2005-06.
• The Government of Orissa was the first to initiate reform of the State power sector with substantial
restructuring of SEB to make the operation of the sector more efficient and financially viable.
• In India, as in all developing countries, power generation and distribution have been a
government monopoly.
• Ever since the Narasimha Rao Government announced its new power policy for private power,
this country has witnessed one of the most acrimonious debates on various aspects of the policy.
• If agriculture and industry are regarded as the body and the bones of the India economy,
transport and communications constitute its nerves which helf the circulation of men and
materials. The transport system helps to broaden the market for goods and by doing so, it
makes possible large-scale production through division of labour.
• Indian planners gave high priority to the development of transport, for in their opinion “an
efficient and well developed system of transport and communications is vital to the success of
a plan of economic development which lays stress on rapid industrialisation.”
• Rail and road transport systems dominate but other forms of transport are also important within
their specialised areas considering the size of the country and its geographical features.
• Since 1950-51 transport systems have registered impressive progress but there are many
bottlenecks, constraints and difficulties. Inadequacies and imbalances in transport threaten to
constrain economic growth and the quality of life in urban as well well as rural India.
• Despite impressive expansion over the years, the entire Indian transport network is characterised
by many deficiencies and a major exercise in expansion of capacity and modernisation and
technological upgradution is necessary.
• The Indian Railways had modest beginnings in 1853 when the first railway train journeyed a
distance of 22 miles between Bombay and Thana. From a modest beginning in 1853, the railway
development was very rapid and by 1900 there were nearly 25,000 miles of railway line.
• As the Indian Railways constitute the largest transport agency intimately connected with the
development of the national economy, the main objective of planning in Railways in the past
was to expand railway traffic in such a way as to avoid bottlenecks in the production process
and to ensure an efficient rail transport system.
• Before 1924, Railway finances formed part of the Central Government finances. But from 1924,
the Railway finances were separated from the general finances of the Central Government.
• Although the railway in India is the cheapest mode of transport tfran any other mode, Indian
Railways has never incurred massive losses.
• Today railways requires urgent efforts for expanding railway lines, new engine factories, coach
factories and other types railways infrastructure.
• The Seventh Plan (1985-90) brings out the importance of roads as follows : “Since the country’s
economy is still largely agrarian in character and the settlement pattern is rural-oriented, roads
constitute a critical element of the transportation infrastructure.
• Road development in India was neglected in the past for various reasons. In the first place, the
governments—Central and State—did not appreciate the importance of developing the road system.
• Railways and roads are complementary to each other much more than other modes of transport
and are mutually helpful. The road system links up the cultivators with the local market and
the nearest railway station.
• There are two kinds of water transport—inland water transport or river transport and coastal
or marine transport.

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