3. Growing Indian Urban Population
INDIA'S URBAN T RANSIT ION
Urban Population (million) Rural Population (million) Total Population (million)
1600
1408.93
1400
1291.30
1230.48
1200 1164.02
PO PU LAT IO N IN MILLIO N
1027.02
1000
846.30 833.88 843.77 833.25
811.77
800 741.67
684.30
628.70
548.20 575.68
600 524.80
439.10 447.53
396.60
400 352.25
285.35
217.60
200 159.50
109.10
0
1971 1981 1991 2001 2010 2015 2020 2030
YEAR
AEON Consultants 3
4. Indian Urban Growth- Features
Urban population has grown at about 4% p.a. vis-à-vis 1.5% growth in rural areas
Level of urbanisation increased from 23% in 1981 to 29% in 2001
Expected to reach about 36% by 2011
Pace of urbanisation has rapidly increased in the last 2 decades
Increase in Urban incomes also having an impact on the demand for urban infrastructure
Share of service sector in the Indian GDP has increased significantly
Has resulted in increase in income levels in the Urban areas
Of the 21 mega cities (population. 10 million+) in the world , 17 are estimated to be in developing countries, 3 in
India
India has the second largest urban system in the world. Comprises of over 3700 urban local entities
About 30% of the total population resides in Urban areas
Two-thirds of the above live in Class I (100k plus) cities
Metropolitan (million plus) cities have increase from 5 in 1951 to 27 cities in 2001
About 1/3rd of the urban population lives in these cities
Engine of productivity and growth in the country
Contributes about 60% of the national income
AEON Consultants 4
7. Indian Scenario- Features
A liberalizing economy and rated as 4th largest country based on Purchasing Power Parity
[PPP]
World’s largest democracy & among the strongest emerging markets
1..2 billion people with 300 million in the middle class bracket
Well matured financial and securities market
Time-tested judicial systems
WTO member committed to providing opportunity to the global market
Constantly undertaking reforms in every sector with Infrastructure Sector receiving
Government’s fullest attention
AEON Consultants 7
8. Indian Economy Growth- Features
India has potential to attract US $ 100 billion over next five years
Export Oriented Sectors alone to attract US$ 11 billion investments
Increase in FDI will lead to increase in GDP by another 2-3 %
Potential for creation of 1 Million direct and indirect jobs each year
Source: AMCHAM with McKinsey&Co.
Large pool of educated manpower available at affordable cost
Significant Impact on lifestyle and standard of living
Cities with world class integrated infrastructure recognized as necessary drivers of
economic growth
Between 2002 to 2007 India has improved its FDI confidence ranking from Rank
No. 15 to Rank No. 2
AEON Consultants 8
9. Indian Economy Growth- Features
C hina
India
United S tates
United K ingdom
B raz il
Hong K ong
S ingapore
United A rab
G ermany
R us s ia
A us tralia
F ranc e
V ietnam
C anada
Malays ia
J apan
Other G ulf s tates
S outh A fric a
Turkey
Mexic o
P oland
Indones ia
S outh K orea
C entral A s ia
C z ec h R epublic
0 0.5 1 1.5 2 2.5
FDI confidence maintained FDI confidence gone up FDI confidence lowered
On a scale of 0 to 3 . Source : A.T. Kearney
AEON Consultants 9
11. Indian Urban Infrastructure – Shortcomings
Only 60% of the Urban households have piped water supply
Only 46% of households have water toilets and only 28% are connected to public sewerage
system
Only 60% of them have their garbage collected by the municipal authorities
Over 21% of the urban population lives in squatter settlements/slums
The Tenth Plan Document has assessed a shortage of 22.4 million houses during the period 2002-
07, which requires an investment of Rs. 4 lac crores
The city roads inadequate/poor for traffic requirements, leading to congestion
None of the Indian cities have proper MRTS
Inadequate medical and health facilities (Appx. 26 beds per 10000 population in Public Hospitals)
Demand for Urban Infrastructure investment - Grown beyond the resources of Govt.
AEON Consultants 11
12. Inadequate Indian Urban Infrastructure – Impact ?
India Urban Sector is competing with the best cities in the developing countries to attract
investments. Thus creating urban infrastructure is mandatory to increase India’s competitiveness
Sustaining Industrial growth requires development of cityscapes
Industrial growth faces a major impediment as Inadequate infrastructure is identified as one of the
biggest constraints of doing business in India
Infrastructure plays a major role when it comes to deciding between China, India and other Asian
countries for FDI and FII decisions
AEON Consultants 12
13. Inadequate Indian Urban Infrastructure – Impact ?
Hampers Economic Growth
Affects the profitability of production, levels
of income, output and employment
Poor Urban
Infrastructure
Affects Country’s
Lower Corporate Investments Global
Competitiveness
Hinders expansion in areas with poor Slows down the pace with which a
infrastructure and lesser country can integrate its’ economy
developed areas into the global system
Poor urban service coverage is the main hindrance to a city’s
ability to attract investments which promote economic
development
AEON Consultants 13
14. Inadequate Indian Urban Infrastructure – Impact ?
Total
weighted responses
Tax regulations 7
Tax rates 5
Restrictive labor regulations 15
Poor w ork ethic in national labor 3.2
Policy instability 4.5
Inflation 1.3
Bottlenecks
inefficient government 18
Total
Inadequately educated w orkforce 3
Inadequate supply of infrastructure 27
Government instability/coups 1
Foreign currency regulations 3.1
Crime and theft 1.2
Corruption 11
Access to finance 4
0 5 10 15 20 25 30
Source: Economic Forum’s Global Competitive Report of FY07; *From a list of 14 factors, respondents were asked to select the five most problematic
for doing business in India and to rank them from 1 to 5. Figure 27 shows responses weighted according to their rankings, where higher the figure the
more problematic the factor
AEON Consultants 14
15. Indian vs. China – a comparison
Indian Urban Infrastructure – Requirements
India’s investment in infrastructure at around 4.6% of GDP is far lower than that of China’s at 11%
China is investing 8-10x in highways every year since the mid-1990s compared with India’s
investment
In ports, China has on average added 350 million tonnes in capacity every year. This compares to
overall traffic of 650 million tonnes in India
China added 100 gigawatts in electricity generation capacity in 2007 alone. This compares to total
electricity generation capacity of 140 gigawatts in India
The gap in infrastructure between India and China is so large that for India to catch up with China’s
present level of stocks per capita by 2015, India’s infrastructure investment to GDP should rise to
12.5% as against the current 3.6%
2.8% of GDP(Govt.)
0.8% of GDP(Private)
AEON Consultants 15
16. Indian Urban Infrastructure –– Requirements
Indian Infrastructure Requirements
The Gross Capital Formation (GCF) in infrastructure as a proportion of the GDP emerges as the
most important key in sustaining high economic growth.
However GCF as a proportion of GDP continues to be lower at around 5% only
As per the Indian Prime Minister’s speech at NYSE 2004 US$150/year bn would be required in
next 10 years for infrastructure alone
According to the United Nations Population Division (UNDP) by 2030 while the rural population
will increase only marginally, urban population will double by 2030 to around 600 million people .
AEON Consultants 16
17. Indian Urban Infrastructure – Requirements
It is estimated that INR34,385 billion (~USD860 billion) worth of construction opportunity in India
for the next five years, representing a CAGR of 20% versus a CAGR of 14% for the past five
years
The Central Public Health Engineering (CPHEEO) has estimated fund requirement of Rs.
172,905 crores (~USD38.42 billion) for 100% coverage of the urban population under safe
water supply and sanitation services by 2021
The Rail India Technical & Economic Services (RITES) has estimated fund requirement for
Urban Transport Infrastructure at Rs. 207,000 crores (~USD46 billion) over the next 20 years
Comparing the demand with the estimated annual institutional finance flow of about Rs. 5,000
crores (~USD1.1 billion) leaves a huge gap in Infrastructure funding requirements
AEON Consultants 17
18. Indian Urban Infrastructure – Government Initiatives
Recent initiatives have seen India create a liberalised and free policy regime in all
infrastructure sectors i.e
Roads – Highways & Road development projects worth US$ 12 billion being
implemented through National Highway Authority of India (NHAI), have attracted
extensive participation of world majors
Telecom – India is rated as amongst the fastest growing markets
Seaports – Leading port operators across the world participating in government port
privatization and to develop greenfield ports.
Power – Huge investment plans in power generation, transmission and distribution
through both government and private sectors are being planned
Railways – Moves to augment rail infrastructure through private sector being brought in
place
AEON Consultants 18
20. Why build a whole new city ??
Although, each city or town has a master plan and zoning plans and is technically supposed to
expand in conformity with that in a planned manner, the coming up of slums shows a definite
weakness in the system if not a failure of the development authorities
The growing urbanization has posed a new challenge to the authorities as there is a continuous
pressure on available basic civic services like shelter, drinking
water, electricity, sanitation, transport, health and education
The advantage a new Designer City will have is that they wont carry any historical baggage of
improper urban planning and development
The expenditure on improving the infrastructure in cities is massive and even when incurred, the
cities will soon reach saturation.
Cost of building new cities is much lower than providing different services to the people scattered
in different slum areas of a city or providing all the rural areas with infrastructure.
Increased production of goods and services at a lower cost there by creating efficient contribution
towards Indian Economy
One city will not solve India’s problems, but a chain of such cities will go a long distance in
urbanising India.
AEON Consultants 20
21. Proposed concept – A Multi-Product SEZ City
It is planned to build the city as one Multi-Product SEZ
The area for a multi-product SEZ varies from 2500acres(min.) to 12500acres
It is mandatory for a minimum of 35% of the area known as processing area to have industries
involved in exporting goods and services
An SEZ is the most sought after status by the industry players keeping in mind the tax incentives
Special Economic Zones (SEZs) in India defined as :
“Specifically delineated duty-free enclave and shall be deemed to be foreign territory for the
purposes of trade operations and duties and tariffs”
Apart from tax benefits, the world class infrastructure will further lure the industries in to the city
The SEZ act requires the developer to further develop the social infrastructure in the remaining
65% or less area of SEZ known as non-processing area
AEON Consultants 21
22. SEZ – Added Incentives
High Point - Preferential Policy framework with a package of incentives
Benefits of local advantages within an international business environment
Business Infrastructure combined with social facilities
Development, Administration and Operation to be undertaken by private sector to enable a hassle
free operating environment
Envisaged as areas of excellence to enable global companies to derive domestic advantages for
doing business
An SEZ is ensured of infrastructure support for development in terms of resources like water,
power, roads connecting to SEZ by the government
Further, government goes a long distance in acquiring the land for an SEZ, which to a great
extent simplifies the process of land acquisition
Sectored restrictions on manufacturing sector inapplicable within SEZ
Single window clearance
All SEZ activities on self certification basis
AEON Consultants 22
23. SEZ – Added Incentives
Inter unit transfer of goods permitted
The SEZ developer enjoys various benefits, a few of which are listed below:
Exemption from customs/excise duties for development of SEZs for authorized
operations approved by the BOA.
Income Tax exemption on export income for a block of 10 years in 15 years under
Section 80-IAB of the Income Tax Act.
Exemption from minimum alternate tax under Section 115 JB of the Income Tax
Act.
Exemption from dividend distribution tax under Section 115O of the Income Tax
Act.
Exemption from Central Sales Tax (CST).
Exemption from Service Tax (Section 7, 26 and Second Schedule of the SEZ Act).
Integrated Greenfield cities are the most sought after projects by all state governments under a
PPP(Public Private Partnership) model
AEON Consultants 23
24. SEZ – Added Incentives
No routine customs examination of export and import cargo
Forward looking Labour Laws under consideration
100% FDI for manufacturing units operating inside SEZs through automatic approval route in almost
all sectors
100% exemption of income tax for the first 5 years and a 50% exemption for the subsequent 2 years
from the date of commencement of operations.
100% profit repatriation facility from export earnings
Permission to sell within the Domestic Tariff Area (DTA) and an exemption from a Special Additional
Duty (SAD) subject to the company having a positive Net Foreign Exchange Position (NFEP)
Supplies from DTA to be treated as exports while those from SEZs to DTA to be treated as imports.
Investments in SEZ treated as infrastructure development and eligible for exemption
Local inputs at reduced cost without the excise, VAT other levies of India
Duty free import of materials for construction, capital goods and goods required for O&M
AEON Consultants 24
25. PPP – Public Private Partnership ?
Goals
Use Government resources to attract private investments
Improve efficiency in service delivery
PPP approach
Private Sector contribution for:
Financial investments
Improved Technologies
Efficiency in service delivery
Public Sector contribution for:
Financial gap funding to make projects commercially viable
Providing institutional support guidance & regulation
AEON Consultants 25
26. PPP – Public Private Partnership ?
Types of Asset O&M Capital Commercial Duration
Contracts Ownership Investment Risk (Yrs)
Service Public Private & Public Public 1-2
Contract Public
Management Public Private Public Public 3-5
Contract
Lease Public Private Public Private 8-15
Concession Public Private Private Private 25-30
BOT/BOOT Private & Private Private Private 25-30
Public
AEON Consultants 26
27. PPP – Public Private Partnership ?
Public Private Participation is gaining increased prominence in developing countries
Investments flows to infrastructure projects with private participation in developing countries
grew by 12% to US$ 64 billion
China has executed around 406 infrastructure projects during the period 1990-2004 with a
cumulative investment of US$ 67 billion
Greenfield projects (i.e., BOO, BLO, BOT, BOOT) most common format of Public Private
Partnerships
Indian Urban Infrastructure sector needs to learn from and build upon the international
experience to harness the potential of PPP
AEON Consultants 27
28. Indian Ports
India has got 14,500 km of navigable waterways, which comprise of
rivers, canals, backwaters, creeks, etc
Presently, about 37,00 km of major rivers is navigable by mechanized crafts but actually only
2000 km is being used
160 tonnes of cargo is transported through Inland Water Transport
There are 12 major ports in the country apart from 139 minor working ports along the coastline of
about 5,600 km.
The 12 major ports of the country have, on the other hand, handled a total of 519 million tonnes
of cargo during the year 2007-08, registering a growth of 12% in cargo throughput. Last year, the
ports handled 463 million tonnes
Major ports are the direct responsibility of the Central Government while the minor/intermediate
are under the management of the state governments
Kandla, Mumbai, Mormugao, New Manglore, Cochin and Jawaharlal Nehru Port are the major
ports of the west coast while
Indian ports handle large quantities of commodities such as crude, iron ore, steel
products, fertilizers, food grains and cement. Apart from these electronics, textile, stationery, auto
AEONancillaries, leather and jute products are also transported via ports
Consultants 28
29. Indian Ports
Significantly, India's port sector has emerged the unsung hero in India's efforts to increase its
global presence.
The country's booming economy along with its foreign trade has given a tremendous boost to
the sector, which has been instrumental in increasing India's share in world trade from 1.1 per
cent in 2004 to 1.5 per cent in 2006
India's share in world trade is likely to increase to 2 per cent by 2009
With a growth rate of 19 per cent, India's container cargo traffic is estimated to reach 21 million
TEUs(Twenty Foot Equivalent Units) by 2016
The share of non-major ports in cargo traffic has increased from less than 10 per cent in 1990
to the current level of 26 per cent
AEON Consultants 29
30. Indian Ports – all major(pink) and a few minor ports
AEON Consultants 30
31. Traffic & Capacity for major ports for last 6 years
TRAFFIC CAPACITY
YEAR (Million GROWTH (Million GROWTH
Tonnes) Tonnes)
2001-02 287.59 343.95
2002-03 313.55 9.03 362.75 5.47
2003-04 344.8 9.97 389.5 7.37
2004-05 383.75 11.30 397.5 2.05
2005-06 463 20.57 457.125 15
2006-07 519 12.09 660 15
AVERAGE AVERAGE
GROWTH (%) 12.52 GROWTH (%) 8.97
AEON Consultants 31
32. Projected traffic & capacity for major ports for next 6 years
PROJECTED TRAFFIC (Million Tonnes) PROJECTED CAPACITY
@ 15% growth per annum (Million Tonnes)
2007-08 583.64 2007-08 758.73
2008-09 671.18 2008-09 872.54
2009-10 771.86 2009-10 1003.42
2010-11 887.64 2010-11 1153.93
2011-12 1020.78 2011-12 1327.00
2012-13 1173.90 2012-13 1526.00
AEON Consultants 32
33. Indian Ports – Presently Inadequate ?
In its representation to National Manufacturing Competitiveness Council (NMCC), FICCI has
urged the Government of India to target over Rs 1 lakh crore(~USD22.2 billion) of investment
in ports by 2012-13 so as to support the 12% manufacturing growth.
FICCI noted that Indian exports are growing at more than 20% since 2002-03 and last year
(i.e. 2005-06) imports grew by 28% mainly on account of demand from manufacturing sector
for raw materials, intermediate goods and capital goods
In addition to the current growth rate in cargo traffic if we consider the likely impact of various
FTAs and multilateral trade agreements that India is going to have in the near future on our
trade, FICCI feels that the projected traffic could reach 1174 million tonnes by 2012-13 at
major ports
To support this traffic, around 1500 million tonnes of capacity is required at major ports by
2012-13, noted FICCI (Here, the underlying assumption is to add 30% surplus capacity over
the projected traffic for the year).
The present capacity is only around 750 million tonnes
Already, 276 projects entailing an investment of US$ 13.70 billion have been identified. These
include development of new berths, expansion and upgradation of existing berths, deepening
of channels, equipment modernisation and upgradation of rail and road connectivity
AEON Consultants 33
34. Indian Ports – Presently Inadequate ?
Currently, Indian ports have a capacity of 750 million TPA. In comparison, China has an
installed capacity of 5.6 billion TPA
Indian ports are working at much higher capacity utilization, 90%, as against world
standards, wherein capacity is generally pegged at 120 per cent of estimated port traffic to
ensure smooth functioning of the port
Currently, most of the ships carrying cargo from East to West break their bulk at
Colombo, Hong Kong, or Singapore (this is trans-shipment port - shipment of goods to an
intermediate destination before reaching its final port)
At present, 80 per cent of the Indian containers are trans-shipped at Colombo, Singapore, and
Dubai.
Most of the major ports in India are not automated and require up gradation. They are grappling
with low productivity compared with world-class ports such as Singapore
For instance, the time taken for clearing import cargo and shipping export cargo is 21 days and
19 days respectively in India as against 3 days and 5 days in Singapore.
In terms of railway costs Indian shippers incur 7.9 cents per km. as against Canadian railway
cost of 2 cents.
Further, the logistics costs in India accounted for 13% of GDP compared to 11% in Japan; 10%
in Europe and 9% in the US on account of poor logistics infrastructure at ports in the country
AEON Consultants 34
35. Indian Ports – Bottlenecks ??
Inefficiencies at the ports affecting the traffic has been a major reason behind not growing at a
reasonable rate and lagging behind in the global race
Although container traffic has grown rapidly at the major ports in India, inefficiencies due to
infrastructure bottlenecks still persist
Infrastructure bottlenecks have led to higher dwell time, thus hampering container traffic
growth
Weak regulatory structures of major ports
AEON Consultants 35
36. Indian Ports – Various State Scenarios
Gujarat state, with the pioneering work being carried out by its port authority, Gujarat Maritime
Board (GMB), has already established its leadership position among maritime states of India
GMB ports have registered a cargo throughput of 147 million tonnes during the fiscal year 2007-
08 as against 132 million tonnes they handled the year before.
Maritime states of Maharashtra, Andhra Pradesh (AP) and Tamil Nadu (TN) are neck to neck in
comparison when it comes to claiming the No 2 position after Gujarat in port development
In east coast it is Andhra Pradesh as in west coast it is Gujarat !
There is more of an integrated development happening in Andhra Pradesh than elsewhere in south, either
SEZ or industrial activity and connectivity. The state is supporting in land acquisition etc
TamilNadu (east coast) will come closer to Andhra Pradesh but the issues their are related to
land acquisition and when you go down south hinterland gets narrower
In terms of traffic volume it is Maharashtra(West coast). There is plenty of cargo availability and
ports like Rewas, Dharmadhar, Ratnagiri, Dighi would add more pace to throughput in due
course
AEON Consultants 36
37. Indian Ports – Government plans..
Under the National Maritime Development Program (NMDP), the major thrust is on private
sector participation.
66 percent of the total investment outlay is expected to the contributed from the private sector
Of this, NMDP has expected a total capital expenditure requirement of RS 55,800
crore(~USD12.4 billion) to expand the existing port capacities
Private players are expected to pump in Rs 34,500 crore(~USD7.66 billion), either as operators
of container terminals or by forming joint ventures with port authorities
Further, 360 projects have been outlined for all ports put together, including expansion of
ports, improvement in hinterland - inland region lying behind a port - connectivity, and deepening
of ports (aimed at improving ports statistics)
Opening up of this sector for private participation and inducing favorable policies to promote
investments will turn out to be the key so successful implementation of the huge capacity
expansion project
AEON Consultants 37
38. What do we have planned for ports in India and AAJ ?
PORT AUGMENTED
DESIGNER CITIES
AEON Consultants 38
39. Proposed concept – A Multi-Product SEZ City augmented with a PORT
A designer city with a multi-product SEZ status would be an “IDEAL” location for any
manufacturing industry when very near to a world-class port.
Not only would the tax benefits be applicable to the trading done via the ports but also to the
developer of the port
The tremendous savings on transportation of goods from the factory to the port will further
provide an incentive to the industries
The strategy is in line with FICCI (Federation of Indian Chambers of Commerce and Industry) –
E&Y(Ernst and Young) paper on “transforming Indian ports into world class facilities”
The FICCI-E&Y paper calls for focusing on three imperatives if the Indian port and shipping
sector is to become competitive and world class. These include:
Focussed infrastructure development
Facilitating trade through an innovative mix of IT and other value added services
Promoting competition through privatisation
AEON Consultants 39
40. PROBABLE AREAS IDENTIFIED…
Chennai-Bangalore-Mumbai industrial corridor
The Karnataka Government in the State has planned to develop an industrial corridor along the
national highway connecting Bangalore and Mumbai and also between Hubli and Bellary
Main idea behind creating an industrial corridor was to see that all districts along the highway
were industrially developed
The State had been divided into six industrial zones and the Government had already identified
the nature of industries that could come up, based on locally available raw materials
Bellary, where iron ore was available in abundance, was suited for steel industries, while
Gulbarga and its surrounding places, which were rich in limestone deposits, were ideal for
cement factories
Hubli-Dharwad and Belgaum would be given an opportunity to start automobile industries and
IT/BT units
Food processing units would be started in Bijapur, Bagalkot and Shimoga which are well known
for their horticultural produce
AEON Consultants 40
41. PROBABLE AREAS IDENTIFIED…
AP North Coastal Corridor
The Government of Andhra Pradesh intends to develop Coastal Corridor covering the
Districts of Srikakulam, Vizianagaram, Visakhapatnam and East Godavari Districts for
providing connectivity through various modes of transport to potentially identified ports
both major and minor and power plants of different categories namely
conventional, barge based, non-conventional power plants
The development is proposed for the integrated purpose to create infrastructure on
design, finance and build under PPP mode
Government of A.P. proposes to conduct pre-feasibility and detailed feasibility studies
on the existing pattern of road network, rail network and air links available and required
for future facilities in order to create self sustaining infrastructure, which in turn generate
revenue and improved facilities under the core sectors mentioned above
The principle objective behind this project is finally to develop the important connectivity
of along the costal regions duly exploring the potentials under various natural resources
in the coastal districts
AEON Consultants 41
42. AP NORTH COASTAL CORRIDOR – Development Plans
SECTOR SKLM VZM VSP EAST
GODV.
TRANSPORTATION TOTAL PROJECT
1. a) Coastal Roads 130 km 52 km 100 km 156 km 438 KM Pre-feasibility study on
1.existing road pattern
b) Link roads 0 68 80 80 228 KM
a. nature, serviceability, land availability, New alignment with
130 120 180 236 666 KM connectivity to other salient units under, the proposed corridor
2. Rail Network Study on existing rail links between ports and feasibility for
2 track Port link 60 km 20 km 60 km 60 km 200 KM further requirement in the light of goods & cargo handling in the
Railwayline ports.
3. Coastal Sea route Establishment of sea Preliminary report prepared for total investment of Rs. 4628.80
route along the North crores(~USD1.028 billion)
coastal districts.
4. Air Links
a) Air Ports 0 0 2 1 3 Pre-feasibility study to be done for each air port.
b) Helistations 2 2 2 4 10
PORTS Port wise feasibility study to be conducted for its initial
feasibility.
1.Major Ports 0 0 1 1 2
2. Minor Ports 4 1 4 5 14
POWER Pre-feasibility study to be done for each power plant for its
potential features.
Power Plants
a) Conventional 2 2 2 2 8
b) Barge based 1 1 1 1 4
c) Non-conventional 6 6 6 6 24
Source : INCAP (Infrastructure Corporation of Andhra Pradesh)
AEON Consultants 42
43. PROBABLE AREAS IDENTIFIED - PROBLEMS/RISKS ??
The lands to be acquired are vast and hence sometimes a few small chunks are unavailable
due to the presence of a settlement
The government has been proactive in acquiring lands for the projects and SEZ’s but it faces
opposition from a few opposition parties
The sole reason behind the opposition is the conversion of agricultural lands and inadequate
compensation given to the farmers/owners of these lands
The development is also expected to change the natural settings of these areas, further
strengthening the opposition
Most of the planned projects though ushering in development in the region, do not take care of
the needs of the rural folk in these areas
AEON Consultants 43
44. How do we plan to overcome these impediments ?
THE AGRICULTURAL
CITY PLUG-IN
AEON Consultants 44
45. AGRICULTURAL CITY .. ! ?
Conceived as a huge tract of land which will be utilised for large-scale mechanised agricultural
activity
The agricultural activity shall be carried out in a corporate manner and will follow either a model
of contract farming or co-operative, depending upon which is the more suitable one
The land owners shall have contracts with the corporate where-in they would retain the
ownership of their land and receive an income which would be decided on the basis of his land
area and produce per unit area.
The tract of land shall be provided with infrastructure facilities like reservoirs, irrigation
grids, wind energy based power(windmills) if feasible etc., to provide the output an insulation
from natural mishaps like floods, famine etc
The people stand to gain from the proposal as they get a fixed income, better
equipment, improved farming practices, better infrastructure support and hence higher produce
The corporates mostly visualised as a food processing firm or a a firm like a textile firm shall
have control over which crop to be grown based on their needs. This ensures availability of raw
goods at cheaper rates and huge cost savings in transport, be it from the farm to the factory or
factory to the port for export.
AEON Consultants 45
46. AGRICULTURAL CITY .. ! ?
The processing units shall be under the SEZ and hence the before mentioned tax incentives
would apply
We on the other hand would not face the opposition other projects have faced as the people in
this scenario will only stand to gain, though proper awareness regarding the project shall have
to be done and any possible loop holes in the plan after discussion with experts plugged
In brief, we plan to promote even those industries in our SEZ which would find it in their best
interest to enhance agriculture in the vicinity. The location of the land and it’s suitability for
various crops shall determine the nature of both the industry and the crop
Further the agricultural plug-in would go a long way in bringing an urban lifestyle to the rural
poor as time progresses soon
AEON Consultants 46
47. INDIAN AGRICULTURE – AN OVERVIEW
About 70% of the population, and about 75% of the poor, live in rural areas and most depend on
agriculture
Agriculture provides livelihood to 60 percent of the rural people and remains vital for food security
In the past decade (1995/96-2004/05) India's agricultural growth rate slowed down to less than 2
percent per year, compared to about 3.5 percent per annum in the preceding decade
In the poorest states, such as Madhya Pradesh, Orissa, and Rajasthan, growth in the last decade
was below 1 percent per year
The stagnation of agriculture, the high proportion of poor dependent on it, and the widening rural-
urban income gaps are the major concerns of the Government of India (GOI)
Yields of major crops (foodgrains, oilseeds, other cash crops) in India are lower than in many
other countries - for example, rice yields in India are one-third of China’s and about half of those
in Vietnam and Indonesia
The virtual collapse of the agricultural extension system in most states limits farmers' access
to better technologies and practices
AEON Consultants 47
48. INDIAN AGRICULTURE – AN OVERVIEW
The effectiveness of the public agricultural research system is undermined by weaknesses in the
agricultural research system such as:
bias towards irrigated agriculture
weak prioritization
proliferation of programs
top-down programs
weak cost effectiveness
The sustainability of land and water resources is at risk with increasing soil degradation and the
over-exploitation of groundwater in many areas
In addition to erosion, salinity and alkalinity, soils are also losing carbon and micronutrients due
to unbalanced fertilizer use
Nearly 30 percent of the blocks in the country are presently classified as semi-critical, critical or
overexploited as groundwater use exceeds the rate of groundwater recharge
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49. INDIAN AGRICULTURE – AN OVERVIEW
Succinctly put, following are the issues with indian agriculture
Farmers own small tracts of land making the use of machinery on their farms financially
infeasible for them
Further due to the area being small and no uniformity followed in what is being grown by
various farmers, the productivity decreases and sometimes also leads to degradation of soil
fertility
Farmers are not provided with the adequate infrastructure support in terms of power,
irrigation, flood protection etc.
Awareness of the modern farming practices is not there leading to farmers not getting
optimum outputs
Farmers are taken advantage of by the intermediaries between them and the markets
Agriculture in India needs to be modernized, organised and carried out in a professional manner
India is a major exporter of cash crops like cotton which are the raw materials of various industries like
textile
Properly planned co-ordination between agriculture and agri-industries can highly propel the incomes of
both the farmers and the industries.
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