Economic Survey 2017: Highways construction, cargo, power-gen record growth

New Delhi: Despite facing challenging infrastructure deficit in the country aided by resource crunch, debt-laden firms and stressed assets, highways construction and cargo exports registered impressive growth in the first half of FY2017. The Economic Survey said Tuesday.

Highways construction/ widening was one area that witnessed about 10 percent growth in the first half of the current fiscal whereas, power generation saw a little over 6 percent increase and rail freight traffic recorded about 2 percent growth, as per the Survey which was tabled in the Parliament today.

Railway earnings saw a dip by about four percent in the first half of the current fiscal while cargo at major ports saw about 5 percent growth with cargo export growing by 10 percent.

"On logistics, India is handicapped relative to competitors in a number of ways," the Survey mentioned indicating that the costs and time involved in getting goods from factory to destination is greater here compared to other nations despite advantages of cheaper labour.

It mentions that logistics cost in India is a high USD 7 per km for road transport as compared to USD 2.5 in China, USD 3 in Sri Lanka and USD 3.9 in Bangladesh.

Also, customs and port clearances take 6 days here as compared to 1.5 days in China and 3 days in Sri Lanka.

"Few very large capacity containers (VLCC) come to Indian ports to take cargo so that exports have to be transshipped through Colombo which adds to travel costs and hence reduces the flexibility for manufacturers," the Survey says.

On resource crunch faced by companies especially in the infrastructure sector, the Survey states that the companies faced debt-restructuring due to higher costs, lower revenues, greater financing costs till a few years back.

"Nearly one-third of corporate debt was owed by companies with an interest coverage ratio less than 1 (IC1 companies), many of them in the infrastructure (especially power generation) and metals sectors," it said.

As slowing growth in "China caused international steel prices to collapse, causing nearly every Indian steel company to record large losses," it said.

"The government responded promptly by imposing a minimum import price, while international prices themselves recovered somewhat, thereby affording the steel industry some relief. Even so, the IC1 share remained above 40 percent in late 2016," the Survey said.

It also mentioned that the 5/25 Refinancing of Infrastructure Scheme has offered a larger window for revival of stressed assets in the infrastructure sectors and eight core industry sectors.

Most indicators of infrastructure related activities showed expansion during H1 2016-17.

It said that thermal power, with a growth of 6.9 percent, boosted overall power generation while hydro and nuclear power generation contracted marginally during April-September 2016.