Transport environment PERSPECTIVES

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Transport environmentPERSPECTIVES

• B.V.L.Narayana
• SPTM/ RSC/ BRC

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OBJECTIVES

• TO EXPOSE THE CLASS TO THE CHANGES OCCURRING IN
  THE TRANSPORT SECTOR
• POLICY ISSUES
• CHANGES IN MODAL BUSINESSES
• ATTAIN AN OVERVIEW OF THE INDUSTRY
• UNDERSTAND THE DYNAMICS OF THE INDUSTRY
• FACILITATE CREATION OF A BASE OF KNOWLEDGE FOR
  UTILISATION FOR THE THEME PAPER

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Structure of presentation

• Present status of transportation industry
• Look at policy perspectives
• Eleventh plan
• National integrated transport policy-2001
• Status of modes of transport
• Railways, roads, shipping, airways
• Trends in customer requirements
• Logistics and SCM evolution
• Some issues for discussion
• Emphasis on railways approach paper

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ROLE OF TRANSPORT --ECONOMY

• Economic functions (Fromm 1965)
• Input to production process
• Help in shifting of production possibility
  frontier
• Alter factor costs
• Reduce inventory costs
• Increase factor mobility
• Optimize economic value generation for factors
• Increase welfare of people
• Provide access to services- jobs, health care etc
• Improve social cohesion
• Improve security

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Transport role in economy

• Rural transport improvements
• Lower agriculture production costs
• Develops non agricultural rural economy
• Urban transport improvements
• Improves labor accessibility
• Improves access to amenities
• Inter- urban transport improvements
• facilitates trade

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Role of transportation

• Efficient system necessary for
• productivity
• Competitiveness
• Necessitates
• Adequacy
• Reliability of transport infrastructure and
  services
• Role of government crucial

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Perspectives --economy

• Growing Indian economy6-9
• Globalization
• Increasing international trade
• Technological changes
• Increased use of ICT
• Newer and complex technologies
• Integration of economies
• WTO and GATT agreements
• World energy crisis

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Issues in transportation

• confronted with the changing pattern of
  industrial production and geography away from
  traditional industries and clusters towards a
  more dispersed pattern embodying high value and
  low volume manufactures.

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PERSPECTIVES

• Scenario dominated by
• Roadways
• Railways
• Attempt
• To develop other modes
• Develop in an integrated manner
• Achieve efficient, safe, sustainable regionally
  balanced system
• Each mode economically useful and self sustainable

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Transport environment

• Task force on integrated transport policy 2001
• Traffic elasticity GDP will decreaseat 1
• Share of high value low volume traffic will
  increase
• Integrated transport policyIssues in system
• Consumes 40 of energy
• Slow technological development
• Low investments in capacity building
• Low share of rail traffic
• Capacity constraints-- require investments

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Transport environment

• Study forecasting up to 2025-2026
• RITES Planning commission
• LOOK FOR ROUTE WISE PLANNING
• USE OF IT
• Provide complete logistic solutions
• Develop logistic hubs
• Sustainable transport policy
• Maintain high economic growth
• High resource generation
• Prudent use of natural resources
• Protection of environment
• Social progress

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Core philosophy ITP 2001

• View transport system
• As an Integrated structure
• Where Modes
• complement each other
• interface each other
• Compete with each other
• Are efficient
• Take advantage of key characteristics

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Policy objectives

• Meet demand generated by economic growth
• Ensure development
• With equal regional participation
• Capacity augmentation
• With priority for maintenance
• Optima inter-modal mix
• Higher generation of internal resources
• Promote safe, environment friendly, sustainable
  system

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Transport environment

• Objectives of policy
• Develop an economically rational inter-modal mix
• Develop efficient sustainable, safe, regionally
  balanced network
• Improved service and network development
• Optimal inter-modal mix and freight passenger
  mix for railways
• Increase rural connectivity
• Promote efficiency in operations add value and
  provide value to customers
• Develop and maintain an updated database
• Intra regional and inter regional
• Increase rail share of traffic

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Issues policy level

• Expansion, modernization, technology up gradation
• Old assets to be replaced
• Slow technology induction
• require capacity expansion
• An opportunity for catching up

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Issuespolicy

• Pricing and financing
• Requires scaling up of investments
• 3-4 times present level
• Higher budgetary support
• Greater internal resource generation
• Other sources
• Pricing to
• Conform to actual resource used
• Subsidies
• Rare societal considerations
• explicit

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Issues --policy

• Use pricing, taxation, subsidy to
• Develop an optimal inter-modal mix
• Promote efficiency in operation
• Enhance revenue generation

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Issues --policy

• Energy , environment
• consumes 40 of energy
• Conflict with environment
• Pollution
• Land use
• Intrusion into spaces
• Congestion
• Impact on other sectors
• Need to look at environmental concerns

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Issues --policy

• Private sector participation
• Distinguish between
• Infrastructure development
• Service provision
• To be involved in both
• Aim to provide open access to infrastructure in
  all modes
• Garner resources through participation

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Regulatory framework--policy

• Sector prone to market failures
• Public goods
• High capital costs
• Require economies of scale
• Element of sunk costs
• Externalities
• Pollution, congestion, land use
• Impact production of services
• Individually natural monopolies

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Issues --policy

• Regulatory frame work
• Required for
• Prevent exploitation of natural monopoly
• Monitor quality of services
• manage competition
• Ensure responsiveness
• Settle disputes on use of infrastructure
• Need to be independent

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Initiatives tenth plan-railways

• Initiatives
• Container train operations opened for all
• DFC
• Liberalization of siding policy
• Incentive schemesfreight, terminals
• RVNL
• PPP cell
• for development of logistics chains
• Dedicated power plants

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Concerns in tenth plan- railways

• Neglect of piecemeal traffic
• Poor penetration of containerization
• Line and terminal capacities
• Mechanization of freight terminals
• Security concerns
• Poor project implementation
• Asset reliability

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Eleventh five year plan targets
INDICES 2006-07 20011-12
Freight (M MT) 726 1100
Freight (BTKM) 479 720
Passenger (Mil) 6400 8400
Passenger (BKm) 683 880
Frt 5 yrs M MT 3031 4713
Frt 5 yrs BTKM 2060 3036
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Issues for Discussion

• In what business we are in?
• Do we estimate demand?
• Who can help us in estimation of demand?
• How do we cost services?
• Do we need to change Mgmt/ orgn structure?

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Throw forward of projects on railways (planning commission)   Throw forward of projects on railways (planning commission)   Throw forward of projects on railways (planning commission)  
  KMS Rs crore
NEW LINES 8132 31,519
GUAGE CONVERSION 7148 10,417
DOUBLING 3213 7,314
ELECTRIFICATION 1,952 1,080
TRAFFIC FACILITY WORKS/nos 325 2,044
METROPLITAN TRANSPORT   3,820
TOTAL   56,194
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 PERFORMANCE OF RAILWAYS ( planning commission)   PERFORMANCE OF RAILWAYS ( planning commission)   PERFORMANCE OF RAILWAYS ( planning commission)   PERFORMANCE OF RAILWAYS ( planning commission)   PERFORMANCE OF RAILWAYS ( planning commission)   PERFORMANCE OF RAILWAYS ( planning commission)   PERFORMANCE OF RAILWAYS ( planning commission)   PERFORMANCE OF RAILWAYS ( planning commission) 
  ACTUAL TARGET ACTUALS   ACTUALS   ACTUALS   ACTUALS   ACTUALS  
  2001-02 2006-07 2002-03 2003-04 2004-05 2005-06 2006-07
ORIGINATING FREIGHT/MT 492.5 624 518.7 557.4 602.1 666.5 728.4
FREIGHT)BNTKMS 333.2 396 353.2 381.2 407.4 439.6 475
ORIGINATING PASSENGERS/ Millions 5169 5686 5048 5202 5475 5832 6352
PASSENGERS/ BPKMS 494.2 593 515.4 542.1 576.6 616.6 691.8
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Transport environment--railways

• Issues in railways
• Slow increase in capacity
• Slow increase in volume handling
• Slow execution of projects
• Slow penetration of containerization
• Low share in traffic
• High tariff of energy charged to railways
• Other issues in sector
• Encourage pit head/coastal power plants

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Objectives eleventh plan- railways

• Create adequate capacity to cater to
• Long term growth
• Medium term growth
• Provide improved services
• Railways- Capacity expansion will give benefit in
  12th plan so
• Capacity enhancement through quick yielding
  investments
• Utilize capacity enhancements in rolling stock

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Challenges in eleventh plan-railways

• Double its transport capacity
• Reduce unit costs of operations
• Improve service levels
• To achieve this concentrate on
• Investmentsstrategic capacity expansion
• Core business of providing logistic solutions to
  freight and passenger customers
• Institutionalize market responsive pricing and
  planning policies
• Provide cost efficient door to door and
  customized services

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KEY ISSUES FOR RAILWAYS

• NEW ASSET INVESTMENTS AT HIGHER LEVEL215000
  CRORES
• REPLACEMENT OF ASSETS- 60000 CRORES
• INCREASED INTERNAL GENERATION
• EXTRA BUDGETARY SOURCES
• RATIONALISE TARIFFS
• REDUCE CROSS SUBSIDIZATION

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ISSUES FOR RAILWAYS

• CAPACITY ENHANCEMENT
• Dedicated freight corridors
• Other routes
• Low cost capacity expansion
• Route wise planning
• Investments in mineral routes
• Investments in feeder routes to DFC
• Rolling stock increase
• Increased production facilities
• Short term capacity enhancement
• Manage seasonal and directional variations
• Higher axle loads
• Investments in maintenance practices

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Issues for Railways

• Technology up-gradation
• Longer trains
• Optimize utilization of coach capacity
• Reduce speed differentials
• High speed freight stock
• Improve freight terminal approaches
• Use of IT for improved service delivery
• UTS
• Universal ticketing at doorstep
• FOIS
• Improve project management

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Transport environment

• Road sector
• Increase in capacity of network
• Integrate development of state highways with
  existing network
• Develop Asian highway network
• Poor maintenance of network
• Induction of technologyhigh axle load
• No tax collection barriers
• Emphasis on rural connectivity
• Resource constraints

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Objectives for 11th plan roads

• Develop roads as part of integrated transport
  system
• Expedite NHDP
• Removal of deficiencies on high density
  corridorNH
• Enhance high density corridorsSH and MDRs
• Emphasis on express way development
• Emphasis on NE connectivity
• Rural connectivity
• Get resources from private sector

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Issues in road sector

• Unable to handle traffic densities and speed
• Poor riding quality
• Need speeding up of investments
• Improve maintenance
• Safety on roads
• Increase length of expressways
• Need for capacity standards to be identified
• Integrated development of road network
• Integrated road transport development plan
• Pollution control
• Barrier free movement
• Overloading

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Issues with development of road sector projects
management

• Constraint of resources
• Thin spreading of resources
• Delay in pre-construction activities
• Poor contract management
• Weak contractors
• Poor implementation capacities
• Poor maintenance
• Non plan activity is neglected
• Multiple agencies involved
• No proper standards

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Issues in road transport

• Fuel consumption
• 5.7 per year 1980-2004
• 3 per year thereafter
• Vehicle population increasing rapidly
• Total by 11
• HCV 7
• Road Network increased by 4.5
• Poor safety and environmental management

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Barriers to road transport

• Seven different agencies for clearances to do
  transport
• Taxes central and state
• Stoppages and checks at check posts
• Multiplicity of laws for access to roads
• Barriers to interstate transport
• Checks for overloading, weighments

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Measures to prevent overloading

• Discourage increase in axle load permissions
• Discourage modification in designincorporate in
  registration certificate
• Install in motion weigh bridges
• Enforcement at source of loading
• Repeated lapses leads to deregistration of
  companies
• Offload and handle at detection pointssupreme
  court directive

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BHARAT NIRMAN

• Target by 2009
• Build 146915 km of rural roads
• Connect 66802 inhabitations
• Upgrade 1.94 lakh km of existing rural roads
• Needs 78000 crores
• 25000 crores required by states for renewal
• Core network of 1.4 million km (DR)
• Requires 14000 crores yearly for maintenance

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Rural road connectivity

• Build 146915 km of rural roads
• Developed as part of rural development
• Now segregated under PMGSY
• Now integrated with bharat nirman
• Aim to provide connectivity to habitations with
  1000 population
• Link rural roads with existing network
• Provide infrastructure at village level

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Impact of rural road connectivity

• Improvement in transportation services
• Diversification of agriculture
• Improved market access
• Diversification of livelihood opportunities
• Improved services
• Improved out reach in state
• Decline in incidence of poverty

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Shipping --perspectives

• Rising import and export volumes
• Critical for maritime trade
• Objective to double our foreign trade
• 8.4 million GT 1.1 of world GT
• Tonnage stagnant till 2004-05
• Contributes 2 to 2.5 of GDP
• Emphasis on multimodal transportation
• Containerization 574 million TEUs by 2015 6
  growth
• Ports handle 800 million tonnes -2012

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Trends impacting shipping

• Globalization of businesses
• Increasing international trade
• Global ownership and management of port terminals
• Increased private sector participation
• Increased trends towards
• Multi modal transportation
• Containerization 574 million TEUs by 2015 6
  growth
• bigger ships
• In India large role for state and private owned
  terminals
• Use of IT
• WTO negotiations and commitment to services

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Eleventh plan issues

• To handle 800 million tonnes through
• Expansion and modernization
• Have deep water ports
• Achieve international productivity norms
• Capacity augmentation through PPP mode
• Rail road connectivity
• Emphasis on
• Non major ports
• Competition and transparency in services
• Redeployment of surplus assets
• EDI
• Regulatory framework

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National maritime development programme

• Total investment 100,339 crores
• Port sector 55804 crores
• IWT and shipping 44555 crores
• Time line completion by 2011-12
• Port sector
• 276 projects
• 34505 crores private sector participation
• Port connectivity
• Ten road projects329.5 km-2036 Cr
• Eight rail projects961.5 km- 2119 Cr
• 4 road and 5 rail under consideration
• All ports to have four lane road DL rail

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Issues in shipping

• Increase GT in line with international trade
  share
• Expand coastal shipping
• Expand role for IWT
• Increase scope for multi-modal transport
• Increase ports infrastructure and connectivity
• Low productivity

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Air transport- perspectives

• Preferred mode for
• Long distance travel
• Business travel
• Accessing difficult terrains
• Transporting high value and perishable
  commodities
• Achieves great speed and saving of time
• Now affordable competing with other modes
• Unexpected growth in private sector

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Perspectives-airways

• Infrastructure development in tenth plan
• Modernization of metro airports
• new metro airports
• Approved plan for modernization of 48 other
  airports
• Facilitation of customs for air cargo
• 100 FDI permitted
• Liberalization of air service agreements
• Objectives in 11th plan
• Improve infrastructure
• Encourage passenger and air cargo streams
• Connectivity to NE

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PERSPECTIVES--airways

• Traffic projections
• 13.5 CAGR in tenth plan for international stream
  of passengers
• 21.8 CAGR in tenth plan for domestic stream of
  passengers
• Eleventh plan forecasts( BY 2011-12)
• 15.9 international
• 19.9 domestic
• 540.4 lakh international
• 1513.16 lakh domestic
• 860.8 thousand tonnes international cargo
• 1822.7 thousand tonnes domestic cargo

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Evolution of logistics integration
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Extent of outsourcing of 3PL
As percentage of total logistics costs
Area 2008 2011-13
N.America 49 56
Europe 61 69
Latin America 48 59
Asia Pacific 57 64
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Indian logistics industry

• Indian GDP 1 trillion dollars
• GDP will grow at 5 over next ten years
• Logistics costs 14 of GDP
• Will reduce to 10 of GDP in next ten years
• Value of industry 140 billion dollars
• Transportation costs
• 40-45 of total logistics costs
• Industry size 56 63 billion dollars

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Issues with approach paper

• Why are financial targets for revenues not
  highlighted?
• Marginal increase in revenue per million tonnes
  handled proposed, why?
• Are we capable of spending the money?
• Can we commercialize technology innovations
  within the plan?

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Total transport system studyRITES
2008-09--findings

• Policy level
• Synergise, integrated plan for all modes
• Allocate based on niche domain cost advantage
  based on resource cost
• Identify gaps between optimal and actual modal
  mix for each commodity
• Link transport demand to land use. Environmental
  issues
• Focus on accessibility, mobility, quality of
  life, economic development
• Resource Cost (Economic Cost Social Cost)
  (Financial Cost Shadow Price Factor Social
  Cost)

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Total transport system studyRITES
2008-09--findings
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Total transport system studyRITES
2008-09--findings
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Total transport system studyRITES
2008-09--findings
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Total transport system studyRITES
2008-09--findings
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Total transport system studyRITES
2008-09--findings
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Total transport system studyRITES
2008-09--findings
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Total transport system studyRITES
2008-09--findings
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Issues with approach paper

• Pricing is critical how do we reconcile our
  costing systems?
• Why is man power exploitation not a key area?
• Are we in business of infrastructure provision or
  service provision or both?
• Why are we not involved in bharat nirman?
• Training investment for new centres. what skills
  or areas to be covered?

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Section 80-IA of income tax act

• Explanation.-For the purposes of this clause,
  "infrastructure facility" means,-
• (a) a road including toll road, a bridge or a
  rail system
• (b) a highway project including housing or other
  activities being an integral part of the highway
  project and
• (c) a water supply project, water treatment
  system, irrigation project, sanitation and
  sewerage system or solid waste management system
• (d) a port, airport, inland waterway or inland
  port
• (ii) any undertaking which has started or starts
  providing telecommunication services whether
  basic or cellular, including radio paging,
  domestic satellite service, network of trunking,
  broadband network and internet services on or
  after the 1st day of April, 1995, but on or
  before the 31st day of March, 2003
• (iii) any undertaking which develops, develops
  and operates or maintains and operates an
  industrial park or special economic zone notified
  by the Central Government in accordance with the
  scheme framed and notified by that Government for
  the period beginning on the 1st day of April,
  1997 and ending on the 31st day of March, 2006

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Themes in 12 th plan

• Describe the big picturethe forces shaping
  India and the world, and the implications of
  these
• Create scenarios, which describe plausible,
  alternative outcomes of the interplay of these
  forces, not numerical predictions
• Should go beneath them to find the more
  fundamental issues of why sufficient change is
  not happening in these areas

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Themes in 12th plan

• Some forces/themes suggested (should be validated
  by the scenario thinking process)
• Demographics its changing shape and content,
  not just the numbers
• Opportunities for young women
• Neglected regions of the country
• Urbanization
• Climate changein Indian context
• Water

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Themes in 12th plan

• Implementation
• I am seeing sections and words (in plans)
  and not the how
• An enabling versus an interventionist
  approach to implementation
• Need innovations in policies
• Decentralize consultation processgo to small
  towns

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THANK YOU