Infrastructure: Chapter test

Only in BOT (Toll) does the concessionaire finance, build and operate the road and recover its money by collecting toll for the concession period, so a fall in traffic hits its own revenue. In EPC the government pays the full cost and the contractor only builds. In BOT (Annuity) and HAM the government pays fixed annuities and keeps the toll, so the traffic risk stays with the government.

Both statements are correct, and Statement-II explains Statement-I. Highway, power or port projects have long gestation and repay over 15 to 25 years, but banks fund themselves mostly with deposits of short to medium maturity. Lending long against short liabilities creates an asset-liability mismatch and concentration risk; this was one cause of the stressed infrastructure loans behind the twin balance sheet problem. That is why the Government has built long-term channels such as NaBFID, IIFCL, InvITs and the corporate bond market.

All three statements are correct. PM Gati Shakti was launched on 13 October 2021 as a GIS-based whole-of-government platform on which ministries and States map their assets and planned projects in layers, so that roads, rail lines, pipelines and utilities are planned together. The platform was built by BISAG-N, Gandhinagar. Proposals are examined by the Network Planning Group, made up of the heads of the network-planning wings of the infrastructure ministries, and then go to an Empowered Group of Secretaries; the Logistics Division of DPIIT acts as the secretariat. Note that Gati Shakti is a planning tool, not a separate funding scheme: projects are still financed from each ministry's own budget.

Statements 1, 2 and 3 are correct, so the answer is 'Only three'. The National Logistics Policy was launched on 17 September 2022. Its stated targets are to reduce logistics cost to global benchmarks by 2030, to improve India's Logistics Performance Index ranking to the top 25 by 2030, and to build a data-driven decision-support system for logistics. It is carried out through a Comprehensive Logistics Action Plan, which includes the Unified Logistics Interface Platform (ULIP), standards, skilling and State logistics plans. Statement 4 is wrong: the policy did not create any statutory freight regulator; tariffs in each mode are still set under their own laws and authorities.

The Logistics Performance Index is published by the World Bank, usually every two to three years (2007 to 2018, then 2023). It scores countries on six components: customs, infrastructure, international shipments, logistics competence, tracking and tracing, and timeliness, mainly through a survey of logistics professionals, with new big-data measures of shipment delays added in 2023. In LPI 2023 India ranked 38th out of 139, up from 44th in 2018. The National Logistics Policy aims to take India into the top 25 by 2030.

Statements 1 and 2 are correct. Electricity is Entry 38 of the Concurrent List, so both Parliament and the States legislate on it, and the Centre's Electricity Act sits alongside State reform laws. The Electricity Act, 2003 de-licensed generation: any company can set up a thermal plant without a licence if it meets the technical standards of grid connectivity, though hydro projects above a set cost need the concurrence of the Central Electricity Authority. Statement 3 is wrong: the Act did the opposite and pushed the unbundling of State Electricity Boards into separate generation, transmission and distribution companies. It also brought in open access, power trading and regulatory commissions.

Statements 1 and 2 are correct. AERA was created by the AERA Act, 2008, after private operators took over the Delhi and Mumbai airports, to set the charges for aeronautical services such as landing, parking, ground handling and user development fees at major airports. The passenger threshold for a major airport was raised from 1.5 million to 3.5 million a year by a 2019 amendment, and a 2021 amendment let the Centre notify a group of airports as a major airport so that small airports can be bundled with profitable ones. Statement 3 is wrong: airfares are not regulated by AERA; they are set by airlines in a deregulated market, with the DGCA only monitoring them.

The MMLPs under Bharatmala are being developed by National Highways Logistics Management Limited (NHLML), a wholly owned company of NHAI, at about 35 locations, mostly on a PPP (design-build-finance-operate-transfer) basis with long concessions; the rail link and inland waterway elements involve the Ministry of Railways and the IWAI. An MMLP is a freight hub with warehousing, cold chains, customs clearance and rail-road (and in places water) links, meant to cut the cost of moving goods between modes. DFCCIL builds freight lines, CONCOR runs container depots and rail services, and the Sagarmala company funds port-linked projects.

Statement I is wrong but Statement II is correct (d). Statement I is wrong because it is reversed: interest income that an InvIT passes on to investors is taxable in their hands. Dividends are usually exempt, as long as the project company has not opted for the lower corporate tax regime. Statement II is right: the Finance Act, 2021 made InvITs and REITs borrowers under the SARFAESI Act, 2002, so lenders can enforce security against them, which makes lending to them safer.

Notice what an InvIT is: like a mutual fund for infrastructure. It pools investors' money into income-earning assets such as toll roads, power lines and pipelines, and passes on most of the income. SEBI regulates both InvITs and REITs. The government uses InvITs for asset monetisation.

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S3i focuses on three of the four (c). The UN Office for Project Services (UNOPS) launched Sustainable Investments in Infrastructure and Innovation (S3i) in 2018 to bring private money into infrastructure in developing countries. Its three focus areas are affordable housing, renewable energy and health infrastructure. Item 2 is wrong: mass rapid transport is not one of them. So options (a), (b) and (d) are wrong.

Notice that S3i projects included plans for affordable homes in countries such as Ghana, Kenya and Pakistan, and renewable projects in the Caribbean. UNOPS itself is a UN body based in Copenhagen that manages projects for governments and other UN agencies. The initiative later ran into financial mismanagement concerns and was wound down.

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Only one statement is correct (a). Statement 1 is right: the Stability and Growth Pact (1997) is a set of fiscal rules for EU members: the budget deficit should stay below 3% of GDP and public debt below 60% of GDP. Countries that break the rules face an excessive deficit procedure. Statement 2 is wrong: it says nothing about sharing infrastructure. Statement 3 is wrong: it says nothing about sharing technology.

Notice that the rules were suspended during COVID-19 and reformed in 2024, giving countries more time to cut debt. The aim is to keep the euro stable, since members share a currency but run their own budgets. India's version is the FRBM Act, 2003, which sets fiscal deficit targets for the Centre.

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Both statements are correct (c). Statement 1 is right: the G-20 began in 1999, after the Asian financial crisis, as a meeting of finance ministers and central bank governors to discuss global economic issues. It was raised to leaders' level in 2008, after the global financial crisis. Statement 2 is right: during its 2023 presidency, India pushed digital public infrastructure, such as UPI and Aadhaar-style platforms, as a key priority, and the New Delhi Declaration endorsed it.

Notice India's other G-20 wins: the African Union became a permanent member, and the theme was "Vasudhaiva Kutumbakam", One Earth, One Family, One Future. India also launched the Global Biofuels Alliance. South Africa held the presidency in 2025, the first in Africa.

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India is a member of all three (d). Item 1 is right: India is a founding member of the Asian Infrastructure Investment Bank, which began work in 2016 in Beijing, and is its second-largest shareholder after China, as well as its largest borrower. Item 2 is right: India joined the Missile Technology Control Regime in June 2016, which helps it buy and sell missile technology. Item 3 is right: India became a full member of the Shanghai Cooperation Organisation in 2017, along with Pakistan. So options (a), (b) and (c) all leave something out.

Notice India's place in the export control clubs: it is in the MTCR, the Wassenaar Arrangement (2017) and the Australia Group (2018), but its bid for the Nuclear Suppliers Group stays blocked by China.

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Only statement 1 is correct (a). Statement 1 is right because the AIIB, set up in 2016 with its headquarters in Beijing, had more than 80 approved members by 2019, and now has about 110. Statement 2 is wrong because China is the largest shareholder, with about 26% of the voting power. India is the second-largest shareholder and the bank's biggest borrower. Statement 3 is wrong because the AIIB has many members from outside Asia, such as the UK, Germany, France, Brazil and Egypt. The USA and Japan are not members.

Notice the comparison: the Asian Development Bank (Manila, 1966) is led by Japan and the USA. The New Development Bank of the BRICS is in Shanghai.

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