Lifelines of the National Economy

A field of wheat in Punjab feeds a family in Kerala. A phone made in one city is sold in a thousand others. Tea grown in Assam is drunk in London. None of this would be possible without the networks that move goods, people and ideas. Transport, communication and trade are the lifelines of the national economy, tying distant parts of the country together and linking India to the world. The faster and wider these lifelines, the more developed the economy.

Roadways form the densest transport network in India and carry the largest share of traffic. Roads are cheaper to build than railways. They can reach hilly and remote areas where railways cannot go. They also provide the vital "last mile" link to homes and fields. India's roads range from world-class expressways and National Highways (which connect major cities) down to village roads. The Golden Quadrilateral super-highway project links Delhi, Mumbai, Chennai and Kolkata.

Railways are the principal mode of long-distance transport for both freight and passengers, and they are the lifeline of the country. Indian Railways carries goods in bulk and takes people across the length of the land. It binds the nation together economically, socially and politically. The northern plains have level land and a dense population, so they have the thickest railway network. Mountains, deserts and forests make railway building difficult.

National Highways form only a small fraction of road length, yet they carry about 40 to 45 per cent of road transport demand. Under the old numbering system, a few routes were famous in their own right.

• NH1: Delhi to Amritsar, the northern stretch of the historic Grand Trunk Road.
• NH2: Delhi to Kolkata through Mathura, Agra and Varanasi, following the Grand Trunk Road alignment.
• NH6: Hajira (near Surat) to Kolkata, crossing Maharashtra, Chhattisgarh and Odisha, the longest east-west route.
• NH7: Varanasi to Kanyakumari, the longest National Highway in the country.

Road density, the length of road per 100 square kilometres of area, varies sharply across states. Kerala has the highest density of surfaced roads among the states. Among Haryana, Maharashtra, Punjab and Tamil Nadu, the descending order of road density is Tamil Nadu first, then Maharashtra, then Punjab, then Haryana.

The Golden Quadrilateral is joined by other long corridors, national and international.

• North-South Corridor: Srinagar to Kanyakumari, spanning the country top to bottom.
• East-West Corridor: Silchar in Assam to Porbandar in Gujarat. The endpoints are Silchar and Porbandar, not Dibrugarh and Surat.
• India-Myanmar-Thailand Trilateral Highway: runs from Moreh in Manipur to Mae Sot in Thailand. It ends at Mae Sot, not Chiang Mai.
• BCIM Economic Corridor: a proposed Bangladesh-China-India-Myanmar corridor connecting Kolkata with Kunming in China. The Indian terminus is Kolkata, not Varanasi.

Indian Railways is the largest railway network in Asia, but it is only about the fourth largest in the world, behind networks such as those of the USA, China and Russia. The network is run through zones, each with its own headquarters. Some pairings are favourite test points.

• North Eastern Railway: headquartered at Gorakhpur.
• Eastern Railway: headquartered at Kolkata.
• South Eastern Railway: also headquartered at Kolkata, not Bhubaneswar.
• South East Central Railway: headquartered at Bilaspur.

The Konkan Railway is a roughly 760 km line along the west coast through Maharashtra, Goa and Karnataka, reaching towards Kerala. It is the only rail route that cuts across the Western Ghats. Its construction was financed by issuing bonds, not by a public share issue.

Two modern initiatives matter for exams. The National Rail Plan sets capacity and freight targets for the year 2030. Kavach is an indigenously developed Automatic Train Protection system. It uses RFID tags fixed on the track to prevent collisions and signal passing at danger. It involves no German or other foreign collaboration.

Three more modes complete the transport picture.

Pipelines are a modern way to carry liquids and gases (crude oil, petroleum products and natural gas) over long distances cheaply and without loss, straight from oilfields to refineries and markets.

Waterways are the cheapest mode of transport, ideal for carrying heavy and bulky goods over long distances, as they need no road or track to be built. India has inland waterways on its rivers and canals. It also has busy major ports along its long coastline for overseas trade.

Airways are the fastest, most comfortable and most prestigious mode, able to cross mountains, deserts and oceans with ease. But air travel is the costliest, so it is used mainly for valuable, urgent goods and for long-distance passengers.

India's seaports fall into two legal classes. Major ports are administered by the central government. Examples are Kochi, Paradip and New Mangalore. Non-major ports come under the state governments. Dahej in Gujarat is one example. A few individual ports carry distinctions that examiners love.

• Kamarajar Port (Ennore): the first major port in India registered as a company.
• Mundra: the largest privately owned port in India.
• Jawaharlal Nehru Port: the largest container port in India. Visakhapatnam is not the container leader.
• Visakhapatnam: handled the highest tonnage of import cargo among Indian ports.

Linked to the ports is shipbuilding. Cochin Shipyard is India's largest shipyard.

A Greenfield airport is built from scratch on a fresh site. A brownfield airport expands or upgrades an existing facility. Donyi Polo Airport at Itanagar and Kushinagar International Airport were built as Greenfield projects. Vijayawada International Airport, by contrast, is an expansion of an existing airport, so it is not Greenfield.

Communication is the passing of information, and it is of two kinds. Personal communication links two people, such as a letter, a telephone call or an email. Mass communication reaches a large number of people at once, through radio, television, newspapers, magazines and films. It both informs and entertains the public.

India has one of the largest postal and telecommunication networks in the world. The spread of mobile phones and the internet has revolutionised how people connect, do business and access services. Distances have shrunk dramatically.

Trade is the exchange of goods and services. Trade between two countries is called international trade, and it is considered the economic barometer of a nation's prosperity.

The goods a country sells abroad are its exports, and the goods it buys from abroad are its imports. The difference in value between a country's exports and imports is its balance of trade. When exports are worth more than imports, the balance is favourable (a surplus). When imports exceed exports, it is unfavourable (a deficit). India exports goods such as software, textiles, gems and engineering products. It imports petroleum, machinery and electronics.

The composition of trade is tested in detail, so a few rankings are worth memorising. Petroleum normally tops the import bill. In the mid-1990s the broad descending order of import value ran petroleum, then capital goods, then chemicals, then iron and steel, then gems. In 2001–02, however, pearls and precious stones topped the import bill, because India imports rough diamonds in bulk, cuts and polishes them, and re-exports them.

• Edible (vegetable) oils: India's highest-value agricultural import. The volume imported exceeds domestic production, yet a customs duty is still levied on it.
• Marine products: India's largest agricultural export in the late 1990s.
• Fruit production: India ranks second in the world, not first.
• Tobacco: India grows large quantities but is not among the top two exporters.

Particular goods have classic destinations and sources. Iron ore goes to Japan. Leather goods and cotton fabrics go to the USA. Tea goes to the UK. For bauxite, Canada replaced Italy as the main importer of the Indian mineral. In the other direction, the arid countries of the Middle East send India fruits such as dates along with palm oil.

The USA is India's largest trading partner by volume of trade. Within South Asia, Bangladesh, not Nepal, is India's largest trading partner, and textiles are a key item of India-Bangladesh trade. Despite the growth in trade, India's share of world merchandise exports remains small, roughly 1 to 2 per cent. India's merchandise exports first crossed the 50 billion dollar mark in 2002–03, yet the country still runs a persistent merchandise trade deficit, since imports keep outpacing exports.

The reforms of 1991 reshaped India's trade. The rupee was devalued in 1991 to make exports cheaper abroad, and this, with wider liberalisation, drove the export growth of the 1990s. The EXIM Policy of 1992 was liberal and market-oriented, and it ran for five years, 1992–97. Cutting import duties on capital goods became a standard liberalisation tool: cheaper machinery lets domestic firms upgrade their technology.

India also joined the global rule system under GATT, which became the WTO in 1995. One WTO agreement, TRIMS (Trade-Related Investment Measures), prohibits measures such as quantitative import restrictions imposed on foreign investors. TRIMS applies to trade in goods only, and it does not itself regulate foreign investment. A recent policy instrument is the Production-Linked Incentive (PLI) scheme, which pays incentives on incremental output and is open to both domestic and foreign firms.

Services changed the face of India's exports. Software exports grew at roughly 50 to 60 per cent a year in the late 1990s, and the IT sector grew about 28 per cent in rupee terms in 2001–02. The strength is one-sided, though: India is strong in software exports but does not have a strong hardware manufacturing base.

Tourism has grown into a major trade in India. It earns valuable foreign exchange. It supports a huge number of jobs in hotels, transport and handicrafts. It also promotes the appreciation of India's culture and heritage. India attracts visitors for its history, its varied landscapes, its beaches, hills and wildlife, and for medical and eco-tourism. Tourism provides employment, income and cultural understanding. For these reasons, it is actively promoted as an industry.