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March 09, 2017

Essay : Infrastructure Development - A Path Towards Economic Growth

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Infrastructure Development - A Path Towards Economic Growth

Overview
  • Introduction of infrastructure. 
  • Classification of infrastructure. 
  • Development of infrastructure through different models. 
  • Government of India's policy for the development of infrastructure. 
  • India's infrastructural development in the fields of agriculture, transport and industry. 
  • Importance of development of urban infrastructure.
For any country aspiring to excel in growth and' development, infrastructure is a vital component. The role of infrastructure can never be discounted, as it contributes both directly and indirectly to the economy. India is growing rapidly in the world where economic growth has plummetted, it offer
s very high potential for investment and growth. A country's transition from developing to a developed category, depends on infrastructure, as infrastructure supports, primary (agriculture), secondary (industries), tertiary (service) sectors. Infrastructure can be classified as hard and soft infrastructure. Hard infrastructure is also referred as physical infrastructure. This is necessary for functioning of any developing country. Physical infrastructure includes, rail, road, airports, seaport, power, irrigation, urban infrastructure etc. Soft infrastructure, i.e. the social infrastructure includes, education sector, health sector, financial system, government infrastructure, law enforcement, emergency services, defence infrastructure etc.


The major difference between the two types of infrastructure is that, the former (hard infrastructure) contributes towards 'growth' of the country, while the latter (soft infrastructure) contributes towards the 'development' of a country. For holistic development of any country an adequate balance between the two is required. Although, the leaning may be towards hard infrastructure as the results are tangible but the role of soft infrastructure is also very important. The development of infrastructure can be done on three models. These three models can be applied for the development of infrastructure. First model is government funded and managed infrastructure. Here, the private sector does not set its foot as their profit viability is not so high. Second model is private funded and managed infrastructure, but also available for public usage. Here, profit viability is conspicuous therefore private sector forays into this area. The third segment is public private partnership. A public-private ownership is a commercial-legal relationship defined by the Government of India as a partnership between a public sectors entity and a private sector entity where 51 per cent or more equity is with the private entity. This is a rather complex model where the funding and management is agreed on the basis of agreement or contract. This model has come to define infrastructure development since 1991, when we opened our economy for liberalisation, privatisation and globalisation. Here, mostly private sector know how and government funding allows the development of infrastructure. Considering India's size and population we can call India an infrastructure deprived country. At present even when India and world is growing at a relatively slower pace, but in order to sustain the economic growth, investment in infrastructure can be hardly overstated. The FDI inflow in the construction sector has been increasing over year due to the potential of growth in the field.

In 2015, Government of India announced the government's target of Z 25 trillion investment in infrastructure over a period at three years, which will include Z 8 trillion for developing 27 industrial clusters and an additional Z 5 trillion for road, railway and port connectivity projects. Further India needs Z 31 trillion to be sent on infrastructure development over the next five years, with 70 per cent of funds needed for power, roads and urban infrastructure segments. Indian economy is mainly reliant on agriculture. More than 55 per cent of our population is involved in agriculture, thereby making the sector the largest employer. For the sector to grow sustainably irrigation infrastructure needs revamping. As India is reliant on monsoon and vagaries of monsoon has created stressful situations in last few years, leading to even cases of farmer suicides.

Therefore, appropriate investment and timely implementation will bring the much desired relief in the sector. Schemes like accelerated irrigation benefit programme, river interlinking projects will go a long way. In the 2016-17 budget, government has allocated large sum for irrigation infrastructure development. The government declared that the existing schemes implemented by some umbrella schemes like, Krishonnati Yojana, Soil Health Card Scheme, Paramparagat Krishi Vikas Yojana etc.

Similarly, roads, rails, airports, seaport are very vital infrastructures which is used for trade and commerce in the country and also outside it. In 2016 budget, the government has allocated for road and rail in 2016-17 is Z 2.18 lakh crore. Projects like Pradhan Mantri Gram Sadak Yojana. Delhi, Mumbai Freight Corridor etc is a move in the right direction. Also sea ports are being upgraded by mechanised handling of cargo and increasing the cargo handling capacity. Moreover, projects like Sagar Mala will contribute a great deal towards coastal shipping and trade. To boost coastal clui shipping, it has asked all the 12 major ports to accord priority berthing to such vessels and facilitate faster movement of cargo, as a short-term 1.1) r-I measure. As a step towards comprehensive and integrated planning for Sagarmala, the government will put in place a national perspective plan for nthe coastline to identify potential geographical regions to be called Coastal
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Economic Zones. Similarly, government is diversifying the freight materials carried by railways. As road infrastructure is a major competitor for railway, railway is exploring more opportunities in outer fields also. Railways accounts for almost 30% of total freight traffic. The other very vital infrastructure is the power sector. The total installed capacity of India is almost 290 GW today. India is diversifying its energy mix as green energy is the demand of today's world. Investments in solar projects, nuclear power, wind mills is taking at a higher pace. Government has also opened FDI in these areas. Recently government had also launched UDAY for the financial turnaround of distribution companies. Through UDAY (Ujjwal Discom Assurance Yojana), government will convert all the outstanding loans of Discoms into state bonds which they can pay at a later date. Government has also floated schemes for rural electrification viz Pradhan Mantri Grameen Vidyutikaran Yojana. Power sector reform and infrastructure development is very vital as it propels growth in other sectors viz agriculture, industries service sector. Urban infrastructure for any developed state is of very importance.

Due to the fast paced life in urban areas the infrastructure should be world class. Many urban projects which have really transformed the face of city are, Delhi Metro, Yamuna Expressway, Bandra-Warli Sea Link, Maharashtra Bus Rapid Transport System, Indira Gandhi International Airport etc. They have relieved the people of the area from regular traffic snarl up. Government has also done efforts to revamp infrastructure by schemes like Smart City, Housing For All etc. These schemes will create conditions for hassle free commutation in urban areas. Two other vital infrastructure needs of urban area is solid waste management and drinking water supply. Solid waste management has become a great menace for urban areas like Delhi, Mumbai.

In the social infrastructure government effort is required all the more. As these infrastructure are not very profit making ventures so as a welfare state it is the duty of government to fill these gaps. However, private investment has started to flow in health and education sector. But due to cost factors the private social infrastructure remain beyond the reach of many common people. Government should make concerted efforts to come up with more infrastructure projects and ensure their timely execution. As the projects are often marred by cost and time overruns resulting in inconvenience for the beneficiaries and depleting tax payer's money. Government mechanisms viz special purpose vehicle and viability gap funding is relevant for infrastructure development.

Difficult Words with Meanings :
  • Plummet to fall suddenly and quickly from a high level or position
  • Tangible that can be clearly seen
  • Viability that will be successful, that can be done
  • Conspicuous easy to see or notice
  • Overstated exaggerated
  • Revamp to make (something) better or like new again
  • Vagaries an expected and inexplicable change
  • Freight goods that are transported by ships, planes, trains or trucks
  • Snarl up a situation in which traffic is unable to move
  • Menace a person or thing that causes serious damage
  • Concerted done in a planned and determined way
  • Marred to detract from the perfection or wholeness of
shared by Nisheeta Mirchandani
 
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