Infrastructure Development in India
| June 21,2010 12:17 pm IST
The efficacy of private sector participation in infrastructure development would be contingent upon the capability to commercialize these projects whereby recovery of investments would be through a system of user charges. There is a potential for public private partnerships (PPPs) to contribute more and help bridge the infrastructure gap in India.
There has been considerable progress in the last ten years in attracting private investment into the infrastructure sectors; first in telecommunications, then in ports and roads, and in individual projects in other sectors.
With the current GDP growth of 8%, in which there is contribution of nearly 51% from services and 16% from manufacturing sector there is a need for proper alignment of resources. To sustain this growth India needs to develop sound infrastructure so that the right input of skilled, qualified and socially contented labor; visible and reliable supply chains; prompt and accurate information for decision making; efficient process and updated technology can be given to the operations of manufacturing and services.
The need to provide world class infrastructure that keeps pace with 8 per cent economic growth is clear. City roads are choked with traffic, power cuts are a fact of life and passengers are routinely delayed as booming air travel tests airport capacity.
Analysts say the infrastructure sector as a whole needs to grow 8 per cent a year, instead of 5 per cent at the moment, to meet the government's vision of even higher growth, more jobs and better basic living conditions for 260 million poor. Therefore there is a need to holistic approach to look in to infrastructure from the industrial perspective to enhance the quality of inputs to the operations of the company.
Infrastructure output growth for the first month of the new financial year has come in at a healthy 6.7 per cent as compared to 6 per cent for the same month of previous year. The growth rate for April is higher than the average monthly rates reported for the previous 3 months, but lower than 8.7 per cent reported for March 2006. The new economic policies aimed at stepping up economic growth, improving market efficiency and competitiveness, and integrating the Indian economy with global markets have already placed a heavy demand on all types of urban infrastructure services. The resulting bottlenecks are beginning to pose serious impediments to enhancing productivity. Urban infrastructure includes water supply and sanitation which are important basic needs for improvement of the quality of life and enhancement of the productive efficiency of citizens.
There has been a steady increase in the urban population on account of rapid industrialization, natural growth and migration from rural areas. This has prompted the working out of alternative ways of meeting the increasing transport demand given the constraints of land and capital, and the need to control energy consumption, pollution and accidents.
The general picture which emerges from the above review is that not only has the demand for infrastructure facilities and services continued to outpace supply but also the quality of existing supply is poor. The visible signs of shortfalls in capacity and inefficiencies include increasingly congested roads, power failures, long-waiting lists for installation of telephones and shortages of drinking water. The widening gap between demand and supply of infrastructure also raises questions concerning the sustainability of economic growth in future.
Sector-wise Growth Rates.