20 Oct

Significance of Infrastructure Sector

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Contents

• Investment in infrastructure is crucial for inclusive and long-term development
• Several initiatives in recent years to promote sustainable infrastructure development.

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Introduction:

Infrastructure is the backbone of any economy. The extent and quality of infrastructure determines the ability of the country to utilize its comparative advantage and enables cost competitiveness.

Investment in infrastructure is crucial for inclusive and long-term development because

• Infrastructure services like electricity, telecommunications, roads, rail, ports, and airports – are critical to the development of a strong, modern, productive and efficient economy.
• It reduces logistic cost and promotes export competitiveness.
• Multimodal transport system provides integrated and seamless connectivity for movement of people and goods.
• It contributes to national integration and regional development.
• Infrastructure also contributes to poverty reduction and promoting both rural and agriculture development.
  • For e.g., good roads/Railways/Storage facilities etc. ensure better income for farmers through timely market access.
• Digital infrastructure further has huge impact on all the sectors including health (e.g., telemedicine), education (e.g. MOOCs) etc.

Keeping this in mind, GoI has launched several initiatives in recent years to promote sustainable infrastructure development.

• Increasing Investment:
  • High Capital allocation for infrastructure: In last few years, government’s capital
    expenditure has regularly increased and the budgetary allocation for the FY24 for the same has reached Rs 10 lakh crores.
  • National Infrastructure Pipeline (NIP) aims to mobilize more than 100 lakh crore rupees between 2020-25 for various infrastructure projects.
  • National Monetization Pipeline will also contribute to mobilization of resources for infra projects through monetization of various brown field government projects.
  • National Bank for Financing, Infrastructure and Development (NaBFID) has been set up as developmental financial institution to set in motion a virtuous investment cycle.
  • Project Development Cells (PDCs) have been set up in all concerned ministries and departments of GOI to provide an institutional mechanism to fast track investments.
• To enhance efficiency and cost competitiveness – PM Gati Shakti and National Logistics Policy has been launched.
  • PM GatiShakti is aimed at breaking departmental silos and bring more holistic and integrated planning and execution of projects.
  • National Logistics Policy (NLP) aims to reduce the logistics cost in India and bring it on par with developed nations.
• Sector Specific Initiatives: Other than these the traditional focus on infrastructure efforts like roadways, railways, airways, ports etc have continued with various initiatives like Bharatmala Pariyojna, Sagarmala Pariyojna, UDAN initiatives, etc.

Conclusion

• These initiatives can collectively bring out untapped potential of underutilized modes of infrastructure. This buffet of reform on all aspects related to infrastructure investment and project execution not just ensure economic growth and economic efficiency but also generates confidence among various stakeholders in the economy towards government functioning. IMF has observed in case of India, increased government spending on infrastructure also leads to crowding in of private infrastructure.

Question 1: Investment in Infrastructure is crucial for inclusive and long-term development of the country. Discuss the key recent initiatives by GoI to promote sustainable Infrastructure Development in India [10 marks,150 words]
Question 2: Investment in Infrastructure is essential for more rapid and inclusive economic growth. Discuss in the light of India’s experience [Mains 2021, 15 marks, 250 words]