Building Infrastructure: Basis to reviving economic growth in India
For quite sometime India has been facing sluggish economic growth. The various factors that are held responsible include unfavorable global economic scenario, widening current account deficit, policy logjam, weak investor sentiments, legislative hurdles and coalition politics woes. What must be prioritized to bring back the economic growth on higher end is building necessary infrastructure to support all forms of economic activities. It must be noted here that lack of quality infrastructure in India vis-à-vis China is major reason inter alia behind the low growth. Each and every sector needs a robust infrastructure in place, be it agriculture, manufacturing, trade, finance, health, education and so forth to flourish and realize their true potential.Conventionally infrastructure is classified into three types:
Physical Infrastructure: Transport facilities(Roads,Railways,Waterways and Ports),Canals,Power,Telecom.
Social Infrastructure: Schools,Hospitals,Welfare Centres.
Financial Infrastructure: Banking facilities, Other financial institutions.
All these categories of infrastructure are not watertight compartments rather inter-related and interdependent. They along with proper legal backing and policy guidelines in an integrated manner contribute to the optimum utilization of resources.
Presently India is marred by various infrastructural bottlenecks viz.
Delays in land acquisition: The land acquisition (LARR) bill remained stalled in parliament for long which in turn has had put breaks on commissioning of various requisite projects leading to inordinate delays. Thankfully, it recently got passed in the parliament which might bring in some respite.
Stalled big projects: Those like POSCO and such other more than 200 projects are still awaiting the push owing to several factors like land,fuel linkages,protests and so forth.
Stern regulations and lack of clarity over mining: Unearthing of irregularities in mining activities,specially in Karnataka has led to a huge slump in production of raw materials including coal.
Less than expected increase in road coverage: The increase in networks of roads has been far less than expected in past four years which mounts to surge in transportation problems.
High dependence on imported coal: Despite having huge coal resources in the country, a large proportion of coal for the power sector and other key areas import huge quantities of coal which at times leads to various issues arising out of rupee volatility and import policy changes.
Delays in environmental clearances and permission from local authorities: lack of single window clearance mechanism and bureaucratic delays at multiple levels remains major roadblock in execution of infrastructural initiatives.
Poor management of public distribution system: Despite of the fact that PDS has been in place for over four decades, in most of the states barring few such as Chhattisgarh, Tamil Nadu and Odisha is in a really bad shape facing high leakages and poor service delivery.
Lack of auxiliary school facilities such as toilets, playground and library: Expansion of education facilities has been a mixed bag.While there has been an impressive gross enrolment ratio, there is a high drop-out ratio in later stages. Overall development of children in country suffers due to lack of basic facilities which hampers capacity building and much hyped demographic dividend.
Paucity of grain storage facilities: There has been bumper harvest in the country of major food crops but the toil put in by the farmers go in vain at several instances due to the poor storage facilities. Food Security Law is a step in the right direction which may help in resolving this issue while feeding the hunger.
Regional disparities in development of infrastructure: There has been significant imbalance witnessed in the development of infrastructure in various states and intra state as well. Left wing extremism has also been a major obstacle in affected states in this regard.
Corruption issues: Huge scams such as that of 2G Spectrum or that coal block allocation has also affected variedly by causing Telecom companies to become overcautious and hampering of coal mining respectively.
Financial Inclusion: Rural outreach of commercial banks has been low. Low financial literacy further enhances the gravity of the problem underlined. This is even the basic premise for the recently announced cash transfer scheme for disbursement of various subsidies and scholarships.
All the aforementioned impediments have had compounded effect on various economic growth indicators giving birth to many other problems such as that of high unemployment, low industrial production, lack of investments and thus an overall slump in the economy with a lower GDP growth rate.
There’s a dire need to improvise the scenario from what it exists today. Government has been trying to give a push to all such initiatives through announcement of various policy guidelines,introduction of relevant bills in the parliament,proposals to amend the related legislation, and create an enabling environment to encourage both domestic and foreign investors. This is being done through tools such as Infrastructure Debt Funds which was announced in the budget speech of 2011-12 by the then Finance Minister Shri Pranad Mukherjee. Infrastructure Debt Funds (IDFs) help to accelerate and enhance the flow of long term debt in infrastructure projects for funding the government’s ambitious programme of infrastructure development. Another measure has been that of setting up of Special Purpose Vehicle for various infrastructural projects. Viability Gap Funding has been pitched in by the government to support infrastructural activities in projects in a number of sectors such as roads, ports, airports, railways, inland waterways, urban transport, power, water supply, other physical infrastructure in urban areas and increasingly in social sector initiatives. Furthermore The Cabinet Committee on Investments (CCI) notified in January 2013 to expedite decisions on approvals/clearances for implementation of major infrastructure projects. This is expected to improve the investment environment in the country by bringing transparency, efficiency and accountability in accordance of various approvals and sanctions.
Most of the infrastructure projects in India are run through Public Private Partnership(PPP) mode via its different forms such as BOT(Built Operate Transfer), BOLT(Build Operate Lease Transfer) etc.
There’s a need to see that all such ventures are taken up in a fair and legal manner. There’s been a pricking issue of quality control and maintenance of standards in the infrastructural projects, both brownfield and Greenfield ones. Fully functional independent regulatory authorities are much needed to keep a check on malpractices while facilitating in giving the leap to projects to take off in a time bound manner. Conversion of MRTP Act to Competition Act was a much welcomed legislation. Easing of FDI caps are also desirable measures but must be backed by a proper framework to achieve the desirable goals. Much effort must be invested in building the capacities of the people and skill-training to realize the enormous potential of our demographic dividend for which a sound education and health infrastructure is a must. While we may have best policies and legislations in place,but they may go futile if not implemented effectively and efficiently. This is what has been a major lacuna in most of our problems-poor implementation and execution of policies and laws. This calls for a more active monitoring authority. Moreover there’s a thin line between lobbying and corruption which needs to be understood and carried forward. Ever since the adoption of new economic policy, boost has been given to private sector in most of the areas;it needs to be more streamlined in this era of neo-liberal state to unleash greater heights.
It can be said that while our major macroeconomic fundamentals are doing but the growth rate has declined significantly apart from global concerns the domestic ambience can be pepped up to uplift investor sentiments and thereby bring back the economy on high growth trajectory. This is possible only when we have our basic infrastructure in all sectors in place. Building better infrastructure in a time bound manner holds the key to economic development and emerge as frontrunner in the global scenario.