INFRASTRUCTURE
AND DEVELOPMENT – POLITY
News:
Infrastructure
Revolution: Fuelling India's Economic Growth towards 2047
What's
in the news?
●
India is envisaging a revolution of sorts
in the infrastructure sector in the next quarter of a century riding on Prime
Minister Narendra Modi’s vision to make India a ‘Developed Nation’ by 2047.
Key
takeaways:
●
By building sustainable and modern
infrastructure that can match that of any developed country, particularly
through advanced transportation networks, including roads, railways, ports, and
airports, India intends to accomplish the overall goal of over 8% growth, in
future.
The basic physical
facilities (roads, buildings, power supplies) and organisational structures
(schools, hospitals, banks) needed for the operation of society are known as
infrastructure. Infrastructure contributes to economic development of a country
both by increasing the productivity of the factors of production and improving
the quality of life of its people.
Infrastructure
facilitates growth:
● Increases agriculture production and
productivity
o
Development of the primary sector depends
on development of irrigation, power, credit, transportation, marketing,
research and development and other facilities.
● Increases flow of foreign capital
o
Increases the confidence of foreign
investors to do business in India and thus bring FDIs.
● Employment opportunities
o
Road and railway infrastructure generate
more jobs in construction and maintenance sector.
● Backward linkage:
o
Economic growth makes demands for
infrastructure which further facilitates more growth.
Infrastructure prevents recession:
● Multiplier Effect:
o
high-quality public infrastructure
supports economic growth, generates jobs, and improves the well-being of the
citizens.
● Investment in education
o
directly contribute to more productivity,
efficiency, and hence higher earnings, and less vulnerability to unemployment.
● Improvement in productivity:
o
Infrastructure development in sectors such
as transport sector improves productivity.
o
Studies shows 1% growth in infrastructure
stock leads to 1% growth in GDP.
● Key to modern technology:
o
Infrastructure brings new technology which
helps the country in competition with international players.
o
E.g.: Internet of things, Big Data etc.
Initiatives
to boost infrastructure sector in India:
● National Infrastructure Pipeline:
o
It is a group of social and economic
infrastructure projects in India over a period of five years with a sanctioned
amount of ₹102 lakh crore.
● National Infrastructure Investment
Fund:
o
Launched with an initial corpus of Rs
40,000 crore, aims to develop commercially viable greenfield and brownfield
projects.
● Public-Private Partnership:
o
Government associates itself with private
entities to develop projects.
o
E.g.: Golden Quadrilateral, North–South
and East–West Corridor.
● Infrastructure Debt Funds:
o
to address the issue of sourcing long term
debt for infrastructure projects in India.
● Viability Gap Funding:
o
Government financially supports the
viability gap to the tune of 20% of the cost of the project in the form of a
capital grant from its viability gap fund.
● Foreign Direct Investment and
Infrastructure Development:
o
100% FDI is allowed under the automatic
route in sectors such as mining, power etc.
o
FDI is also allowed through the approval
route in sectors such as the civil aviation sector etc.
● India Infrastructure Finance Company
Limited (IIFCL):
o
to provide long term finance to viable
infrastructure projects through the Scheme for Financing Viable Infrastructure
Projects through a Special Purpose Vehicle.
● Complementary Schemes:
o
Initiatives such as ‘Housing for All’ and
‘Smart Cities,’ is working on reducing the bottlenecks that impede growth in
the infrastructure sector.
● Masala Bonds:
o
National Highways Authority of India
(NHAI) launched Masala Bonds in 2017, for raising capital for funding the
infrastructure projects in India.
Other
sector-specific schemes:
● Energy Infrastructure
o
Hydrocarbon
Exploration and Licensing Policy (HELP): enable E&P operators
to explore and extract all hydrocarbon resources under a single licence.
o
UDAY
scheme to improve operational and financial parameters of
discoms.
o
KUSUM
Scheme to install solar pumps and sell surplus electricity.
● Transport Infrastructure
o
Mission
Avataran to transform Indian Railways through 100%
electrification by 2024.
o
National
Highway Development Programme, 1998 includes Golden
Quadrilateral and Diamond Quadrilateral.
o
BharatMala
Project to upgrade & expand 24800km NHs by 2022.
o
Sagarmala
Project: Develop minor ports and improve existing ones.
o
Faster
Adoption & Manufacture of (Hybrid &) Electric Vehicles (FAME)
● Logistics Infrastructure
o
Dedicated
Freight Corridor: Eastern Corridor: Ludhiana – Kolkata.
o
Multi-modal
Logistic Park that interconnects different modes of
transport – air, sea, and land.
● Communication Infrastructure
o
Bharatnet
Project: Connect all 2.50 lakh gram panchayat with broadband
National Optical Fibre Network (NOFN).
o
Samarth
Udyog Bharat 4.0: Make Indian industry Industrial
revolution 4.0 ready by 2025.
WAY
FORWARD:
● Invest in sustainable infrastructure
o
South Korea, which directed 80% of its
stimulus towards green measures, rebounded faster from the 2008 financial
crisis than economies in the OECD.
●
Facilitating
infrastructure investment
o
Setting up of a Development Finance
Institution (DFI) with an initial capital of ₹20,000 Cr.
● National Monetisation Pipeline
o
To sell assets created by PSUs such as
NHAI, PGCIL, Railways etc. and money raised would then be used for the creation
of new infrastructure assets.
India runs among the
largest infrastructure programmes in the world, and has invested over $1.1
trillion on it in the last decade. An efficient infrastructure is the biggest
enabler for growth that can materialise the goal of reaching a 5
trillion-dollar economy in India.