“Investment in Infrastructure is essential for more rapid and inclusive economic growth”. Discuss in the light of India’s experience. UPSC 2021, 15 Marks

Q12. “तीव्रतर एवं समावेशी आर्थिक संवृद्धि के लिए आधारिक–अवसंरचना में निवेश आवश्यक है ।” भारतीय अनुभव के परिप्रेक्ष्य में विवेचना कीजिए । (250 शब्दों में उत्तर दीजिए)

Q12. “Investment in Infrastructure is essential for more rapid and inclusive economic growth”. Discuss in the light of India’s experience. (Answer in 250 words) 15


The infrastructure sector is a major economic driver in India. The sector plays a critical role in propelling India’s overall development, and the government places a high priority on implementing policies that will ensure the country’s world-class infrastructure is built in a timely manner. Power, bridges, dams, roads, and urban infrastructure development are all part of the infrastructure sector.

According to the Department for Promotion of Industry and Internal Trade (DPIIT), FDIs in the construction development sector (townships, housing, built up infrastructure, and construction development projects) and construction (infrastructure) activities totaled US$ 26.14 billion and US$ 25.38 billion, respectively, between April 2000 and June 2021. In FY21, infrastructure operations accounted for 13% of overall FDI inflows of US$ 81.72 billion. This shows the potential of this sector

Why Investment in Infrastructure is needed for an inclusive economic growth?

  • Infrastructure development promotes inclusive growth and poverty reduction by creating new jobs and economic activities; lowering production and transportation costs through improved transportation and connectivity; increasing overall production capacity; connecting markets and other economic facilities that may extend beyond the country; and improving access to key facilities such as health, education, and other basic services.
  • It should be highlighted that good quality infrastructure is critical not only for faster economic growth but also for inclusive growth. By inclusive growth, we mean that the advantages of growth are shared by the majority of a country’s inhabitants. As a result, inclusive growth will alleviate poverty and reduce income disparity in the country.
  • Micro, small, and medium-sized enterprises (MSME) are dispersed throughout the economy, and their production and growth require access to quality and dependable infrastructure services in order to compete efficiently with large-scale enterprises, which can often build some of their own infrastructure, such as installing their own small power plants or generators.
  •  Furthermore, large-scale businesses might position themselves near ports and transportation hubs where the necessary infrastructure is accessible.
  • Small businesses are extensively spread across the economy and must rely on the provision of general infrastructure amenities. Thus, constructing general infrastructural facilities enables small businesses to compete successfully with big-scale companies, while being labor-intensive generates a significant number of job possibilities. This will aid in the alleviation of poverty in developing countries.
  • Infrastructure expansion, such as irrigation, rural electrification, highways, and road transport, would encourage agricultural growth and the establishment of agro-processing enterprises. These general infrastructure facilities will assist farmers and owners of processing companies in obtaining raw materials, fertilizers, and other inputs at a low cost, as well as in transporting their goods to markets in large towns and cities.


Government Initiatives  

  • The government has allocated Rs. 233,083 crores (US$ 32.02 billion) to improve transportation infrastructure in the Union Budget 2021. The government increased the number of projects included in the ‘National Infrastructure Pipeline (NIP)‘ to 7,400. As of 2020, 217 projects totaling Rs. 1.10 lakh crore (US$ 15.09 billion) had been completed. As of July 2021, the government had invested US$ 1.4 trillion in infrastructure development through the NIP.
  • The government intends to develop a geospatial digital platform as part of the GatiShakti National Master Plan to facilitate the planning and monitoring of projects ranging from telecom networks to gas pipelines to roads and railroads.
  • The Second Dam Rehabilitation and Improvement Project (DRIP-2) will improve dam safety by developing dam safety rules, bringing in worldwide experience, and introducing new technologies. The project will be carried out at 120 dams spanning Chhattisgarh, Gujarat, Kerala, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Odisha, Rajasthan, and Tamil Nadu, as well as at the national level via the CWC.
  • Government of India has ambitious road and maritime connectivity programmers in the form of Bharatmala and Sagarmala Missions. This will enhance the logistics facilities in India.

To increase accountability and transparency in the infrastructure sector, it is necessary to facilitate the assimilation of data and information from all stakeholders, including Central and State Governments, Urban Local Bodies, Banks and Financial Institutions, PE funds, and private investors, both local and foreign, on a single platform.

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