Role of Infrastructure in Development
It is now well recognized that a country’s development is strongly linked to its infrastructure strength. Infrastructure helps determine a country’s ability to expand trade, cope with population growth, reduce poverty and a host of other factors that define economic and human development. Good infrastructure raises productivity and lowers production cost, but must also expand fast enough to accommodate growth. The precise links between infrastructure and development have been subject to extensive debate. The link between infrastructure and economic growth has been studied extensively in literature, the World Bank report (1994) of the World Bank for instance. The results show that infrastructure development can have a significant impact on the economic growth. For low-income countries basic infrastructure such as water, irrigation and to a lesser extent transportation are more important. As the economies mature into a middle-income category, their share of power and telecommunications in the infrastructure and investment increases. An estimate however shows that a 1% increase in infrastructure stock* is positively associated with a corresponding growth in GDP across countries.
Infrastructure is a necessary but not a sufficient condition for growth. Adequate complements of other resources must be present as well. In developing countries like India, infrastructure development and financing has largely been the prerogative of the government. Since infrastructure is typically a natural monopoly, the government considered it necessary to keep control of the same, in public interest. The success and failure of infrastructure to meet the needs of the people is largely a story of the government’s performance.
In the case of India, the government has taken great strides in improving the infrastructure stock of the nation since independence. However, when compared to developed countries we still have a long way to go. For instance, per capita power consumption in India is a meagre 282 KWH compared to 18,117 KWH for Canada. The situation has worsened in the 90’s with frequent revisions being made to the eighth plan document owing to the government’s inability to bear the cost of infrastructure anymore.
The simple truth is that public money is no longer sufficient to meet the burgeoning needs of the nation in line with its economic aspirations. Reluctantly, therefore the government has to throw open the doors to private participation in infrastructure.
Public Sector in Infrastructure Development
Infrastructure represents a strong public interest and so mer5its the attention of the government. The dominant role, that the public sector has assumed in the infrastructure
• Recognition of the economic importance of infrastructure
• Belief that the problems with supply and technology require highly active intervention by the government.
• Faith that the government could succeed where markets appear to fail
There is enough evidence to show that, despite significant growth in a number of developing countries infrastructure facilities have fallen far short of the requirements, Though each sector has special problems, there are common patterns in the provision of infrastructure services and shortcomings such as:
• Operational deficiencies
• Inadequate maintenance
• Extensive dependence on fiscal resources
• Lack of responsiveness to the needs
• Limited benefits to the poor
Download Full Project Report
It is now well recognized that a country’s development is strongly linked to its infrastructure strength. Infrastructure helps determine a country’s ability to expand trade, cope with population growth, reduce poverty and a host of other factors that define economic and human development. Good infrastructure raises productivity and lowers production cost, but must also expand fast enough to accommodate growth. The precise links between infrastructure and development have been subject to extensive debate. The link between infrastructure and economic growth has been studied extensively in literature, the World Bank report (1994) of the World Bank for instance. The results show that infrastructure development can have a significant impact on the economic growth. For low-income countries basic infrastructure such as water, irrigation and to a lesser extent transportation are more important. As the economies mature into a middle-income category, their share of power and telecommunications in the infrastructure and investment increases. An estimate however shows that a 1% increase in infrastructure stock* is positively associated with a corresponding growth in GDP across countries.
Infrastructure is a necessary but not a sufficient condition for growth. Adequate complements of other resources must be present as well. In developing countries like India, infrastructure development and financing has largely been the prerogative of the government. Since infrastructure is typically a natural monopoly, the government considered it necessary to keep control of the same, in public interest. The success and failure of infrastructure to meet the needs of the people is largely a story of the government’s performance.
In the case of India, the government has taken great strides in improving the infrastructure stock of the nation since independence. However, when compared to developed countries we still have a long way to go. For instance, per capita power consumption in India is a meagre 282 KWH compared to 18,117 KWH for Canada. The situation has worsened in the 90’s with frequent revisions being made to the eighth plan document owing to the government’s inability to bear the cost of infrastructure anymore.
The simple truth is that public money is no longer sufficient to meet the burgeoning needs of the nation in line with its economic aspirations. Reluctantly, therefore the government has to throw open the doors to private participation in infrastructure.
Public Sector in Infrastructure Development
Infrastructure represents a strong public interest and so mer5its the attention of the government. The dominant role, that the public sector has assumed in the infrastructure
• Recognition of the economic importance of infrastructure
• Belief that the problems with supply and technology require highly active intervention by the government.
• Faith that the government could succeed where markets appear to fail
There is enough evidence to show that, despite significant growth in a number of developing countries infrastructure facilities have fallen far short of the requirements, Though each sector has special problems, there are common patterns in the provision of infrastructure services and shortcomings such as:
• Operational deficiencies
• Inadequate maintenance
• Extensive dependence on fiscal resources
• Lack of responsiveness to the needs
• Limited benefits to the poor
Download Full Project Report
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