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Is India’s infrastructure really improving?

http://images.businessweek.com/ss/07/03/0308_india_infrastructure/image/trafficjam.jpg As an NRI are you concerned about experiencing camel-back rides on pot-holed roads, spread of water-borne diseases through drinking water and sudden blackouts or electricity load shedding back home in India? There’s no reason to – these are experiences of the past. Foreign direct investment in various industry sectors, inflow of foreign tourists, hosting of international events like the Asian Games, Cricket World Cup and Commonwealth games have focused the global spotlight on India.

Globalization has created an urgent need for superior infrastructure on a massive scale and India has risen to the challenge.

The Asian Development Bank (ADB), a major source of funds for India’s infrastructure projects, has earlier funded public transport, power, and urban infrastructure projects. Encouraged by its success, it’s now considering investments in new infrastructure projects, such as restoration of water bodies, agriculture, and tourism. India’s infrastructure development will require an investment of USD 150 billion in the next few years. India’s current investment rate of 31% of GDP is expected to grow with foreign investment inflows in future. (Source: Press Trust of India)

Improvement initiatives

Governments, both past and present, have acknowledged the need and initiated bold ventures for developing world-class infrastructure in India.

* Highways and road networks are under construction and state governments are sprucing up existing state highways and roads with an investment infusion of Rs.1,80,000 Crores from the central government. (Source: ICRA)

* Proper roads, telephone, electricity, and drinking water to every village by the year 2009 is the goal of the ambitious Bharat Nirman Program with a budget of Rs. 1,74,000 crore. (Source: Ministry of Commerce and Industry)

* The government is determined to achieve a growth of 8% to 10% over the coming years and planning massive investments to improve basic infrastructure such as ports, airports, roads, electricity, and telecom.

* To fuel rapid growth, the government awarded contracts for four-laning of about 5,500 km of national highways in the year 2005-2006, the largest initiative since the National Highways Development Program started rolling.

Challenges

India’s infrastructure growth faces some formidable challenges. International financial institutions must provide funding before foreign exchange reserves drain out completely, as learnt from the Asian crisis experience of 1997. The large disparities of deficit and surplus in world economics need to be balanced to avoid a sudden downturn and adverse effect on emerging economies like India. For example, in 2005, the USA had a current account deficit of USD 805 billion, whereas Japan, China, and the Middle East had a surplus of USD 163.9 billion, 158.6 billion, and 196 billion, respectively. (Source: Press Trust of India)

Terrorism is on the rise and threatening to disrupt economic growth. Rising international oil prices have created volatility and indirectly affected all economic growth across sectors. The biggest challenge is to achieve sustained economic growth in the Asian region.

The initiatives planned and rolled out with a positive and cooperative approach among global economies can help surmount the challenges. This will help overcome problems not just in India but in other developing countries, too.

Do you think overcoming these challenges will take more than just a co-operative approach? Tell us why. Do write in with your suggestions on what the government can do to improve infrastructure in India.

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About

Tushar’s main goal is to spot good news-worthy info and get it out to the public as soon as possible. He has been writing about Personal Finance and Investing in India for the last 3 years. You can reach him at: tushar@allindiatoday.com


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