Emerging Trends in Infrastructure Development in India
INTRODUCTION:
-
Infrastructure
is generally defined as the physical framework facilities through which goods
and services are provided to the public. The infrastructure sector covers a wide spectrum of services such as transportation (including roadways, railways,
airways and water transportation), power generation, transmission and
distribution, telecommunication, port handling facilities, water supply, sewage
disposal, irrigation, medical, educational and other primary services. Some of
these services have a direct impact on the working of a business enterprise,
while others are more important from a societal point of view. It contributes
to economic development by increasing productivity and by providing amenities
that enhance the quality of life. The availability of adequate infrastructure
facilities is imperative for the overall economic development of a country.
Infrastructure adequacy helps determine success in diversifying production,
expanding trade, coping with population growth, reducing poverty and improving
environmental conditions. The relationship between each of the infrastructure
sectors and the environment is complex. Infrastructure has got both positive and negative effects on the individuals, society, economy and the
natural environment. A good infrastructure in the form of improved transport
can increase the productivity of workers through better management of time spent
by them on nonproductive activities. Improvements in water supply and
sanitation also can have a positive impact on the health of the workers, thereby
increasing their productivity. Better infrastructure in various forms helps
the poor earning more for their livelihood and thus leading to a reduction in
poverty and inequality.
EMERGING TRENDS:
-
The emerging
trends in the Indian organized retail sector would help the economic growth in
India. There is a fantastic rise in the Indian organized retail sector in a
very short period of time between 2001 and 2006. Eventually, out of the shadows
of the unorganized retail sector, India has a chance of tremendous economic
growth, both in India and abroad. The emerging trends in the Indian organized
retail sector are also adding up to the development of the Indian organized
retail sector. The relaxation by the government on regulatory controls on foreign
direct investments has added to the process of the growth of the Indian
organized retail sector. The infrastructure of the retail sector will evolve
radically in the recent future. The emergence of shopping malls is increasing
at a steady pace in the metros and there are further plans of expansion which
would lead to 150 new ones coming up in India by 2008. As the count of supermarkets is going up much faster than the rate of growth in the retail sector, it is
taking the lions to share in food trade. The growth of the Indian organized retail
sector is anticipated to be heavier than the growth of the gross domestic
product. Alterations in people’s lifestyles, growth in income levels, and
encouraging conventions of demography are proving favorable for the new emerging
trends in the Indian organized retail sector. The success of this retail sector
would also lie in the degree of penetration into the lower-income strata to tap
the possible customers in the lowest levels of society. The demands of the
buyers would also be enhanced by more access to credit facilities. With the
arrival of the Transnational Companies (TNC), the Indian retail sector will
undergo a transformation. At present the Foreign Direct Investments (FDI) is
not encouraged in the Indian organized retail sector but once the TNC’S get in
they inevitably try to oust their Indian counterparts. This would be
challenging for the retail sector in India. The trends to follow in the future No
one single format can be assumed as there is a huge difference in cultures
regionally. The most encouraging format now would be the hyper marts. The hypermart format would be further encouraged with the entry of the TNCs.
IMPORTANCE OF
INFRASTRUCTURE: -
The
importance of infrastructure for sustained economic development is well
recognized. High transactions costs arising from inadequate and inefficient
infrastructure can prevent the economy from realizing its full growth potential
regardless of the progress on other fronts. Physical infrastructure covering
transportation, power, and communication through its backward and forward
linkages facilitate growth; social infrastructure including water supply,
sanitation, sewage disposal, education, and health, which are in the nature of
primary services have a direct impact on the quality of life. The visible signs
of shortfalls in capacity and inefficiencies include increasingly congested
roads, power failures; long-waiting lists for the installation of telephones and
shortage of drinking water illustrate the widening gap between demand and supply
of infrastructure and also raise questions concerning the sustainability of
economic growth in the future.
INFRASTRUCTURE
INDIA: -
Infrastructure
in India generally refers to the elementary supporting factors responsible for
the entire frame of India. The infrastructure definition says that anything
that forms the core of the functioning of any country is infrastructure. India
is the seventh-largest country in the world has maintained infrastructure
management that has enabled India to reach new heights.
INDIAN
INFRASTRUCTURE REPORT: -
Indian
infrastructure report suggests a fairly good state of infrastructure planning
in India. The infrastructure building and engineering in certain spheres like
power, telecommunications, information technology, transport, etc. need more infrastructure
resource solutions. Indian infrastructure companies manage the infrastructure
required in these areas. The infrastructure companies in India also look
after infrastructure construction and development. India also has many infrastructure
finance companies that provide funding and financing for infrastructure
development projects in India. One of them is Infrastructure Development
Finance Corporation or the India Infrastructure Finance Company Limited. Infrastructure
Management Services Coming to infrastructure management services, these include
services from:
Infrastructure Architect - He helps in design.
Eying the basic blocks of infrastructure utilities.
Infrastructure Analyst - His job is to analyze the infrastructure the business works in India.
Infrastructure Advisory - He advises about the
infrastructure solutions to a particular problem and also evaluates and reports
the risk involved in any particular infrastructure development.
Infrastructure Bank - It provides infrastructure
finance and asset management for infrastructure assets in India.
The Indian
infrastructure sector involves prolonged infrastructure research for the
infrastructure technologies to be updated. For the infrastructure optimization and
reaching a level of a standardized infrastructure outsourcing the bottlenecks in
the system need to be smoothened. The infrastructure requirements list the need
for technology designed for the infrastructure today. These are being provided
through coordination among the developed countries like USA, UK, etc. and the
Government of India.
EDUCATION IN INDIA:
-
Education in
India is mainly provided by the public sector, with control and funding coming
from three levels: federal, state, and local. Child education is compulsory. Nalanda University was the oldest university-system of education in the
world. Western education became ingrained into Indian society with the
establishment of the British Raj. Thus India lost its native educational
system. Education in India falls under the control of both the Union Government
and the states, with some responsibilities lying with the Union and the states
having autonomy for others. The various articles of the Indian Constitution
provide for education as a fundamental right. Most universities in India are
Union or State Government controlled. India has made huge progress in terms
of increasing primary education attendance rate and expanding literacy to
approximately two-thirds of the population. India’s improved education system
is often cited as one of the main contributors to the economic rise of India.
Much of the progress in education has been credited to various private
institutions. The private education market in India is estimated to be worth
$40 billion in 2008 and will increase to $90 billion by 2020.
INFRASTRUCTURE
INVESTMENT PATTERN: -
Sectored
analysis of infrastructure investment reveals that there has been a significant
change in the pattern of investment. There has been an increase in the share of
investment in the communication sector. Investment in electricity, gas, and
water had tended to increase from an average of about 2.5 percent of GDP. There
has been a trend of massive expenditure on telephones. It is expected that in
the coming decades, the Asia-Pacific region is likely to spend more on telephones
and power than anywhere else in the world. The capital investment needed to
finance this development is estimated to run into trillions of dollars.
PARTICIPATION
OF PUBLIC-PRIVATE SECTOR: -
The bulk of
infrastructure investment in India has been in the public sector, which has
overall accounted for about 75 percent of total investment. The public sector
has been the dominant investor in infrastructure in the second half of the 20th
century. The private sector investment in infrastructure has generally been in
the range of 1.0 to 1.6 percent as a proportion of GDP. It is mainly in ‘other
transport’ that the private sector has so far been active: this is primarily in
the investment in the road cargo industry and in bus transport. The railways
and communication sectors have been totally owned by the Government whereas
there has been some marginal participation of the private sector in power. The
public sector supplies more than 90 percent of the investment in power, water
supply, and sanitation, railways, roads, telecommunication, etc. The private
sector is only a marginal player in each of these areas at present. Currently,
private sector participation is being actively pursued in the provision of
power, telecommunications and for a segment of roads. The discussion has already begun
on private participation in urban infrastructure but arrangements enabling such
participation are still to be made.
REQUIREMENTS
OF INFRASTRUCTURE INVESTMENT: -
Infrastructure
investment as a proportion of the total gross domestic investment (GDI) in
India comprised about 22 percent to 24 percent. This ratio had the tendency to
increase towards the latter part of the decade. A similar pattern on infrastructure
investment was also observed during the same period in the first growing East
and Southeast Asian countries. Their gross domestic investment rates increased
to over 30 percent of GDP, rates of infrastructure investment rose
correspondingly to levels of 7 to 8 percent of GDP.
PRIVATE
FINANCING OF INFRASTRUCTURE: -
There has
been a worldwide trend of massive investment in infrastructure and it is likely
to increase at a faster rate in the coming future. Therefore, the capital
requirement for this rapid growth of investment would be unmanageable on the
part of the public authorities in different countries of the developing world.
This will force particularly the Asian governments to rely increasingly on
private capital. Private capital is finding its way into infrastructure through
privatization of existing utilities as well as thorough the construction of new
projects on a build-operate-transfer (BOT) basis allowing the contractors to
build the project and then to make money by keeping a fixed share of revenues
the projects generate. Private finance for infrastructure can be tapped from
the commercial banks, stock markets or bond markets. But the experience
suggests that the appetite of commercial banks for infrastructure projects is
limited. In fact, it is the capital markets that have emerged as the major
source of private finance for infrastructure. The most obvious problems for
infrastructure projects are political. In many countries, infrastructure
facilities are subsidized. Investors will put in financial capital only if they
can be sure that a government will in return commits its political will to the
tricky business of phasing out subsidies.
COMMERCIALIZATION
OF INFRASTRUCTURE: -
The need for
the hour in the present phase of economic development is the commercialization
of infrastructure projects. The investment must be made on those infrastructure
projects which can recover its invested resources through a system of user
charges. The services of investment projects should no more to be continued as
a free good. Such user charges should bear a direct relation to the specific
benefits that the facility provides the user. Commercialization would involve
giving service providers, whether in the public or private, well-defined
budgets based on revenues from users, and managerial and financial autonomy,
while at the same time, holding them accountable for their performance. The
efficacy of commercialization, however, would be contingent upon the ability to
segregate payers and non-payers and prevent any incidence of free riding.
CONCLUSION: -
Almost all of
infrastructure investment was earlier made by the public sector in India.
Government funds were allocated to different levels of government and
infrastructure entities essentially through the planning process. These funds were
allocated in the form of grants to different levels of government, or as equity
or debt contributions to public sector entities such as public sector
corporations including specialized financial intermediaries such as Housing and
Urban Development Corporation (HUDCO), State Electricity Boards, various authorities,
departmental undertakings and the like. A major10 fiscal change that has taken
place over the last decade is that there is now no positive balance of current
revenue (BCR) to allocate for investment for any purpose. All most all the
incremental growth in infrastructure investment will have to come from the
private sector. Since private investment in infrastructure is inevitable, and
if we want it to be made on a sustainable basis, it is necessary to reduce both
the perception and the reality of risk.