Roadmap for Answer Writing 1. Introduction Definition of Infrastructure Investment: Briefly explain what infrastructure investment entails and its significance for economic growth. Thesis Statement: State the importance of infrastructure investment for rapid and inclusive economic growth, particularly in the context of India. 2. Body A. ...
In the last few decades, there has been considerable underinvestment in rail infrastructure, thereby reducing the efforts required to expand, strengthen and modernize the Indian Railways. Further, the investment has been insufficient for introducing technological improvements, improving safety aspecRead more
In the last few decades, there has been considerable underinvestment in rail infrastructure, thereby reducing the efforts required to expand, strengthen and modernize the Indian Railways. Further, the investment has been insufficient for introducing technological improvements, improving safety aspects and meeting the demands of both freight and passenger customers.
Challenges in speedy creation of rail infrastructure include
- Regulatory delays: The process of land acquisition is lengthy and cumbersome in India because of land disputes and rehabilitation and compensation issues. For instance, several cases have been filed in Supreme Court and High Courts against land acquisition for Dedicated Freight Corridors.
- Non-viability of decisions: The working of Indian Railways is caught up between making it a self-sufficient organization and serving it as a transport system for the poor, the result being rise in passenger fares and new trains and routes being decided on non-commercial reasons.
- Financial issues:
- High operating ratio (at 98% in 2018) curtails the ability of Railways to make fresh investments through internal accruals. The alarming increase in operating ratio can be attributed to implementation of the Seventh Pay Commission award, reduced passenger fares, and declining market share in freight traffic.
- High debt servicing costs put further strain on railway finances. It is set to rise at a much faster pace in the coming five years due to repayment obligations related to Dedicated Freight Corridors and High-Speed Rail (HSR) network, thereby putting a freeze on newer infrastructure projects.
- Rail infrastructure development is highly dependent on government funding, which is limited. Further, few PPP projects which have been implemented are fraught with several hurdles including unrealistic cost estimates.
- Difficult terrain and weather conditions: Risk assessment in hazard zones and uncertain weather conditions such as in rugged Himalayan terrains and flood prone Brahmaputra region pose challenges in completing projects on time.
- Law and order problems: Many projects in the North-Eastern region, Jammu and Kashmir and Naxal-affected areas of Madhya Pradesh, Andhra Pradesh, Chhattisgarh, etc. are suffering on account of law and order problems.
Faced with the above challenges, a number of steps have been taken up by the government, including
- Increasing Capital Expenditure (Capex): Annual Average Capex has been doubled from Rs.45,974 Cr in 2009-14 to Rs. 99,512 Cr in 2014-19. In the recent Budget Estimate (2021), Capex has been further increased to Rs. 2.15 Lakh Crore.
- Vision 2024 document: It has been envisaged to achieve targets of 2024 Million Tonnes freight loading by 2024.
- National Rail Plan (NRP) 2030: It has been developed with a view to develop infrastructure by 2030 to cater to the traffic requirements up to 2050 and increase modal share of rail freight to 45%.
- National Infrastructure Pipeline (2020-25): It has dedicated investment worth more than 13 lakh crores to revamp the Indian Railways.
In addition, the need of the hour is to bring administrative reforms in Railways, introduction of new-age technology, prioritization of projects and their tim- bound execution and outcome-oriented action, privatization of some of the operations of the Indian Railways as suggested by the Bibek Debroy Committee etc.
See less
Model Answer Introduction Basic infrastructure facilities form the bedrock of economic growth. Without adequate infrastructure, India's economy operates below its potential, hindering both rapid and inclusive growth. Investment in infrastructure is crucial to address these challenges. Body CreationRead more
Model Answer
Introduction
Basic infrastructure facilities form the bedrock of economic growth. Without adequate infrastructure, India’s economy operates below its potential, hindering both rapid and inclusive growth. Investment in infrastructure is crucial to address these challenges.
Body
Creation of Jobs
Infrastructure development projects, such as road construction and railway expansion, are labor-intensive, significantly boosting employment opportunities in both formal and informal sectors. For instance, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) exemplifies how infrastructure initiatives can create jobs and fuel domestic demand.
Multiplier Effect
Capital expenditure on infrastructure has a multiplier effect of 2.45, stimulating both demand and supply. This leads to accelerated economic growth and job creation. The National Infrastructure Pipeline (NIP) for FY 2019-25 aims to provide world-class infrastructure, enhancing citizens’ quality of life.
Improved Connectivity
Investments in infrastructure enhance connectivity between regions, fostering economic integration. Projects like Bharatmala and Sagarmala improve trade and commerce, driving economic growth by facilitating smoother movement of goods.
Reducing Logistic Costs
World-class infrastructure such as roads, railways, and ports can significantly reduce logistic costs, which currently stand at 12-14% of GDP—higher than the global benchmark of 7-8%. Initiatives like the Gati Shakti scheme aim to streamline multi-modal connectivity, thereby lowering logistics expenses.
Inclusive Growth
Infrastructure investment promotes inclusive growth by extending access to essential services like education and healthcare to underserved communities. The Pradhan Mantri Awas Yojana (Housing for All by 2022) aims to provide dignified housing to all by addressing the needs of those living in inadequate conditions.
Increased Productivity
Infrastructure development leads to greater productivity by facilitating the efficient flow of goods and services, thereby reducing transaction costs and enhancing production efficiency.
Conclusion
Investment in infrastructure is vital for India’s journey toward achieving sustainable development goals (SDGs). Initiatives like the NIP, Gati Shakti, and NaBFID must be effectively implemented to establish a robust foundation for a self-reliant India (Aatmanirbhar Bharat).
See less