Infrastructure and Development

What is Infrastructure ?
‡ Infrastructure Covers a number of Social and Public Utilities which are known as ³Social Overhead Capital´ ‡ Public Works ±Roads ,Major Dam and canal works for Irrigation and Drainage ‡ Public Utilities -Power, Telecommunications Water Supply, Sanitation and Sewerage ,Solid waste Collection &Disposal and Piped Natural Gas ‡ Other Transport- Urban and inter urban railways Urban transport , Ports and waterways and airports

Social overhead capital or investment in infrastructure
‡ Investment in infrastructure is significant because of its products /results are investment opportunities created in other industries/sectors . ‡ They require a ³great minimum size´ ‡ Excess (idle) capacity is unavoidable in the initial period ‡ This Investment is ³ irreversible in time ³ ‡ It must directly precede investment in production and other directly productive investment. ‡ Its services cannot be imported.

Infrastructure projects
‡ A minimum durability of service ‡ A long gestation period ‡ A minimal industry mix of different kinds of industries/related services/public utilities. ‡ Because its huge requirement of funds for initial capital investment and private sector would neither be able to mobilize huge funds / manage it independently.

Problems of infrastructure projects
‡ The concept of infrastructure projects was highlighted by originally by Paul Rosenstein-Rodan & Ragnar Nurkse ‡ These investment decisions are inter related and individual investment projects have high risk because of uncertainty as to whether their product will find a market. ‡ It needs a ³big push ³ to be sustainable ,but nevertheless stimulates overall economic progress ‡ Infrastructure facilities like Special economic zones (examples : SEEPZ for electronics & IT , Kandla EPZfor heavy machinery &Ship breaking , Surat EPZ for gems & jewellery) Bandra ±Worli Sea link bridge

Why it is important ? what are its contributions ?
‡ Infrastructure means physical framework of facilities provided to the public. Its linkages to the economy are multiple and complex . ‡ It contributes to economic development both by increasing productivity and by providing amenities which enhance the quality of life.

Its contributions ««
‡ They are intermediate services which increases profitability of production, permitting higher levels of production output ,income and employment ‡ They raise productivity of other factors including labour and other capital ‡ infrastructure programmes include medical, educational and other primary services

Major benefits of Infrastructure
‡ ‡ ‡ ‡ ‡ ‡ ‡ Economic growth Poverty alleviation Environmental sustainability Quality of life Standards of living Expanding trade Contributes income and foreign exchange

Issues in Infrastructure development & management
‡ Manage Infrastructure like a business ,not a bureaucracy . ‡ Give larger autonomy to raise resources and revenue to manage public utilities efficiently and effectively ‡ Introduce competition to improve the quality of services and its efficiency ‡ Give voice to the users of public utilities

Issues in Infrastructure
‡ Public Private Partnership (PPP) in construction ,ownership and financing and management offers better service and higher returns and performance improvements ‡ Governments would have continuing role in infrastructure development and management.

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