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A nation’s infrastructure provides a support system for the growth of other industries. The article highlights the different sectors of infrastructure, the progress made in urban and rural infrastructure and the future for the infrastructure sector in India.


Infrastructure is given due recognition for a nations economic progress. Infrastructure sector is characterized by
  • Natural monopoly
  • High sunk costs
  • Non tradability of output
  • Non rivalness in consumption
  • Price exclusion
  • Impart externalities
The following sectors come under the purview of infrastructure
  • Electricity (which would also include generation, transmission and distribution) and R&M of power stations.
  • Non conventional energy (including wind energy and solar energy).
  • Water supply and sanitation (including solid waste management, drainage and sewerage) and street lightning.
  • Telecommunications.
  • Road & bridges.
  • Ports.
  • Inland waterways.
  • Airports.
  • Railways.
  • Irrigation.
  • Storage.
  • Oil and gas pipeline networks.
Infrastructure Of Indian Economy

Urban Infrastructure
It has been found Internationally and in India too, urban development is key to economic prosperity. The growth of the service sector has further cemented the need for an efficient urban infrastructure. The rapid urbanization and the increasing pressure on major cities from the migrant population, has put undue stress on urban infrastructure resulting in shortage in housing, inadequate water supply and sewerage, traffic congestion, pollution, poverty and social unrest. Today managing urban infrastructure is a major challenge for urban planner.

Post Reforms Urban Development
The reforms concentrated on restructuring and defining the role and responsibility of urban municipalities. Some of the salient features are:

1) Expand the source of fund for financing urban infrastructure projects. These include
  • Urban Reform Incentive Fund
  • City Challenge Fund
  • Pooled Finance Development Fund
  • Tax Free Municipal Bond
2) Improved public private partnerships to augment private sector participation in the urban sector.

3) Issue municipal bonds to generate finance.

The Constitution Amendment Act 1992
The act provides the state government power to involve local civic bodies in improving the condition of the urban poor. The act gives constitutional status to Urban local bodies (ULBs) and advocates a uniform local governance structure throughout the country. The functions under the responsibility of local civic bodies are:

Urban Planning.
  • Regulating land usage and construction activity.
  • Planned socio economic development.
  • Improve quality of roads and bridges.
  • Regular water supply for domestic, industrial and commercial purposes.
  • Public health, sewerage and solid waste management.
  • Fire services.
  • Protect urban eco system.
  • Measures to improve living standard of urban poor.
Rural Infrastructure
India lives in its villages. Development of rural infrastructure is equally vital, if not more important than urban infrastructure. Efficient rural infrastructure is key not only for rural economic progress, but also to alleviate the living standards of rural poor. Some of the constraints for rural infrastructure development are poor financial health of the state governments, insufficient rural development projects and the incompletion of many sanctioned projects. In order to address the problem, the government initiated the Rural Infrastructure Development Fund (RIDF) in 1995-96 with an initial sanctioned amount of Rs 2000 crores with inputs from both the public and private sector.

Some of the salient features of the RIDF are:
  • It covered the inadequacy of both private and public funding for rural infrastructure development.
  • It covered the shortfalls in target by public banks for agricultural lending.
  • Deposits from commercial banks to RIDF have been broad based.
Future Trends
  • To sustain growth in the infrastructure of Indian economy, despite the global meltdown, the government is planning an investment of US$ 20.38 billion in the next two years for infrastructure development. Further the government has set aside US$640.8 million for improving the condition of ports, railroads, highways and airports over a period of 15 years.
  • The index for the six core industries-crude oil, petroleum refinery products, coal, electricity, cement and finished carbon steel has shown a growth of 2.9 per cent for March 2009 in comparison to March 2008.
  • According to the Planning Commission, there exists an investment opportunity of US$ 25 billion by 2011-12 in India's shipping and ports sector, as the country seeks to double its ports capacity to 1500 million tons.
  • The government plans to bring private investment through the PPP mode to set up over 300 airports. It has planned to invest US$ 9 billion to modernize existing airports by 2010.

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