In this article, I would like to analyse one of the most important economic factors, which is also one of the tool aiding economic development. Well if you are still wondering what I am talking about, it is about Infrastructure.
Infrastructure refers to some of the basic and important facilities like electricity, crude oil, transportation, roadways, refineries etc. It is on the basis of these various infrastructure facilities that the industrial development and in turn the economic development of a country depends. Let us analyse the situation that is present in India. No doubt that Indian Industry has achieved a good growth in industries, especially industries relating to that of Information Technology or in short IT. But the question is, are there enough Infrastructure facility in the country to sustain the growth of these industries and to encourage them to grow. Even if the industries do make a marked development, it is only with the help of these infrastructure facilities that future development and growth is possible. India at the moment needs foreign investment, and foreign investors would be forthcoming only if the country has a good infrastructure facility to offer.
Let us take the city of Chennai, which is fast growing as another important Information Technology gateway of India. The public transport facilities are yet to improve in Chennai. While some of the companies provide their own private buses for the employees, the Government should take adequate steps to provide frequent public transport facilities to these areas. Also as far as the connecting roads from these IT parks are concerned, they are in a bad state and more overhead bridges are required in these areas. In order to draw a comparison between the state of affairs in India and similar economy, let us take for example of China. The improvement that China has undertaken in their entire transport and roadways, especially in the city of Shangai is noteworthy. The facility offered by the Government of China is commendable and provide impetus to various foreign investments. China as an economy has grown tremendously. We need to take example from such economies and move forward and provide better and more investment to infrastructure. The Government by providing and investing in Infrastructure facilities to fast growing cities like Chennai, is going to be rewarded in two ways. One is by providing increased employment facilities to the unskilled labourers, and the increase in more foreign investments.
By referring the various articles on infrastructure and the China Year book (2003-2004) and by comparing the infrastructure facility offered in China and those existing in India the following are the various observations made by me; For one China has offered to provide all the infrastructure facility in the form of more ports, highways and connecting roads from the port to the inside of China. China has encouraged foreign investors to invest in their country; the encouragement offered by them is in the form of Government investment in infrastructure. This has helped the investors by producing goods at a cheaper cost thereby reducing their price. Foreign Investors are completely impressed by this offer. According to the office of foreign investment administration, under the Ministry of Commerce, China has invested around $10 billion with average growth rate of 20% since 2000. From the excerpts of an interview with Sridhar of ‘Bengal Tiger Line’ conducted by Business Line, China has encouraged competitiveness among various ports in the sense that Government owned port authority would built the infrastructure, while the private entrepreneurs bring in the equipments and operate. Taking the example of ports between Shenzhen and Hong Kong Sridhar observes that while the ports are in the outskirts offering cheaper facilities, it has also got the other advantage, that whilst one port is engaged the carrier can always move to the other. This leads to reduction in the waiting period and also reduction in the cost involved. The most important factor that India has to learn from China is that, quick decisions in the Government level has lead to such an improvement, but as far as India is concerned this has become a barrier, with projects waiting for years to be completed. The indecisive nature of the Government has resulted in increased cost, and delay; this situation needs to be changed immediately.
While I do acknowledge the various facilities provided by the Government to the IT sectors in Chennai. Yet the State Government must do more active investments and town planning, if they would like to see more investment and more growth in the Information Technology Sector. The Government apart from their own efforts should also support the various infrastructure facilities undertaken by the various corporate themselves, the encouragement can be in the form of reduction in duties, conferred upon such facilities. The Infrastructure development, undertaken wholly by the Government or partly by the Government should ensure that the infrastructure provided should be in lieu with the development projects to be undertaken by the corporate. A joint consensus should be reached by such corporate (either corporate in the same area or corporate having similar business activity must join together) to ask the Government for a common infrastructure plan which would be beneficial for all the corporate houses and also reduce the expenses of the Government. I also feel that more research needs to be undertaken in order to provide optimum and maximum utilisation of the electricity in the various industries, and more investment and research is required in alternate sources of electricity, such that we make good utilisation of the resources around us. While the Government cannot do much about the global increase in the crude oil prices, it can still impart education and training to various industrial houses on ways of efficient use of power and availability of alternate sources. Investment is thus again required in researching such project, such that the outcome would be maximum and efficient use of resources and greater productivity. Well as a citizen and as an entrepreneur, I have full faith in the system and am sure that the Government takes these steps without further delay and help the economy of the State and in turn the Country grow.
In their website The Asian Development Bank, has analysed the various infrastructure constraint facing our economy. The article titled “ Asian Development Outlook:2005” It has analysed the infrastructure situation in India. According to the site, both private and public infrastructure investments have been quite below the desired level. The reason why the private investments in infrastructure are low is because of the gestation gap between borrowing and returns. Because the return of the loan amount depends on the productivity of the infrastructure facility provided, if it fails then it is difficult to return the loan, also the gestation period between borrowing and return of the loan is quite high in case of infrastructure investments. Hence domestic market for long-term security loans must be encouraged, and ADB has done so with the issue of its long-term bonds.
In case of Government investment in Infrastructure, it has not been quite forthcoming because of the consolidated fiscal deficit faced by both the central and the State Government. But in order to overcome the situation the Central Government has decided to invest in specific areas like that of road, port, tourism and airport with the aid of additional borrowings, which has longer maturity period. With all this steps taken by the Government, there is an expectation that overall investment rate would gradually increase to the level of 27.5% in the Financial Year of 2007.
Thus seeing a sliver lining in the dark clouds, has given me hope and believe it would for others too. But what is actually required is proper support of the Government to Private Entrepreneurs who are willing to invest in infrastructure facilities. Th
e Government (both the Central and State Government) should step up and decide immediately on the various decisions, which would determine further investments in infrastructure facilities. The Government should go ahead and do what is necessary to increase the investment rate in Infrastructure to the projected 8.0%(FY 2005-06). Both the state and the Central Government should bear in mind that an increase in investment in infrastructure facility would largely contribute to the sustained and steady growth of the economy.
I belong to this community and can be considered as one of the contributor towards the growth of IT sector of the community, I sincerely hope that both the State and the Central Government step in and amend the infrastructure situation of the state and the country as a whole. This would greatly encourage and benefit, corporate like ours and hence lead to overall development and growth of the economy.