ACCESS TO infrastructure services is crucial for economic growth and poverty reduction. Energy to drive industry and create jobs, water to support agricultural production, roads and ports to transport products to the market are critical to any country at any time but especially so in an economic downturn. Infrastructure projects, however, often take years to prepare. Postponing them has a drastic knock-on effect for medium-term growth. Many countries have planned to accelerate infrastructure spending to respond to the world-wide crisis.
Policy makers know that improvements in basic physical infrastructure can help reduce disparities between regions and communities and promote inclusion, particularly among the most vulnerable. The right infrastructure financing can also open doorways to the green economy of the future that many nations examine with interest and hope. In India, the need for infrastructure investment is widely recognized as a critical priority for ensuring more- and more inclusive- growth. Inadequate power supply, for instance, remains a key constraint, with people, businesses and factories in many areas hampered by inadequate electricity supply.
The national and state highway networks have failed to keep pace with the tremendous growth in demand for road transport: only about 30 percent of the state highways are two-lane, more than 50 percent are in poor condition, and the average travel speed is about 30-40 km/h. It is estimated that the economic losses incurred on account of congestion and poor roads run as high as $6 billion a year. Antiquated urban infrastructure is a severe constraint to the enhancement of living standards. With 40 percent of India’s population expected to live in urban areas by 2021 and expected to create about 65 percent of the Urban’s GDP, it is urgent to ensure that modern water supply, public transportation, sanitation and solid waste management are in place to support this growth.
The government’s 11th Five-year Plan (2007-12) places a strong emphasis on improving the country’s aggressive targets on infrastructure investment, from its current growth of GDP to 9 percent by 2012. Some of the World bank’s new instruments, such as the Clean Technology Fund and the Carbon Partnership Facility, can provide additional resources and improve the financing terms for green infrastructure investments that have significant local benefits, such as in urban waste management of renewable energy. India will surely reach the peak in terms of economic growth in time to come.
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