Infrastructure Is A Decadal Growth Driver; Catalyses ‘Ease Of Living’
Most policymakers see inadequate infrastructure as cause of underdevelopment.
It is actually the effect.
Roads, bridges, transit, water, power, rail network, spectrum and a host of other infrastructure assets are the essential building blocks of the economy. They enable trade, power businesses, stabilise the economy. Infrastructure enhances productivity, stimulates demand, creates jobs, and spurs investment. It triggers growth, boosts the economy, pedalling the virtuous growth cycle.
A powerful multiplier; enhance social mobility, stimulate growth
A Crux study highlights that every rupee invested in well-designed, robust infrastructure sector raises economic activity by three. Similarly a 25% sustained increase in futuristic and interconnected infrastructure spending accelerates real growth of 10% in 5 years; and a four multiplier.
Benefits accrue for decades.
India’s infrastructure needs Rs. 100 lac crores, 40%, in ‘developed’ urban India alone. The largest 10 cities, also the economic hubs are home to a tenth of its people, delivering over half of nation’s GDP. Sustained infrastructure investment will boost growth in these cities. Better infrastructure will improve health & well-being; enhance ‘ease of living’. It will catalyse potential, and equally a magnet that attracts investment to these cities.
However, discussions regarding infrastructure spending invariably meanders, is never comprehensive. Lack of resources and ‘alternatives’ like welfare scheme etc. dominates the debate.
Citizens are condemned to suffer poor infrastructure
There is now a ray of hope.
The Prime Minister’s vision to invest in infrastructure has every sector excited. Benefits of public investment are more broadly shared than the benefits of private-sector investment.
However he needs to go beyond, and deliver.
Both attract & incentivise partners
In the aftermath of the pandemic, the industry lacks the confidence, even the ability to invest in long gestation infrastructure projects. Admittedly, Government may not have the resources or the capacity to carry the burden of creating the infrastructure, and will tire out. It must raise resources, (finance is cheap) and lead the investment cycle; and ‘pick & lift’ the private partners along the way. Government must, both attract & incentivise by creating a robust framework that supports and enables symbiotic public-private partnership.
Similarly the government must act and behave like an equal partner. Enabling administrative and fair & just legal framework is the spine of an economy. Trust, shared goals, and risk-reward are at the heart every partnership.
However, public-private partnership is unequal, beset with mutual mistrust. Partnerships have fallen apart; several have failed because the government is indifferent, acts and behaves like the big brother; it lacks the partnership ethos. Goals are invariably misaligned, intents nonlinear, resulting in rumpled execution. Lack of capacity of the project owners (bureaucracy) hasn’t helped.
Alienates the ‘big & best’
This attitude alienates the ‘big & best’ of the private sector from the infrastructure ecosystem, perpetuating the distrust, depreciating the impact. The economy suffers, businesses pay the price. Citizens endure.
A Crux insight focussing on 100 large projects highlights how our archaic infrastructure framework shaves about a tenth from the GDP growth rate; ineffective implementation subtracts even more value.
There are several other key challenges. The nature, character and behaviour of big government invariably dominate economic forces. The ecosystem is swayed by ‘links and connections’, resulting in resources misallocation. This is detrimental to developmental ethos. It chokes projects, imposes huge costs, and hurts the economy's productive sector.
The model is broken.
PM’s vision may inspire action. It always does. But as in most cases, that alone is never enough. Not sufficient.
India will need a cadre of ‘designers & doers’ to impact the outcome.
Our infrastructure policy must constitute a broad set of principles that addresses the concept holistically. Adopt a robust yet innovative implementation framework, supported by investment in digital supervision, focussed & holistic monitoring. It must revamp its procurement processes, adopt transparent expenditure milieu. Similarly, government needs to strengthen its institutions and create entities that can hire the best talent. It must, in addition augment capacity, upgrading capabilities of its implementation agencies.
Policymakers must optimise investments, focus on community-oriented projects augment cross-sector outcomes, and prioritize projects that have the largest impact, high potential for growth. Equally focus on completing on-going projects for ‘quick’ wins and triggered stimulus. Incomplete projects are a drag; completed assets can be utilised, monetized.
Must recognise; and equally appreciate. Not impose
Infrastructure development is complex, with several inter-connected sub-systems. Governance is technical, specialized, largely applied and should be the responsibility of a cadre of domain experts who coherently understand and holistically deliver.
Government must obtain timely procurement, ensure holistic pre-project approvals, assure sustainable and transparent revenue stream. Private sector on its part has responsibilities too. It should bring in new technologies, implementation expertise & capabilities commit finances, ensure quality.
It is easy to lose sight of the smaller (but more tactical) projects like social infrastructure, cross sectoral rural focused projects that accelerates & enables broader, sustainable benefits, and drives social mobility. The Government must strategically bundle such smaller schemes, incentivise private partnerships to efficient delivery. Similarly policymakers must be equally wary of indifference & temptation to upgrades and ‘shovel ready’ projects to ‘tick the box’.
Infrastructure supplements rural economy, rebalances growth. The forward-backward linkages, enhances equity & opportunity, and elevates rural living conditions.
Not only is infrastructure a long-term multiplier, it equally is a remedy and stimulus for a slowing or a disrupted economy. Infrastructure promotes economic growth (forward linkages), growth in turn makes demands on infrastructure. The two-way relationship is self-sustaining.
Infra dev. always a ‘work in progress’
The leadership in him has missioned a clear and ambitious program and hand over the baton to the bureaucracy, which should deploy a systematic & holistic approach. Policymakers must embrace symbiotic partnerships and pass the baton to the technocrats and the project management team. They must imbibe rigor in execution, innovation in program management for impact and optimisation.
PM’s vision of infrastructure creation is truly transformational; and bringing it to the forefront of the development ecosystem is equally defining.
It will influence our lives and elevate ‘ease of living’.
