Poor Indian Infrastructure: Calls for action from the new government

May 8, 2014 | Posted by bobbysrinivasan << back to blog

Indian economy has been dragged into this quagmire over the last decade due to inefficient use of its resources. So much of the government budget money along with people’s savings have disappeared in the form of subsidies and also eaten away with nothing to show. This consumption of course contributed to the GDP but took the money away from the much needed infrastructure development. All the policies of the UPA government were towards winning votes rather than setting a meaningful infrastructure which will contribute to growth. We, as people have accepted poor infrastructure as though it is ordained and nothing could be changed. This is far from the truth. We need a good and well thought out infrastructure. If this country has any dream of becoming a developed country, we need to resolve that this should be available at any cost. Mr. Chidambaram ran out of money and the deficit in the budget of 2013-14 started piling up and so he decided to postpone all infrastructure projects to keep his commitment. Prime Ministerial candidate Modi talks about spending huge amounts of money on infrastructure development. Hope it happens. In the business world, a sinking fund provision exists to pay for the replacement with a newer and more efficient equipment. We need this for our country. But given the size of budget deficit and debt it appears as a distant dream.

Time has come for a new beginning. The new government should provide a hefty sum of money say in the range of 15-20 percent of the total budget towards infrastructure development. The money that is spent on welfare should be used to promote new jobs and skill development. This may cause pain among many but there is no choice.

India achieved 7.58 percent average economic growth in the last 10 years. But this was mostly due to consumption but very little in the form of investment. We need to change our model similar to the one used by China. Currently China is grossly overbuilt but when the global economy recovers they are ready to participate in the growth. Are we going to change? Time will tell.

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