Infrastructure is the key

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The infrastructure sector is the main engine of the Indian economy. The sector has a huge responsibility to guide the overall development of India and the government has focused intensively on implementing policies to ensure the timely establishment of world-class infrastructure in the country. The infrastructure sector includes electricity, bridges, dams, roads, and urban infrastructure development. Infrastructure is fundamental to our quality of life – a fact that implicitly and explicitly explains the proliferation of infrastructure in the Sustainable Development Goals (SDGs). India is striving to improve its manufacturing competitiveness at a time when manufacturing powerhouse China is shifting toward consumption-led growth. China now faces the risk of overcapacity in segments such as port and power. For India, on the other hand, its road to sustainably higher growth and a competitive manufacturing sector goes through robust and reliable national infrastructure, especially in power and transportation.

Population growth, migration, and urbanization trends demand an increase in infrastructure development, especially in emerging economies and developing countries. For example, energy-related infrastructure and an expansion of the electricity grid are necessary to provide energy access to urban and rural areas. Transportation infrastructure— such as roads, railways, ports, airports—is key for people’s mobility from home to work, and for connecting rural areas to domestic and regional markets, contributing to a country’s economic development. Sustainable water infrastructure will improve people’s lives by providing access to water and help manage scarce resources in a sustainable manner.

Government Initiative and investment

In Union Budget 2021, the government has given a massive push to the infrastructure sector by allocating Rs. 233,083 crore (US$ 32.02 billion) to enhance the transport infrastructure. The government expanded the ‘National Infrastructure Pipeline (NIP)’ to 7,400 projects. ~217 projects worth Rs. 1.10 lakh crore (US$ 15.09 billion) were completed as of 2020. Through the NIP, the government invested US$ 1.4 trillion in infrastructure development as of July 2021. So here I would like to mention some of the key highlights of the Budget 2021 are as follows:

  • In October 2021, the Dubai government and India inked an agreement to develop infrastructures such as industrial parks, IT towers, multipurpose towers, logistics centers, a medical college, and a specialized hospital in Jammu & Kashmir.
  • The government announced Rs. 18,998 crore (US$ 2.61 billion) for metro projects.
  • In June 2021, Mr. Rajnath Singh, the Minister of Defence e-inaugurated 20 km long double lane Kimin-Potin road, together with nine other roads in Arunachal Pradesh and one each in the Union Territories of Ladakh and Jammu & Kashmir, built by Border Roads Organisation (BRO).
  • In November 2021, India, the US, Israel, and the UAE established a new quadrilateral economic forum to focus on infrastructure development projects in the region and strengthen bilateral cooperation.
  • In November 2021, the Asian Development Bank (ADB) has approved a US$ 250-million loan to support the development of the National Industrial Corridor Development Programme (NICDP). This is a part of the US$ 500-million loan to build 11 industrial corridors bridging 17 states.

Important Features of Infrastructure:

It is worth mentioning some different aspects of infrastructure – First, the construction of infrastructure requires large and piecemeal investments and contributes to exports, after a long time their gestation period is quite long.  Second, thanks to large overhead capital and one-off investments, most of these important economies of scale can be observed. Due to the significant economies of scale that can be found in many infrastructure services, they have the characteristics of natural money. The third important part of infrastructure facilities is the creation of externalities.

infrastructural facilities are either built or run by the government and public sector enterprises or if the private sector is permitted to make an investment in them and run them, they need to be regulated by the government, so that they should not exploit the consumers. For example, the distribution of electricity which is an infrastructural service is being provided by two power Companies of Tata and Reliance in different regions of Delhi, the electricity rates and other charges are being regulated by an authority appointed by the government. Similarly, in telecommunication, which is another infrastructural service, vari–ous companies such as Airtel, Vodaphone, Idea, MTNL are providing this service of wireless telephony (i.e., mobile service) are being regulated by TRAI.


The infrastructure sector has become the biggest focus area for the Government of India. India plans to spend US$ 1.4 trillion on infrastructure during 2019-23 to have a sustainable development of the country. The Government has suggested an investment of Rs. 5,000,000 crore (US$ 750 billion) for railways infrastructure from 2018-30. India and Japan have joined hands for infrastructure development in India’s Northeast states and are also setting up an India-Japan Coordination Forum for Development of Northeast to undertake strategic infrastructure projects for the region.

Infrastructure is important not only for rapid economic growth but also for ensuring inclusive growth. By inclusive growth, I mean that the benefits of growth are shared by most people in a given country. Inclusive development will thus alleviate poverty and reduce income inequality in the country.

– Amrin

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