Enhanced Role for Infrastructure Growth Post COVID – 19 through Secured Governance

"American roads are not good because America is rich, but America is rich because American roads are good," US President John F Kennedy

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Enhanced Role for Infrastructure Growth Post COVID – 19 through Secured Governance

The role of infrastructure in spearheading the economic development of a country and setting its pace can hardly be over-emphasized. As a foundation in an edifice, the place of infrastructure as well as its soundness, are crucial to the nation’s total development. The economic growth of a country has evidently happened hand in hand with the development of its infrastructure. A sound infrastructural foundation is a key to the overall socio-economic development of a state. This acts as a magnet for attracting additional investment into a state and thus provides a competitive edge over other states. Availability of adequate and efficient infrastructural setup not only promotes rapid industrialization but also improves the quality of life of the people.

The all-pervading importance of infrastructure would be clearer from the fact that it encompasses the whole spectrum of vital services such as roads, railways, civil aviation, shipping, power generation transmission, telecommunications, postal facilities, and urban development. Adequate infrastructure facilities are an absolute necessity for the rapid achievement of sustainable economic growth. Infrastructure facilities are like wheels of development without which the economy cannot function properly.

Relation between Infrastructure and Economic Development

Infrastructure considerably affects the economic development of a country. Several interchangeable terms such as, “social overhead”, “overhead capital” basic economic facilities, etc have been used to denote services that are generally identified with infrastructure. In recent years the term ‘infrastructure’ has been used more frequently in the literature of economic development and is often qualified by a prefix such as ‘economic’ or ‘social to distinguish different types of infrastructure. Historical records corroborate the fact that the countries or regions which have industrialized rapidly had well-developed infrastructure. If the infrastructure of an economy is stronger, one can build up the superstructure without much difficulty. The development history of all countries clearly tells us that unless the infrastructure is built on sound lines, it is not possible to achieve rapid economic development.

“A fast-growing economy like ours requires an infrastructure of truly world-class. This would also promote global competitive efficiency as a major thrust area. The infrastructure needs have to keep pace with the burgeoning needs of the different sectors of the economy. The widening chasm between rural and urban infrastructure is a core area of development”.Development of rural infrastructure including safe-drinking water, roads, housing, healthcare, sanitation, etc. is a prerequisite for the accelerated growth of the rural areas.

A robust economy needs a robust infrastructure. Infrastructure being asinine qua-none of economic development, its development is not a luxury but a necessity. Infrastructure development is of two types-demand driven or supply-driven. For example, in the context of congested urban areas, there is a demand for passes and bridges, and when bypasses are constructed or bridges are made it is because there is a demand for it. On the other hand, in the construction of expressways, which are meant to cater to fast-moving traffic and to the requirements of the industrialists and traders who are willing to pay more for better service, we would say that their construction is supply-driven. These facilities are made available and those who need them use them. Demand-driven infrastructure is a must for development whereas supply-driven infrastructure is one that is desirable but not a must. Normallyinfrastructure develops at a slow pace as it is given the least importance in the early stages of economic growth.

Infrastructure works directly and indirectly on a few determinants of economic development. On the demand side, it opens possibilities of investment by making available several necessary inputs and services, opening up the size of the market as well as increasing the supply elasticity and efficiency of factors of production. On the supply side also the development of infrastructure helps in mobilizing potential savings and channelizing them into productive investment. Adequate quantity, quality, and reliability of infrastructure are key to the growth of any economy. The importance of infrastructure has been generally taken as self-evident. It has been repeatedly emphasized that the availability of infrastructure is a necessary precondition of development. “The function of infrastructure is to release latent productivity in the factors of production singly and in coordination and bring about not only an increase in the output of individual factors and units of production but also mutually additive effect through coordination in inputs, output, space and time and thus maximize the overall rate of economic growth”.

The relationship between infrastructure and economic development may be analyzed by focusing on its impact on the basic determinants of development particularly through its links with capital formation and technological change. The phase at which the economic development takes place depends mainly on the level of infrastructure. The strong positive correlation between the level of infrastructure and economic development has been a well-established fact in the development economics literature. In the Keynesian macro-economic model, the income or output in the economy derives also from the level of investment made in the economy. It should be noted that out of all the four factors contributing to the income of a nation, namely, consumption expenditure, investment expenditure, government expenditure, and net income from abroad, income from investment comes from government spending. Though the income in the Keynesian model6 refers to short-term income, usually measured on annual basis, the investment made also includes long-term investment such as investment in basic infrastructural facilities. Since the model is based on the notion that there is a direct positive correlation between income and investment, investment in infrastructure is economically justified. The expansion and improvement of the infrastructure is a necessary pre-condition for capital formation and increase in production and productivity. Types of Infrastructure:

Enhanced Role for Infrastructure Growth Post COVID – 19 through Secured GovernanceTransport Sector

Transport an important component of the tertiary sector is of immense significance in a country’s economic development. With the advancements, complexities, and sophistication of the modern world, a country cannot think of attaining economic prosperity in the absence of rapid development of the transport sector. Transport is an essential economic infrastructure for the rapid development of any region. The transport sector accounted for 4.85% of the country’s GVA (Gross value addition) in2016-17 with road transport accounting for 3.12% of the GVA, railways accounting for 0.77%, Air Transport accounting for 0.16%and Water Transport accounting for 0.07%.

Airports: AAI manages a total of 137 airports which include 24 International airports (3 Civil Enclaves), 10 Customs Airports (4 Civil Enclaves),80 Domestic Airports, and 23 Domestic Civil Enclaves at Defence airfields. AAI provides air navigation services over 2.8 million square nautical miles of air space. During the year 2019-20, AAI handled aircraft movement of 1,314.23thousand [International 156.0 & Domestic 1158.23], Passengers handled 159.59 million [International 22.26 & Domestic 137.33] and the cargo handled 909.32 thousand MT [International 452.46 & Domestic 456.85].  Further, all Indian airports taken together have handled aircraft movement of 2,587.05 thousand [International 431.85 & Domestic 2155.20], Passengers handled 341.05 million [International 66.54& Domestic 274.51] and the cargo handled 3,328.63 thousand MT [International 2003.12 & Domestic 1325.51].

Railways: Indian Railways is among the world’s largest rail networks under single management. Indian Railways route length network is spread over 123,236 kms, with 13,452 passenger trains and 9,141 freight trains plying 23 million travelers and 3 million tonnes (MT) of freight daily from 7,321 stations.

The railway network is also ideal for long-distance travel and movement of bulk commodities, apart from being an energy-efficient and economic mode of conveyance and transport. Indian Railways is the preferred carrier of automobiles in the country.

The government of India has focused on investing in railway infrastructure by making investor-friendly policies. It has moved quickly to enable Foreign Direct Investment (FDI) in railways to improve infrastructure for freight and high-speed trains. At present, several domestic and foreign companies are also looking to invest in Indian rail projects.

Roadways: India’s road network of 5.90 million kms is the second largest in the world. Of which National Highways constituted 1.94%, State Highways constituted 2.97%, District Roads constituted 9.94%, Rural Roads (including JRY) constituted 70.65%, Urban Roads constituted 9.27% and Projected Roads constituted 5.58%, With the number of vehicles growing at an average annual pace of 10.16%, Indian roads carry about 60% of freight and 87% of passenger traffic.

The total number of registered motor vehicles (Transport and Non-Transport) increased to 253 million in 2016-17 recording a CAGR of 10.11%, outpacing the CAGR of National Highways of 5.54%in the last ten years. While the category of “Transport” vehicles accounts for 8.9% of total registered vehicles, Non-Transport Vehicles account for the balance of 91.1%.

Amongst the Transport Vehicles, LMV (Goods) account for a share of 30.6%, LMV (Passengers) account for a share of25.1%, Trucks account for a share of about 19.3%, Taxi’s account for a share of 12%& Busesaccount for a share of 5.9%. Amongst the Non-transport Vehicles, Two Wheelers account for about 81% and Car’s account for about 12.43%. Two-wheelers, which account for the largest segment of both registered vehicles (Transport and Non-Transport) of 73.86% as well as of non-Transport of 81% in 2017 have grown at the fastest rate with a CAGR of 10.47% in the last 10 years followed by Cars which have [email protected] 10.29%. This trend in vehicular composition can be said to be reflective of a preference for personalized means of transport.

Waterways: Inland Water Transport

India has an extensive network of inland waterways in the form of rivers, canals, backwaters, and creeks. The total navigable length is 14,500 km, out of which about 5,200 km of the river and 4,000 km of canals can be used by mechanized crafts. Freight transportation by waterways is highly under-utilized in India compared to other large countries and geographic areas like the United States, China, and the European Union. The total cargo moved (in tonne-kilometers) by the inland waterway was just 0.1% of the total inland traffic in India, compared to the 21% figure for the United States. Cargo transportation in an organized manner is confined to a few waterways in Goa, West Bengal, Assam, and Kerala.

Sea Ports: India has a coastline spanning 7516.6 kilometers, forming one of the biggest peninsulas in the world. According to the Ministry of Shipping, around 95% of India’s trading by volume and 70% by value is done through maritime transport. It is serviced by 13 major ports (12 Government-owned and one private) and 187 notified minor and intermediate ports. A total of 200 major and non-major ports are present in the following States: Maharashtra (53); Gujarat (40); Tamil Nadu (15); Karnataka (10) and others (82).

In FY20, major ports in India handled 704.82 million tonnes (MT) of cargo traffic, implying a CAGR of 2.74% during FY16-FY20. Cargo traffic at non-major ports reached 447.21 MT in FY20 (till December 2019). The major ports had a capacity of 1,514.09 MT per annum (MTPA) in FY19. The Maritime Agenda 2010-20 has a 2020 target of 3,130 MT of port capacity.

  • The capacity addition at ports is expected to grow at a CAGR of 5-6% till 2022, thereby adding 275-325 MT of capacity.
  • Under the Sagarmala Programme, Government has envisioned a total of 189 projects for the modernization of ports involving an investment of INR. 1.42 trillion (US$ 22 billion) by the year 2035.
  • India’s cargo traffic handled by ports is expected to reach 1,695 million metric tonnes by 2021-22 according to a report by the National Transport Development Policy Committee.

Electric Vehicles (EV): EV sales, excluding e-rickshaws, in India grew by 20% at 1.56 lakh units in 2019-20 driven by two-wheelers.In 2018-19, total EV sales in India stood at 1.3 lakh units. Out of the total sales in FY20, 1.52 lakh units were two-wheelers, 3,400 cars, and 600 buses. The corresponding sale for 2018-19 was 1.26 two-wheelers, 3,600 cars, and around 400 buses.

“This figure does not include e-rickshaws which are still largely with the unorganized sector with a reported sale of around 90,000 units. The corresponding figures of the e-ricks sold in the previous year have not been documented.

Power Sector

India is the world’s third-largest producer and third-largest consumer of electricity. The national electric grid in India has an installed capacity of 371.977 GW as of 31st July 2020. Renewable power plants, which also include large hydroelectric plants, constitute 35.94% of India’s total installed capacity. The Overall generation (Including generation from grid-connected renewable sources) in the country has been increased from 1,376.095 BU during 2018-19 to 1,390.467 BU during the year 2019-20.

The natural resources for electricity generation in India are unevenly dispersed and concentrated in a few pockets. There are around 740 power plants in operation all over India.

Transmission, an important element in the power delivery value chain, facilitates evacuation of power from generating stations and its delivery to the load centers. For efficient dispersal of power to deficit regions, strengthening the transmission system network, enhancing the Inter-State power transmission system and augmentation the National Grid and enhancement of the transmission system network are required. An extensive network of transmission lines has been developed over the years for evacuating power produced by different electricity generating stations and distributing the same to the consumers. The nominal Extra High Voltage lines in vogue are ± 800 kV HVDC & 765 kV, 400 kV, 230/220 kV, 110 kV, and 66 kV AC lines.

The Transmission Line Capacity has increased to 425,071 cKm during FY 2019-20 as compared to 413,407 cKm during FY 2018-19. The addition of Transformation Capacity was 967,893 MVA during FY 2019-20 as compared to 899,663 MVA during FY 2018-19.

Distribution is the most important link in the entire power sector value chain.  As the only interface between utilities and consumers, it is the cash register for the entire sector. Under the Indian Constitution, power is a Concurrent subject and the responsibility for distribution and supply of power to rural and urban consumers rests with the states. The government of India provides assistance to states through various Central Sector / centrally sponsored schemes for improving the distribution sector.

Overall T&D losses in India is approximate 21.04% whereas in other countries like the USA it is only 8%, Japan 7%, Taiwan 9%, Korea 12.5%. India is the country having the highest T&D losses in the world. So there is room for improvement in this area. Energy losses are increasing year by year in states as well as in India as a whole. Energy conservation and good management on the distribution side that results in the loss reduction and hence an improvement of the Indian economy as well as a reduction in consumer tariff that may bring prosperity in India and reduce the gap between generation and demand.

Telecom & Postal Sector

India has witnessed a transformation from an agriculture-based economy to a knowledge-based economy. This phenomenal growth in the heterogeneous service sector in India has been so rapid that today the country stands at number five in terms of tertiary sector output. India’s telecommunication network is the second-largest in the world by a number of telephone users (both fixed and mobile phones) with 1,172.44 million subscribers and 718.74 million internet subscribers, as per the latest report. The telecom industry’s contribution to GDP is estimated to reach 8.2% by 2020, by when industry players are slated to also leverage 5G technologies to connect with global markets and ring in a fully networked, knowledge and services economy.

The wider mobile ecosystem, it said, supported a whopping 32 million jobs (directly and indirectly) and made a substantial contribution to the funding of the public sector with nearly INR. 35.61 lakh crore (US$500 billion) rose through general taxation (before regulatory and spectrum fees). Telecommunication has supported the socioeconomic development of India and has played a significant role to narrow down the rural-urban digital divide to some extent. It also has helped to increase the transparency of governance with the introduction of e-governance in India. The government has pragmatically used modern telecommunication facilities to deliver mass education programs for the rural folk of India.

With a daily increasing subscriber base, there have been a lot of investments and developments in the sector. FDI inflows into the telecom sector during April 2000 – March 2020 totaled INR. 2.72 lakh crore (US$37.27 billion).

5G Smart Phone in India:

India had the highest average monthly data usage per smartphone, at 9.8 gigabytes (GB) by the end of 2018. Increasing numbers of LTE subscriptions, attractive data plans, and changing video viewing habits among young people drove this growth. In Q1 2019, mobile data traffic grew 82% year on year. The high growth rate was mainly influenced by the increased number of smartphone subscriptions. Total mobile data traffic per month in India is expected to increase at a CAGR of 23% from 4.6 exabytes (EB) in 2018 to 16 EB by 2024. In India, 5G subscriptions are expected to become available in 2022 and will represent 6% of all mobile subscriptions at the end of 2024.

Enhanced Role for Infrastructure Growth Post COVID – 19 through Secured GovernanceFor more than 150 years, the Department of Posts (DoP) has been the backbone of the country’s communication and has played a crucial role in the country’s social-economic development. It touches the lives of Indian citizens in many ways: delivering mails, accepting deposits under Small Savings Schemes, providing life insurance cover under Postal Life Insurance (PLI) and Rural Postal Life Insurance (RPLI), and providing retail services like bill collection, sale of forms, etc. With 155,531 Post Offices, the DoP has the most widely distributed postal network in the world.

Financial Sector

The present Indian banking system consists of 18 public sector banks, 22 private sector banks, 46 foreign banks, 53 regional rural banks, 1,542 urban cooperative banks and 94,384 rural cooperative banks are providing financial services in all segments of the society. There are around 144,818 bank branches with 210,478 ATMs in India.

The Indian banking sector is broadly classified into scheduled and non-scheduled banks. The scheduled banks are those included under the 2nd Schedule of the Reserve Bank of India Act, 1934. The scheduled banks are further classified into nationalized banks; State Bank of India and its associates; Regional Rural Banks (RRBs); foreign banks; and other Indian private sector banks. The term commercial banks refer to both scheduled and non-scheduled commercial banks regulated under the Banking Regulation Act 1949.

Educational Sector

India has many accomplishments to celebrate in education. More than 70 million children attend pre-primary school, there is a near-universal primary enrolment and there is a consistent increase in upper primary (lower secondary) participation. The school system in India has four levels: lower primary (age 6 to 10), upper primary (11 and 12), high (13 to 15), and higher secondary (17 and 18). The lower primary school is divided into five “standards”, upper primary school into two, high school into three, and higher secondary into two. Students have to learn a common curriculum largely (except for regional changes in mother tongue) till the end of high school.

Higher Education at a Glance

There are 993 Universities, 39,931 Colleges, and 10,725 Stand Alone Institutions listed on the AISHE web portal. Around 385 Universities are privately managed. 394 Universities are in rural areas. More than 16 Universities are exclusively for women. There are 548 General, 142 Technical, 63 Agriculture & Allied, 58 Medical, 23 Law, 13 Sanskrit, and 9 Language Universities and rest 106 Universities are of other categories.

Total enrolment in higher education has been estimated to be 37.4 million with 19.2 million males and 18.2 million females. About 79.8% of the students are enrolled in Undergraduate level programs. 169,170 students are enrolled in Ph.D. that is less than 0.5% of the total student enrolment.

The total number of foreign students enrolled in higher education is 47,427 come from 164 different countries from across the globe. The total numbers of teachers are 1.42 million, out of which about 57.8% are male teachers and 42.2%are female teachers. There are around 40,813 students were awarded Ph.D. level degrees during 2018.

Healthcare Sector

Enhanced Role for Infrastructure Growth Post COVID – 19 through Secured GovernanceIndia has a vast health care system, but there remain many differences in quality between rural and urban areas as well as between public and private health care. Despite this, India is a popular destination for medical tourists, given the relatively low costs and high quality of its private hospitals. International students/patients in India should expect to rely on private hospitals for advanced medical care.

India also is a top destination for medical tourists seeking alternative treatments, such as Ayurveda medicine and naturopathies therapies. India is also a popular destination for students of alternative medicine. International students should expect to rely on private hospitals for advanced medical treatment in India. Indian pharmacists could be a valuable resource for International Medical Tourism & Pharmacy Industries is also.

Healthcare Infrastructure Statistics

Health infrastructure is an important indicator for understanding the health care policy and welfare mechanism in a country. It signifies the investment priority with regards to the creation of health care facilities. Infrastructure has been described as the basic support for the delivery of public health activities. Effective public health actions rely upon a well-trained public health workforce and good and sufficient health infrastructure.

  • Medical education infrastructures in the country have shown rapid growth over the past few years. The country has 529 medical colleges, 313 Dental Colleges for BDS &253 Dental Colleges for MDS. The total number of admissions for the academic year 2019-20 in Medical Colleges is approx. 70,000 including Government & Private Medical colleges. The Dental Colleges saw the admission of 26,960 in BDS and 6,288 in MDS in the academic year 2018-19.
  • India has 1909 Institutions for ANM with an admission of 55263, 6,861 Institutions with an admission of 267,564 for Nursing, and 1,682 Pharmacy Institutions with an admission of 99,145.
  • There are around 21,403 rural hospitals with 265,275 beds and 4,375 urban hospitals with 448,711 beds in India.
  • There are 4,035 hospitals and 27,951 dispensaries to provide medical care facilities for Ayurveda and Naturopathy medicine under AYUSH Ministry.
  • Healthcare is the right of every individual. 60% of the population lives in rural India. To cater to the health needs of these rural populations there are 158,417 Sub Centers, 25,743 Primary Health Centers, and 5,624 Community Health Centers in India.
  • The total no. of licensed Blood Banks in the Country is 3,108 (approx.).
  • The country has 469 Eye Banks till January 2019.
  • The Central Government Health Scheme (CGHS) was started under the Ministry of Health and Family Welfare in 1954 with the objective of providing comprehensive medical care facilities to Central Government employees, pensioners, and their dependents residing in CGHS covered cities. At present, CGHS has health facilities in 37 cities having 288 Allopathic Dispensaries and 85 AYUSH Dispensaries in the Country. There are 11.413 lakh registered cardholders with a total of 33.96 lakh beneficiaries.

Medical Tourism in India: India, with its ancient and modern heritage, diversities of culture, and exotic destinations is always an attraction to international travelers. Medical travel offers a mix of pleasure, luxury, and quality healthcare for medical patients coming to India. The estimated Foreign Tourist Arrivals (FTAs) in the country for medical purposes during the years 2015, 2016, and 2017 are 2.34 lakh, 4.27 lakh, and 4.95 lakh respectively. Foreign tourist arrivals for medical reasons in 2019 were 697,4536.4% of the total; for 2018, the number was 644,036, 6.1% of the total tourist inflow.

Enhanced Role for Infrastructure Growth Post COVID – 19 through Secured GovernanceTourism Sector

India is a large market for travel and tourism. It offers a diverse portfolio of niche tourism products – cruises, adventure, medical, wellness, sports, MICE, eco-tourism, film, rural and religious tourism. India has been recognized as a destination for spiritual tourism for domestic and international tourists. The total contribution of the travel and tourism sector to India’s GDP is expected to increase from INR. 15,24,000 crore (»US$ 234.03 billion) in 2017 to INR. 32,05,000 crore (»US$ 492.21 billion) in 2028. According to WTTC, India ranked 3rd among 185 countries in terms of travel & tourism’s total contribution to GDP in 2018.

  • The number of Foreign Tourist Arrivals (FTAs) in India during 2019 increased to 93 million as compared to 10.56 million in 2018. The growth rate in FTAs during 2019 over 2018 was 3.5% as compared to 5.2% during 2017 over 2018.
  • The share of India in international tourist arrivals in 2019 was 23%. India accounted for 4.97% of international tourist arrivals in Asia Pacific Region in 2019, with the rank of 8th.
  • About 6% of the FTAs entered India through air routes followed by 19.6% by land routes and 0.8% by sea routes. Delhi and Mumbai airports accounted for about 44.5% of the total FTAs in India. The top 15 source markets for FTAs in India in 2018 were Bangladesh followed by United States, United Kingdom, Sri Lanka, Canada, Australia, Malaysia, China, Germany, Russia Federation, France, Japan, Singapore, Nepal, and Thailand. The top 15 countries accounted for about 75.33% of total FTAs in India in 2018.
  • Enhanced Role for Infrastructure Growth Post COVID – 19 through Secured GovernanceTourism continues to play an important role as a foreign exchange earner for the country. In 2019, foreign exchange earnings (FEE) from tourism were US$ 30.06 billion as compared to US$ 28.59 billion in 2018, registering a growth of 1%.
  • The number of domestic tourist visits in India during 2019 was2,321.98 million (revise) as compared to 1,853.79 million in 2018, with a growth rate of 3%.
  • The number of Indian national departures from India during 2019 was 92 million as compared to 26.30 million in 2018, registering a growth rate of 2.4%.

Enhanced Role for Infrastructure Growth Post COVID – 19 through Secured GovernanceHospitality Sector: The Government is also making serious efforts to boost investment in the tourism sector. In the hotel and tourism sector, 100 percent FDI (Foreign Direct Investment) is allowed through the automatic route. A five-year tax holiday has been offered for 2-, 3- and 4-star category hotels located around UNESCO World Heritage sites (except Delhi and Mumbai). India’s Number of Hotels data was reported at 1,961.000 Units in 2018.

The hotel and Tourism sector received a cumulative FDI inflow of US$15.28 billion between April 2000 and March 2020. In Union Budget 2019-20, the Government introduced a Tax Refund for Tourists (TRT) scheme in line with countries like Singapore to encourage tourists to spend more in India and boost tourism. The Government of India also announced to development of 17 iconic tourist sites in India into world-class destinations as per Union Budget 2019-20.

Ministry of Tourism launched DekhoApnaDesh webinar in April 2020 to provide information on the many destinations and the sheer depth and expanse of the culture and heritage of Incredible India. Till July 20, 2020, 42 webinars were conducted under the series.

Industry Sector

As of 31st October 2019, a total of 1,944,336 companies were registered in the country. Of the 1,156,114 companies were active (comprising of 1,090,762 private companies and 65,352 public companies). Many of the active companies (about 73.54%) were operating in activities covered under four broad heads, namely, ‘Business Services’ (32.27%), ‘Manufacturing’ (19.96%), ‘Trading’ (12.82%), and ‘Construction’ (8.49%).

Enhanced Role for Infrastructure Growth Post COVID – 19 through Secured GovernanceAccording to a recent survey, about 26% of businesses surveyed said their sales and purchases have been impacted due to the virus outbreak. MSMEs are grappling with problems like low liquidity or cash flow and lack of workforce as the daily wagers have gone to their villages. Businesses that are. The services sector is also slowing down with more people opting for social isolation into manufacturing will also take a hit on the export business as the situation remains uncertain. As of 30th September 2019, the total number of foreign companies registered in the country was 4,836 and of the 3,388 foreign companies were active.

Special Characteristics of MSMEs:

  1. Vast discrepancies in legal structure. It is estimated 4 million MSMEs are unincorporated. Out of these, 99% are in the micro sector, functioning in an informal way.
  2. Vast product and services range. While on one hand, 31% of MSMEs are in manufacturing, 36% in the trading, and 33% in services; on the other hand, 51% are in rural areas.
  3. Mostly starved of cash flow. Except for a few MSMEs, which have been well established and have developed a good way of generating capital resources; others mostly rely on working capital loans and cash inflow from sales. The outstanding credit by banks is only 37% that too at a weighted average interest rate of 11.24%. Structurally strong MSMEs are better placed in the current turmoil. Hence, they are more eligible for financial assistance.
  4. Agile is like a fighter aircraft. As most MSMEs are ownership-managed, their capability to re-position products or services to meet changing market requirements and ramp up and ramp down is great.
  5. Market reach, productivity, and visibility. MSMEs lack basic capabilities to enhance their market reach, adopt new software-driven productivity tools and use social media for greater visibility.

Market Size

Foreign Direct Investment (FDI) in the Construction Development sector (townships, housing, built-up infrastructure, and construction development projects) stood at US$ 25.66 billion from April 2000 to March 2020, according to the Department for Promotion of Industry and Internal Trade (DPIIT). The logistics sector in India is growing at a CAGR of 10.5% annually and is expected to reach US$215 billion by end of 2020.

Investments

India needs to invest INR. 336.303 lakh crores (US$4.5 trillion) on the infra sector in 2020-40 for sustainable development in the country. India is witnessing significant interest from international investors in the infrastructure space. Some of the key investments made in the sectors are noted here:

Forecasting Infrastructure Investment Needs & Gaps in India(2015 prices and exchange rates, 2016-2040)

Enhanced Role for Infrastructure Growth Post COVID – 19 through Secured GovernanceForecasting Some Key Infrastructure Investment Needs & Gaps in India(2015 prices and exchange rates, 2016-2040

Self – Sustained Economic growth through Secured Governance

“Secured Governance offers a strategy for the government to get all the basic infrastructure development with a negligible investment by the Government. It is a concept of developing Techno-Economic Corridors connecting HUBs which will act as a growth center for individual sectors. The very concept of “Secured’’ here implies a secured convergence or knitting with various sectors defining a growth for an economy.”

Enhanced Role for Infrastructure Growth Post COVID – 19 through Secured GovernanceSecured Governance – A Holistic Approach to Infrastructure Development

Secured Governance is a concept that is catching the attention of many as a holistic approach to infrastructure needs, promising a great deal. It professes taking advantage of the valuation of assets created and delivering at negligible cost to the government. It aims at balanced growth in all sectors in need of better facilities, in a more holistic manner, rather than focusing only on saying expressways, or power, or any one of numerous other sectors. While addressing any one of them, the others also get due attention ensuring all-around development. It promises more societal participation and benefit-sharing with transparency. Underlying this is a strategy of developing techno-economic corridors connecting urban areas across the country.

Secured Governance advocates a pragmatic approach of taking Advantage of Valuation of Assets Created

This is not new. We all know when development takes place there is valuation in the property. Who benefits from this? Often it is incidental and taken advantage of by land and property sharks. Imagine a model where this valuation can be plowed back into the project and benefit the people around. First, the cost of the project is reduced and can actually be at negligible cost to the government if carefully planned. Next, the population sees it as benefitting them and so they participate more enthusiastically, helping with the early completion of the project rather than being an impediment.

Public-Private Participation (PPP)

The method of execution envisaged is essential of the Engineering, Procurement, and Construction (EPC) model, where concessionaires bid for a project, with the incentive being concurrent areas offered to them for development and commercial use. These will give returns in four to five years which will meet their investment cost. It is better than waiting for 20 years to collect toll to make good the loans taken for a project. While the concessionaire utilizes valuation in a pattern that is part of a larger plan for the area, he also shares this with more and adds more value to the whole system. It will be a win-win situation. The SG approach requires the Government to participate as a facilitator and nothing more. The first step is to recognize the merits of a multi-sector approach to infrastructure and conceive projects which may be predominantly one sector but carry with them smaller packages of other sectors. Implied in this is the ability to make decisions across ministries and give clearances at one point. The method of implementation will also be peculiar to each project, the place, and the local conditions. Single window clearances would therefore have to be the norm, supported by empowered teams that can help conceptualize and clear a project in the SG mold. Once this is done, the execution may be decentralized to specific states or regions. Help from the government will only be required for mid-course corrections where inescapable. The requirement is to move from small to big, from project to project. Each will be unique depending on what the ground and the situation dictates. The method of both valuation and value addition needs expertise and imagination for holistic development in the state through Secured Governance.

PPPs are essentially “risk-sharing partnerships” between governments and the private sector on financing, designing, constructing, and operating public infrastructure and public services. Infrastructure projects are inherently complex and unpredictable, and, under PPP arrangements, governments opt to transfer specific tasks and the risks associated with them to private enterprises that might be better able to execute and mitigate them.

Conclusion

The National Infrastructure Plan (NIP) has been made on a best effort basis by aggregating the information provided by various stakeholders including line ministries, departments, state governments, and private sector across infrastructure sub-sectors. National infrastructure pipeline 2020 to 2025 for achieving GDP of 5Trillion Dollars India needs to spend US$1.4 trillion or Rs 100 lakh crore to step up annual infrastructure investment. All projects(Greenfield or Brownfield, under conceptualization or under implementation or under Development) of project cost greater than INR. 100 crore per project were sought to be captured. Investment in infrastructure is necessary for the economy, as power shortages, inadequate transport, and poor connectivity affect overall growth performance and progress. Infrastructure Growth, huge investment toward a greater formalization of the economy are bound to lead to an acceleration in per capita income of the people and large-scale employment. The government clearly holds the key to realizing this potential and taking a proactive stance.

Enhanced Role for Infrastructure Growth Post COVID – 19 through Secured GovernanceUse modern technologies to provide both immediate assessment and the longer-term ability to continually evaluate the fine balance between lean operations and risk mitigation. Using analytics, AI, and visualization tools, it’s possible to model and then build flexibility and optionality into sustainable infrastructure development.


By,
Dr. P. Sekhar,
Chairman,
Unleashing India Smart City Panel,
MTGF
Dr. P. Sekhar the policy times

By,
Mr. Nitin Gokarna,
IAS,
Principal Secretary,
Public Works Dept,
UP Govt.
Mr. Nitin Gokarna IAS


Summary
Article Name
Enhanced Role for Infrastructure Growth Post COVID – 19 through Secured Governance
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"American roads are not good because America is rich, but America is rich because American roads are good," US President John F Kennedy
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THE POLICY TIMES
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