Page 224 - DECO502_INDIAN_ECONOMIC_POLICY_ENGLISH

Indian Economic Policy Dilfraz Singh, Lovely Professional University

Notes Unit 19: Sectoral Performance II: Role of Infrastructure
in Economic Development

CONTENTS
Objective
Introduction
19.1 Role of Infrastructure in Economic Development
19.2 Energy
19.3 Power
19.4 Transport System in India’s Economic Development
19.5 Urban Infrastructure
19.6 Private Investment in Infrastructure: Outlook and Prospects
19.7 Summary
19.8 Key-Words
19.9 Review Questions
19.10 Further Readings

Objectives

After reading this Unit students will be able to:
• Describe the Role of Infrastructure in Economic Development.

Introduction

Infrastructure is the basic physical and organisational structures needed for the operation of a society
or enterprise, or the services and facilities necessary for an economy to function. The term typically
refers to the technical structures that support a society, such as roads, water supply, sewers, electrical
grids, telecommunications, and so forth. Viewed functionally, infrastructure facilitates the production
of goods and services, and also for the distribution of finished products to markets, as well as basic
social services such as schools and hospitals; for example, roads enable the transport of raw materials
to a factory. Encompassing all things to all people is not a particularly useful way to define
infrastructure, as it does not make clear investors, Governments, and citizens’ ability to understand,
advocate, and direct capital toward durable, networked assets with widespread societal benefits.
Primary infrastructure components are generally monopolistic in nature and require large financial
commitments for their development, repair, and replacement. Infrastructures facilitate economic
productivity and promote a standard of living. Infrastructure can then be more concisely defined as
the physical components of interrelated systems providing commodities and services essential to
enable, sustain, or enhance societal living conditions.
19.1 Role of Infrastructure in Economic Development

The prosperity of a country depends directly upon the development of agriculture and industry.
Agriculture production, however, requires irrigation, power, credit, transport facilities, etc. Industrial
production requires not only machinery and equipment but also skilled mano-power, management,
energy, banking and insurance facilities, marketing facilities, transport services which include railways,
roads, and shipping, communication facilities, etc. All these facilities and services which help in
industrial and agricultural production constitute collectively the infrastructure of an economy. The
development and expansion of these facilities are an essential pre-condition for increasing agricultural
and industrial production in a country. In the last 200 years or more industrial and agricultural
revolutions in England and other countries were accompanied, by a revolution transport and

218 LOVELY PROFESSIONAL UNIVERSITY