TARGETING GROWTH THROUGH INFRASTRUCTURE

It is heartening that the Government has set up a high-level Cabinet Committee under the chairmanship of the Prime Minister to give a major thrust to infrastructure development and keep the focus on this core sector. Allocation of Rs 1 lakh crore, the highest ever sum, for the infrastructure sector is indeed delightful and commendable.

The high growth rate of 6.3 per cent targeted by the Government invariably needs increase in the momentum of economic activities in the country. And for this purpose, development of more and more infrastructure is essential. Therefore, the Government's decision to allow 6.8 per cent fiscal deficit during the current financial year with a view to achieving high economic growth to enable it to spend more money for development as a whole and infrastructure development in particular to accelerate economic activities is a welcome step.


Infrastructure comprises power, railways, road, civil aviation, posts, telecommunications, ports and urban infrastructure, including water supply, sewerage, solid waste management, urban transport, urban renewal, sanitation, development of heritage areas and preservation of water bodies. The Government has now added information technology, irrigation, housing and urban development to the list for the sake of inclusive and all-round growth. So, the scope of its activities is evidently wide-ranging and vast, and hence challenging -particularly in this large country of ours inhabiting population of around 1.12 billion. It is certainly not possible to accomplish the task in a single year or in a fraction of the year in view of the fact that one quarter of the current fiscal had already passed when the Budget was presented in the Parliament by the Finance Minister. Yet, it is undoubtedly a remarkable beginning in that the Government is faced with financial constraint mainly owing to increase in non-plan expenditure on account of increased salary for Government employees, increased expenditure on internal and external security, expenditure on National Rural Employment Guarantee Scheme, National Food Security Scheme to ensure entitlement of 25 kg of rice or wheat per month at Rs 3 a kg to BPL families, education for all, etc.


A look at growth of certain categories of infrastructure during the financial years 2006-07 and 2007-08 indicate that while there has been deceleration in growth of some of them, the others recorded higher growth (Economic Survey 2007-08). Electricity generation, for instance, grew by 7.5 per cent in 2006-07(April-December) whereas its growth in the corresponding period in 2007-08 declined to 6.6 per cent. The number of telephone connections increased to 272.88 million in 2007(as in December, 2007) from 76.53 million in 2004. The growth in the field of information technology has also been immense. The Government has attached special importance to construction of roads in the North-East region under the special Accelerated Road Development Programme for the North-East Region in order to mitigate economic backwardness in the region.


As power (energy) plays the pivotal role in the economic activities, especially in industrial productions, there is an urgent need to pay special attention to generating more power to meet the ever-increasing demand. The other spheres where priority should be accorded include construction of roads in rural areas, augmentation of transport in rural areas, and increase in irrigation facilities. This is because first, the declining underground water-table and uncertain monsoon have cast diminishing effect on agriculture which has suffered a setback in terms of growth rate in the past for a number of reasons, including lack of sufficient irrigation facilities. Unless food production is considerably increased without delay, prices of essential commodities are kept under control and other poverty-alleviation measures are taken on war-footing, more and more people will come below the poverty line and number of starvation deaths will also increase with passage of the time. In that eventuality, the common man will be deprived of the fruits of economic growth and development.


Second, agricultural produce and handicraft products can be properly marketed at reasonable prices if there are good roads connecting villages with towns and cities. Besides, adequate transport facilities are also required for this purpose. All this can ensure growth of rural economy, improvement of the standard of living of the rural populace - in particular the small and marginal farmers and the poor artisans. Consequently, exodus of people from village to towns and cities in search of work will also decline. Thus there will comparatively be less increase in number of slum-dwellers in towns and cities and as a result urban life will be somewhat less inconvenient as compared to the present plight.


Therefore, while formulating plans and economic policies there is need to take holistic view of all the issues and keep in mind the facts that our Constitution aims at securing for all its citizens, among other things, social, economic and political justice and establishing a welfare state.


Let us hope that the Government's village-oriented Budget, combined with thrust to wide-ranging infrastructure development, will yield positive results in the form of all-round development, economic empowerment of the common man and social justice.