‘Investment in Infrastructure is essential for more rapid and inclusive economic growth.’ Discuss in the light of India’s experience.

Infrastructure has been recognized as one of the most important enablers of economic growth. The significance of infrastructure creation has all the more increased in the current context of post covid19 scenario when we have experienced a negative growth of GDP in the last financial year.

Infrastructure spending leads to rapid and inclusive economic growth as it possesses strong forward and backward linkages and a very high multiplier effect.

Increase in infrastructure investment like railway, roads, ports, airport affects the economy in two ways:

1. In the short run, it boosts aggregate demand and crowds in (pulls in) private investment due to the complementary nature of infrastructure services.

2. In the long run, a supply side effect also kicks in as the infrastructure-built feeds into the productive capacity of the economy.

Infrastructure is considered as the backbone of the country’s economy. It leads to inclusive growth in the following ways:

1. Spending in transportation infrastructure connects the rural areas with growth centres, driving income of the rural and poor people.

2. Infrastructure spending absorbs a lot ofbunskilled labour leading to productive employment of the poor and excluded sections of the society

3. Spending in rural infrastructure provides job opportunities to the poor and illiterate people driving the growth in the rural economy. 

4. It’s a fact that when Govt. built the Golden Quadrilateral highway project connecting the four metros, it resulted in higher growth in the 2000 decade.

Realizing the role of infrastructure in inclusive and rapid economic growth, the Government has launched the National Infrastructure Pipeline (NIP) worth Rs. 102 lakh crores. Govt. has also launched the National Monetization Pipeline (NMP), to raise financial resources for the NIP. Govt. has also partnered with the private sector for infrastructure development through PPP model.