Poor Infrastructure A Major Hindrance For Developing India - An Interpretation

Arya Ankit, KIIT School of Law

ABSTRACT

The desire of India to maintain its relatively high development rate is contingent on one key factor: infrastructure. The country, on the other hand, is beset by a shoddy infrastructure that can't keep up with the demands of an expanding economy and population. According to S&P Global Ratings, India's GDP would increase at a rate of roughly 8% over the next three fiscal years, making it one of the fastest-growing big economies. The government also wants the manufacturing sector to contribute an all-time high of almost 25% of GDP by 2025, up from under 16% now.

.At a time when manufacturing powerhouse China is transitioning toward consumption-led growth, India is working to boost its manufacturing competitiveness. China is now at risk of overcapacity in areas like ports and power. India, on the other hand, relies on robust and reliable national infrastructure, particularly in the areas of power and transportation, to achieve sustained higher growth and a competitive manufacturing sector.

Despite large infrastructure investments (about 35 percent of GDP), India's government forecasts that US$1.5 trillion in infrastructure investment is required over the next decade. Even yet, this would most certainly simply serve to bridge the infrastructural gap rather than generate space for future growth. We predict that investing 1% of GDP on infrastructure will result in GDP growth of at least 2% in India, because infrastructure has a "multiplier effect" on economic growth across sectors.

Infrastructure development is crucial for India's manufacturing competitiveness and growth.

Even if finance is available for economically feasible initiatives, timely completion of projects within estimated costs will be a major difficulty.