Does India Need To Reduce Expenditure On Long Gestation And Show Piece Infrastructure Projects And Spend More On Job and Income Generating Projects .
Rajiv Upadhyay
India , by 2010 , had plucked most of the low hanging fruits for FDI and domestic investment . Increase in demand from the huge development in period 1995 – 2010 led people to become over optimistic . Massive investments were made in capacity enhancement for the hopeful but elusive increase in demand . It lead to dramatic rise in NPAs for banks and decline in private investment.
FDI in export oriented projects was not forth coming due to infrastructure constraints . In the last ten years massive investment in infrastructure has been made including roads , ports , freight corridors , metros , airports, power sector etc. Most of the infrastructural deficiencies have been made up.
Yet most of the factories leaving China did not come to India but went to Mexico , Vietnam , Thailand etc. due to our labour laws , law and order, labour productivity, work culture etc . The focus and direction of reforms has to be changed . Also improved infrastructure has not led to either significant increase in jobs or incomes of the consuming middle class and Covid made the poor even more poor. So this development, even if essential, has not served the main purpose . It needs to be reviewed to refocus on people oriented growth rather than statistics oriented growth.
We must realise the mistake of ‘ Shining India of 2004 ‘ under Atal Bihari Vajpayee. The industrialists , benefitting from this round of massive investment, have invested and created a high capacity in say road making . For continued profits, it is essential for them that investment in roads must continue . So they publicise magnified benefits of roads . But infrastructure is a very long gestation period investment . For example a Railway line in an under developed area takes fifteen years to start paying .
It suits both politicians and industrialists to broadcast achievements in infrastructure but we must realise that it is about twenty years since work on Rail link to Srinagar was started. Similarly Bogie beel bridge in Assam took around sixteen years to be completed . Dedicated freight corridor will take twenty years from start before it is fully functional . All these projects will take fifteen more years to become economically viable, independently . German example of Autobahns made by Hitler is not working in India.
Time has come to review and bring down investment in infrastructure. Some of the typical projects on slate which need to be reviewed.
- Political projects like Diagonal highways East to West and north to South can be slowed.
- High speed rail beyond linking Delhi – Mumbai can be slowed .
- No more new dedicated freight corridors to be started in the next five years .
- New Metros in smaller cities to be deferred for five years.
- River linking and river highways to be slowed or deferred for five more years.
- Tier 2 and 3 cities to have airports with only small runway for at best fifty or hundred seat aircraft but with provision for expansion.
- Though not an infrastructure expenditure but free / highly subsidised ration needs to be reduced except for BPL families only.
Instead interest subsidies may be given to MSMEs, Start Ups , new hospitals and educational institutions or even marriage halls , viable self employment projects. Agriculture deserves greater support for irrigation, cold storage , Integrated net based marketing and transport. In view of growing water shortage drip irrigation could be subsidised along with solar panel top huts , street lights etc. in villages. Cooperative movement in north India is much weaker needs to be strengthened and expanded to include more sectors.
Manufacturing is the biggest source of employment for young educated Indians after software and artificial intelligence. It needs to be supported more intensively. Apprenticeship scheme to be made more widespread . Indian universities’ research is often wasteful . 50 % of the all university/ CSIR research should be linked to industries .
Basically national focus must be on job creation and projects that can increase in income for next seven years at least.
