INTRODUCTION Investment in infrastructure is crucial to support a higher level of industrial growth. World Bank studies have estimated that a 1 per cent growth in infrastructure development translates into a 1 per cent growth in the economy. India's immediate goal is to achieve industrial growth of at least 10 per cent per annum and sustainable GDP growth of at least 7 per cent per annum. Enhancing investment in infrastructure is critical to attaining these objectives. In its exhaustive report on infrastructure submitted two years ago, the Rakesh Mohan Committee had set the objective of hiking investment in this sector from around 5.5 per cent of GDP in the 1990s to 7 per cent by 2000-01 and 8 per cent by 2005-06. The Rakesh Mohan Committee had projected the investments needed in various sectors as follows: (All figures in Rs.’000 crore)
Note : Estimates at 1995-96 prices India's infrastructure is grossly inadequate in comparison with world standards and already groaning under the weight of the growing economy. It has long been identified as one of the critical reasons holding back more rapid economic growth. The situation is steadily worsening. In the last two years, the growth rate in the infrastructure industries has actually slowed to under 5 per cent from 8 per cent in the two preceding years, more or less in tandem with the decline in the economy's growth rate from over 7 per cent per annum during 1994-97 to 5.1 per cent in 1997-98. A sharp and immediate step up in infrastructure spending is not just a prerequisite for reversing the two-year-old downturn in the economy; it could well represent the quickest way out of the slide. To further the Government's ongoing initiatives in this sector, a Special Subject Group on Infrastructure was formed within the Prime Minister's Council on Trade and Industry, to suggest ways in which investment in infrastructure could be enhanced in the shortest possible time. The Group focused on selected areas of infrastructure development where it believed that changes in policy direction, clear project priorities and structural changes could accelerate the pace of infrastructure projects as also generate enhanced levels of investment from domestic and international sources. These are:
In the interest of time and focus, the Group has confined itself to the selected sectors listed above and has made recommendations in each sector for the Government's consideration. Further, to provide momentum and the necessary public visibility, the Group has also suggested specific "showcase projects", wherever possible. Many of the recommendations of this report are based on the strong foundation established by the Rakesh Mohan Committee and other major studies on infrastructure. The Group wishes to acknowledege this important work. It also wishes to express its appreciation to senior Ministers, officials of the Government of India and senior executives of various Government authorities, who provided gainful perspectives to this study. Annexure 1.1 provides a list of officials who provided this valuable support. The Group recognises that some of the recommendations in this report will demand substantial review of Government policy in areas such as organisational structures of Government bodies, both at the Centre and in the States, and in the areas of labour, land acquisition and environmental clearances. This, in turn, would call for a demonstration of considerable political will and inter-party political consensus. However, it believes that such affirmative action would be essential to provide the much-needed boost to infrastructure if India is to meet its economic objectives.
Annexure 1.1 : List of Officials
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