Will Infrastructure Spending Lead The Growth Story For India In The Next Ten Years?

For the past one decade, India was pacing quickly towards being a developed county with a commendable growth rate of 7-9%. But now as we see the growth rate stooping, the million dollar question arises – “How to lead the growth story for India in the coming decade?” On its part, Government has given stimulus packages and the sixth pay commission was a welcome move. But would it really help? What could be right move to ensure tangible benefits in near future and sustainable long term development in the long term?

We know that India is a society that firmly believes in saving money for the bad times. In case of increasing 6th pay commission; the major beneficiaries are government employees with disposable income. As the income rises further, the savings rather than spending would increase thus defeating the purpose of infusing money in the economic cycle. On the other hand, if govt. focuses more on infrastructure development such as building roads, dams, bridges, power-grids and telecommunications etc., it would ensure participation from all sectors of the society. There would be a demand for skilled as well as unskilled workers and this bottom of the pyramid which desperately needs money to fulfil its basic needs would spend and the impact on growth would be very much evident soon.

As for the long run, in order for an economy to perform at its optimum potential, it is required to move people, goods and information at a really fast pace. Building infrastructure would ensure better tomorrow by improving the efficiency. By infusing money with the aim of increasing retail consumption, the picture might seem gloomy in the short run but it would be like dealing with the tip of the iceberg.

By creating infrastructure, cost of delivery in supply-chain would reduce and logistics turn-over time would improve. This saving of cost and time would ultimately benefit every stake-holder in the society. By investing in transportation, commutation time and cost would reduce. By having better water supply facilities and sewers, health problems would considerably decrease. More power grids and stronger transmission & distribution would mean fulfilment of energy requirements. Better communication system in place would mean more friendly working condition and a better lifestyle. All this infrastructure in place would mean huge foreign investment, improved tourism and a strongly positive brand image to the world. Infrastructure spending can definitely lead the way out. It would mean a more inclusive growth with all the sections of the society involved in it leading the growth all the way.