Define Infrastructure Bottlenecks

The development of infrastructure is one of the primary aspects of a country’s economic growth. India can boost economic growth to its full potential with improved infrastructural facilities. On the other hand, infrastructure bottlenecks can affect growth negatively.

A bottleneck is a point in a production system when workloads occur so often that the production process cannot deal with them. As a result, the time and the production cost frequently increase. Infrastructure bottlenecks are the outcome of chronic & temporary conditions. Climate change encourages damage to transport infrastructure since it acts as a critical agent in altering the conditions. 

Types of Infrastructure Bottlenecks in India

Infrastructure plays a vital role in the growth of a country’s economy. Therefore, it is necessary to deal with these infrastructure obstacles with the help of short and regulatory governance. Failure to enhance the country’s infrastructure can undoubtedly slow down the growth process. There is a significant gap to be achieved in railways, roadways, and energy infrastructure, impeding India’s progress.

Some of the bottlenecks that create a barrier on the road to infrastructure development and growth in India are:

• Financing: 

• It is crucial to address the funding bottlenecks to achieve the highest infrastructural growth. Operationalising innovative channels can fill the infrastructure financing gap.
• Underdeveloped railway and road networks are examples of financial infrastructure bottlenecks. Because of the capital-intensive nature of infrastructure projects, the need for financing is always a matter of concern.
• The increasing Non-Performing Assets also hampers private firms from getting loans from banks.
• The government has taken many initiatives to address various factors responsible for financing infrastructure.
• One of them is the establishment of the National Infrastructure Investment Fund. It acts as an alternative for the investment fund. A good amount of money NIIF will pool is dedicated to infrastructural projects.

2. Land Acquisition: 

• The only most significant bottleneck regarding infrastructure development is land acquisition.
• Several times, some landowners willingly provide their lands for infrastructure growth. But, primarily, local communities and farmers oppose selling their lands.
• The reason behind their opposition is the difference between the agency’s offered price and the prevailing market value.
• These differences result in critical disputes and litigation issues.

3. Delay in Regulatory Clearance: 

• The infrastructure development program needs various Government approvals or permissions at its different progressive stages.
• There is no regulatory framework that can better handle the approval process. In the absence of on-time desired clearances, the project must face delays in the proper establishment.

4. Complex Environmental Clearance: 

• Before starting an installation or amendment of an infrastructure project that may produce higher levels of environmental pollution, it is essential to get permission from the government.
• Pollution can provoke an unexpected climate change which is not good at all. There are many complex environmental safety measures and guidelines.
• The process is also very hectic and lengthy, with four clearance stages: Screening, Scoping, Public Consulting, and Appraisal.
• Better governance would undoubtedly aid in reducing protracted delays in infrastructure projects.

5. The Capacity of Private Players:

• Along with the funding, the project handling and managing skills of the infrastructure projects owners equally matter.
• Mostly medium to large businesses or agencies are not so capable of handling long and complex projects.
• This lack of skills and abilities creates a roadblock in the project’s progress and is responsible for infrastructure blockages.

6. Climate Change and Weather Interruptions:

• Increased product demand due to weather conditions impacts the supply chain, depleting current inventories and generating issues as merchants struggle to satisfy customer demands.
• For example, bad weather conditions damage transportation infrastructure, affecting the import and export of goods and services. Thus it becomes harder to keep up with consumers’ demand.
• Climate change might influence situations that could impair and shorten the useful life of transportation infrastructure. Weather disruptions, such as a storm, are prominent, as are construction, accidents, and labour conflicts (strikes).
• These incidents happen so frequently that there is no possible forecast of them. These are highly responsible for the damage to transport infrastructure.

7. Under-Investment:

• Underinvestment in infrastructure can lead to chronic bottlenecks with rapid economic growth, which means that capacity is insufficient to meet the demand.
• The underinvestment dilemma is a predicament in which a corporation becomes so wildly overvalued that it cannot invest in growth possibilities.
• Economists recognise this issue as an agency dilemma between a firm’s loan holders and equity stockholders; a circumstance where less money is spent on something than is required over a lengthy period.
• Underinvestment in public infrastructures such as railways and roads is a long-term problem.

8. Disinvestment:

Disinvestment in India is a government strategy when the government wholly or partially liquidates its holdings in public sector enterprises. The decision to disinvest is primarily motivated by decreasing the government’s budgetary burden and bridging a revenue gap. Disinvestment, frequently caused by a lack of maintenance, can result in temporary blockages.

Conclusion

Due to the outcome of chronic & temporary conditions, India’s economic potential is mostly due to inadequate infrastructure in numerous areas. The National Infrastructure Pipeline would aid in improving infrastructure and the realisation of growth potential. Enhancing India’s infrastructure is both a massive problem and a massive opportunity.

A significant increase in infrastructure development must solve the critical challenges. The National Infrastructure Pipeline is a large-scale initiative that includes greenfield and brownfield projects worth more than Rs 100 crore. It would also allow for more aggressive promotion of the pipeline of projects seeking private participation via the India Investment Grid (IIG), National Investment & Infrastructure Fund (NIIF), and other channels.