Infrastructure such as capital goods and fixed capital are vital platforms to conduct economic activities through governance and commercial regulations. The correct utilisation and implementation of this infrastructure can lead to a healthy economy and all-around development of the country. The role of infrastructure in Economic Development in India is vital to its modernity and functionality in various kinds of operations. In economics, the infrastructure is characterised as a tool that delivers various basic fundamental needs to people such as housing, water supply, food, healthcare, energy, and transportation. The telecommunication system is improved and supported by economic infrastructure.
Capital goods are heterogeneous products having a certain set of technical and operational functions. These are durable goods and are used during the production process of a commodity or service. It is therefore called means of production. Fixed capital is real or physical assets that are used in the production process repeatedly. Fixed capital can be purchased, leased, rented or hired. These help in supporting the economic structure of the country, especially India which is still evolving and making its presence known in the international market.
Role of Infrastructure in Economic Development in India
The role of infrastructure in Economic Development in India is extensive given that India is still a developing country undergoing changes and dealing regularly with the consequences of colonialism and imperialism. It can be understood in the following ways:
- Economic infrastructure acts as a stimulus to economic opportunities
- Short term and long-term infrastructure can be developed to affect different areas of the economy to sustain a resilient and inclusive plan for further expansion and growth
- Fostering various public-private sector partnerships
- Encouraging private and foreign investments
- Maintenance of the taxing system that maintains various public facilities and institutions for the common welfare.
- It was estimated that by 2030, India’s transport system would be the sector attracting over 60% investment in infrastructure.
Importance of Infrastructure in Economic Development in India
The importance of infrastructure in Economic Development in India is important because there are still sectors in transport and communication that need investment for the steady growth of economic welfare in the country. Those important key points are:
- India is forecasted to have the third-largest market in Aviation after China and USA. This growth was possible due to the increased investments into the infrastructure.
- Indian Railways is greatly supported by the infrastructure and employs around 1.3 million employees
- Shipping is a potentially unrealized sector in the Indian economy. The SagarMala Project (2015-2025) is projected to raise $80 billion for maintenance and upgrading of the infrastructure here.
Impact of Infrastructure in Economic Growth in India
- Helps in promoting direct investments from international markets
- Stimulating economic activities
- Reducing trade and transaction costs
- Improving competitiveness
- Diversifying means of production
India has taken measures to include certain fiscal as well as monetary reforms to encourage economic growth. There has been a recorded GDP growth of 9.0% in 2022 from 6.6% in 2020. The GDP per capita is around $2313 in 2022. However, India needs to generate employment between 2023-2030 to boost the economy and improve the economic infrastructure,