Investment in infrastructure
The Eleventh Plan (2007-08 to 2011-12) aims at a sustainable growth rate of 9 percent with emphasis on a broad-based and inclusive approach that would improve the quality of life and reduce disparities across regions and communities. There is consensus that infrastructure inadequacies would constitute a significant constraint in realizing this development potential. To overcome this constraint, an ambitious programme of infrastructure investment, involving both public and private sector, is being developed for the Eleventh Plan. The programme ensures strengthening and consolidation of recent infrastructure related initiatives, such as the Bharat Nirman for building rural infrastructure, as well as sectoral initiatives, such as the National Highways Development Programme (NHDP), the Airport Financing Plan, and the National Maritime Development Programme and the Jawaharlal Nehru National Urban Renewal
Mission (JNNURM).
Projections of investment in infrastructure have been made in two ways. First, rough top-down (‘order-of-magnitude’) estimates of investment have been derived from the Government’s GDP growth targets and estimates of the likely evolution of the share of Gross Capital Formation (GCF) in infrastructure as a proportion of Gross Domestic Product (GDP) consistent with those targets. Second, a bottom-up exercise has been undertaken based on a detailed analysis of past trends in combination with strategic and financing plans in the pipeline for various infrastructure sectors.
Projection of GCF based on Growth Targets
India’s GDP is projected to grow annually at an average rate of 9 per cent over the Plan period. Based on investment levels in infrastructure in several cross-country analyses of fast growing Asian economies, GCF in infrastructure may need to be accelerated to around 11 per cent by the terminal year of the Eleventh Plan to achieve the targeted annual growth in GDP of 9 per cent. Realistically, however, starting from a level of less than 5 per cent of GDP observed in 2004-05, such a rapid change in the structure of investments may not be feasible. Moreover, it may not be a necessary condition for achieving a 9 per cent growth since many East Asian countries may have invested more than is essential and while about 10 per cent investment is desirable, India could try to achieve it over a longer period. Taking these factors into account, a top-down target of GCF in infrastructure of around 9 per cent of GDP by the end of the Eleventh Plan seems reasonable. It is assumed that total GCF in infrastructure as a share of GDP increases from 5.
Infrastructure is important in the economic stability of any country and the comfort of its people. Mongolia is grappling with its economy because of poor development of logistical infrastructure. The reasons for this poor growth trace back to the history of the country, and its overreliance on the mining sector. The post-communist country depends too much on mining, which is clouded by corruption, thereby forestalling development of the transport system. The government and organizations in the country are also reliant on international support. Moreover, the recent privatization of institutions is not enough to address the development challenges in the country.
Since the advancement of the technology has taken place, the infrastructure should implies more technology to build up a more secure and also environment friendly compound for the citizen so that in the near future, these people will increases the work productivity to support the economic growth in their working place which this will help them to expand the financial status of the country.
The Gross Domestic Product is to expand up to 6.7% in 2014; it warned that inflation and a high current account deficit (CAD) are the two major concerns in this year. This study states positive impact in the recovery of the global economy and the recent government policies including the steps to open-up foreign investment in various sectors like aviation and retail and others. According to the study India is on the track to meet its fiscal deficit target of 5.3% of Gross Domestic Product in current year, and to narrow it down to 4.8% of Gross Domestic Product in next year which is 2015.
The root cause of the spread is identified as the average cost of development and municipal services. Like low density zoning development, water and sewer connections, or even seemingly ordinary service of average cost pricing makes lower costs in cheap construction. If there is no adjustment to meet the current more nervous and compact city planning objectives, the precious growth management tools would be wasted, and they missed the opportunity to reduce infrastructure costs in the future. In order to stimulate a more compact urban growth model, development costs can be adjusted according to exchange rates or time. In the reform development cost structure, the municipal authorities can make efforts to increase their income by raising the integral development cost income or revenue neutrality by reducing or remitting development costs, and loss of any income was offset by higher development costs of higher income. However, to prevent future fiscal shortfalls and avoid market distortions, development costs should not be lower than the level required to pay for infrastructure
Few concerns have surfaced in economy that plays a vital role in agriculture and therefore in economic development. Developing countries and more even, LDC’s, are dependent on agriculture for income for the population. But achieving good agriculture means that many things have to change within these countries self. Good transportation is need in these countries and more often than not the infrastructure doesn’t allow this to happen and transporting agricultural goods are more expensive for these countries, thus these countries need capital and investments to further their outputs and inputs to gain bet...
Over the last 10 years, there has been an accelerating global trend towards the execution of major public infrastructure projects on a privatized basis. Public-Private-Partnership (PPP) financing modalities, with the capability of
There are several limitations in aviation infrastructure in India for instance parking bays, gates to board passengers, landing slots etc are in short supply. This often leads to massive delays, cancellation and major losses in revenue for many LCCs. For upgraded infrastructure facilities, India’s civil aviation minister Praful Patel said on 15 February 2006 that Indian government defer decision on privatization of International Airport in Delhi and Mumbai. The government aims to set up joint venture to operate these airports and offered 74 per cent stakes. Foreign direct investment (FDI) can hold up to 49 per cent in this transaction, while 25 per cent must be held by private Indian companies. Remaining 26 per cent to be held by Airport Authority of India (AAI) and other government PSUs.
Therefore the cost overruns demand requires adequate building infrastructure facilities at optimum cost (The India Infrastructure Report 1998). Indian government has attached high priority to the building sector (UK Trade and Investment). Rapid growth in the construction industry in india over the past few years has considerably strained its infrastructure. India needs significant investment in the infrastructure sector as many corporate leaders feel that the current infrastructure is inadequate to support their business needs and long term growth in india . India has been a little slow in creating building infrastructure ahead of demand, and it has typically turned into action when bottlenecks become apparent (Survey report of KPMG International and Economist Intelligence Unit). Investment requirement for housing in urban areas has been estimated at Rs.556000 million (US$ 13.4 billion) in the9th five year plan (1997-2002). The Market size, material market potential, labour required skills are the most important factors for considering Foreign Direct Investment in Construction and Engineering in India. Foreign investors in India expect high rates of return on their investments (FDI Confidence
Privatization of infrastructure assets: financial structures, participant motivations, and lessee tax benefits. Khalid A. Razaki, Raymond Pollastrini, Robert J. Moreland. Journal of Finance and Accountancy http://www.aabri.com/manuscripts/121265.pdf
The People’s Republic of China has been one of the key growers of the global middle class throughout the past decades. It houses a middle class population of approximately 300 million people. A massive shift is occurring to increase marketing and increasing urban middle class populations in China. Millions of people are being encouraged to move to the cities which will springboard economic growth through domestic consumption. In addition to urbanization and consumption, the PRC is investing in programs designed to boost infrastructure, healthcare and education. This includes new transportation technology, designed to make domes...
Urbanisation is an indispensable component of Economic Development, but along with it arrives in all allied problems. With the increase in urbanization trends the towns and cities not just becomes more densely populated but also they expand geographically. This process of urbanization creates a huge gap between the supply and demand of urban infrastructure and services. This leads to overstressed basic infrastructure services in urban areas. To cope up with these problems the urban local bodies will have to scale up in their capacity to provide adequate infrastructure facilities such as water supply, sewerage system, sanitation, solid waste management, housing and roads in the existing urban areas as well as in new areas. Such haphazard development otherwise poses to severe health and economic risks to the entire community.
With the difference between capital spending and operating budgets, capital spending has made it difficult to control. Due to this it allows the temptation to the use of debt. Progressively, the state and local governments are funding comprehensive services through capital budget and debt finance. One major subject of a new way of capital budgeting is the temptation that politicians are facing and they are looking for a way to jump-start an economic growth. For example, the economic growth can stimulate private projects with public investment.
Ardnt, Channing, Paul Chinowsky, Kenneth Strzepek, and James Thurlow. "Climate Change, Growth and Infrastructure Investment: The Case of Mozambique. ." Review of Development Economics (n.d.): n. pag. Print.
Endeavoring to make the country a hub of economic development, government in Zambia has in the recent years strengthened its policy framework for investment. In 2004, the country introduced the Private Sector Development Reform Program (PSDRP 1) with its first phase aiming to improve the investment climate and boost the private sector’s contribution to economic growth (NEPAD, 2011). The Program focused on encouraging private investment in infrastructure, business facilitation and an economic diversification. In addition to this, the Public Private Partnership Act was introduced to promote the effective delivery of social services by enhancing transparency, fairness and long term sustainability…removing undesirable restrictions on private sector participation in the provision of public infrastructure (GRZ, 2009:4). Such an investment climate led to a significant boost in one of Zambia’s major contributors to economic growth, the mining sector (GRZ, 2011).
Despite becoming the second fastest growing and the fourth largest economy of the world, India continues to face large gaps in the demand and supply of essential social and economic infrastructure and services. Rapidly growing economy, increased industrial activity, burgeoning population pressure, and all round economic and social development have led to greater demand for better quality services in Education and Healthcare system. Many analysts argue that the best way to improve service provision is to change the way in which governments administer them in India. For those who believe in neo liberal ideology, privatization is the only way to solve this problem. According to the World Bank, the key task is to ‘manage infrastructure like a business, and not