Bridging the Infrastructure Gap

The target of high growth rate primarily guides the economic policy of the country. One of the biggest challenges that India will face in sustaining the GDP growth rate of nine per cent and above is the lack of infrastructural creation in the country. Infrastructure refers to the roads, bridges, power plants, railway tracks, airports, seaports, sewage facilities, drinking water, etc. A continuous flow of funds is essential to create substantial infrastructure. If we are unable to create infrastructure, it will have negative impact on our GDP growth rate.

The cities and the urban capitals are prime movers of our economic engine and recognising this, the government of India plans to invest over $ 25 billion in tier I cities of India for next three-four years. However, if we were to ask if this progress is satisfactory, the answer will be a big no. It is here that Special Economic Zones (SEZs) come into the picture.

The SEZs are clusters of high quality infrastructure zones that are created within the economy. If properly managed, SEZs could facilitate the efficient creation of funds required for infrastructure. Under the SEZ policy, the investors are invited to invest liberally in setting up their production facilities and the government extends certain concessions and facilities to the concerned company. Government also extends certain tax benefits to the SEZ units.

In the last couple of years, the government of India has declared its intention and policy to set up the SEZs, following the Chinese model. Although they have cleared over 200 sites for the setting up of SEZs, more than 50 per cent have been stalled. The SEZ policy has not gone well with the people getting affected directly from it. We have seen farmers agitating against the SEZs in West Bengal, Maharashtra, Haryana, UP against land acquisition for the setting up of SEZs. This is because the policy did not have anything to take care of the poor farmers. The aspect of their rehabilitation and employment after being rendered homeless is not well addressed. Surprisingly, the government had to wait for an agitation by the people against its policy to know the loopholes in it.

There are many issues, which need immediate attention. The landowners in the rural area must get fairer deal for their lands and negotiation should be done by developers themselves and not the government. Further, rehabilitation packages must include development of employable skills among the affected families and there should be provision of fruitful employment to at least one member of affected family. The government should try to develop SEZs only on non-agricultural land.

Indian economy is at cross roads where it needs more industrialisation to sustain GDP growth rate and also build infrastructure to accommodate growing middle class in the country. But the government must also realise that agriculture is an important economic activity. Thus, it would be sensible to avoid diversion of agricultural land towards SEZ.

To truly unleash the potential of India, we need better strategies. The government has limited resources at its disposal. There should be encouragement for private-public partnerships (PPP). PPPs can prove mutually beneficial to both national interest and our vibrant power sector. As the telecom sector has demonstrated, there are significant opportunities in our infrastructure deficit. For consistent upward growth rate, we need to bridge the infrastructure gap.

Rishabh Srivastava

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