Infrastructure development in India: Leveraging private sector participation; Focus on soft infrastructure

Abstract

The role of infrastructure in the sustained economic development of a country is pivotal. Inadequacies in infrastructure can prove to be a great hindrance to growth, particularly for developing countries like India, which stand at an inflection point in its economic life cycle. Policy makers in India have rightly recognised the need for focus on infrastructure. However, experience showed that although government was the major stakeholder and driver of infrastructure expansion, full scale efficiency and speedy implementation were not being achieved. The focus turned towards the private sector which had already proved itself in other sectors of the economy taking India to the global stage. Public private partnership models were developed and many pilot projects were undertaken with quite a few success stories. Increasingly, India has seen emphasis on investments towards infrastructure development, with a greater private sector participation and capital making its way both from within the country and from abroad. However, India has a long way to go when compared with other emerging economies. The comparison is quite stark when India’s infrastructure is compared with the likes of the BRIC quartet. At a time when the world is facing an economic crisis fuelled by reduction in spending on consumer goods, infrastructure growth presents a viable solution both in the short & long term. For this we need to evaluate the efficacy of the private sector participation models being adopted for infrastructural development. Further, there is the need to explore newer business models that can accelerate the pace of infrastructural reforms using private participation. Furthermore, in the context of developing countries when Infrastructure is spoken of in public discourses it has often come to represent the ‘Hard Infrastructure’ like Airports, Surface Transport, Roads, Railways and Ports. However, we present another aspect of Infrastructure referred to as ‘Soft Infrastructure’. Soft Infrastructure refers to all institutions, which are required to maintain the health, cultural and social standards of a country; ex. Public education and training, Public health systems & Investments boosting social welfare. Through the course of this report we focus on the soft infrastructure and the role of private sector in developing Soft Infrastructure in the context of a developing nation like India. We argue that the role of soft infrastructure is as important as ‘Hard Infrastructure’ and for economic and social development of the nation, investments in social and soft infrastructural systems must precede investments in Hard Infrastructure.