Role of Infrastructure Services on the Economic Development of India

Abstract

The importance of infrastructure for sustained economic development is well recognized. High transaction costs arising from inadequate and inefficient infrastructure can prevent the economy from realising its full growth potential regardless of the progress on other fronts. Physical infrastructure covering transportation, power and communication through its backward and forward linkages facilitates growth, social infrastructure including water supply, sanitation, sewage disposal, education and health, which are in the nature of primary services and has a direct impact on the quality of life. The performance of infrastructure is largely a reflection of the performance of the economy. Infrastructure industries are measured by six key infrastructure and core industries (i.e., electricity, crude oil, petroleum refinery products, coal, steel and cement). In this paper, the overall growth and performance of infrastructure services has been examined in depth on the basis of the different parameters such as trends in growth of physical output in infrastructure sectors, telecommunications, power, ports, railways, civil aviation, and post so as to examine whether there is a negative or positive association between infrastructure development and India's economic growth.