Infrastructure key to development

Physical infrastructure is important for sustaining growth and overall development of the economy and spending on infrastructure has larger multiplier effects, the Economic Survey states.

Though there has been some improvement in infrastructure development in transport, communication and energy sector in the country in the recent year, there are still significant gaps that needed to be bridged, the Survey notes. The current economic slowdown provides opportunities for countries like India that have a substantial degree of unmet infrastructure requirements, it adds.

According to the Survey, capacity creation in infrastructure sector presented a mixed picture in 2008-09. While telecom and petroleum sectors performed well in 2008-09 as compared to the recent years, the power sector exhibited considerable shortfall. Most infrastructure sectors too witnessed subdued growth in production/services during 2008-09 because of slump in economic activity, fall in commodity prices, the oil price shocks and overall global economic crisis.

The port and air cargo growth slowed down considerably reflecting the sluggishness in import and export growth in the second half of 2008-09. The rail freight growth too slowed down, but to a lesser degree because the coal sector experienced robust production. In addition, the growth in telecommunication stood as exception amidst the general slowed down, the Survey adds.

The growth of electricity generation by power utilities in 2008-09 was at 2.7 per cent, which was much shorter than the targeted 9.1 per cent. During 2008-09, despite the sharp decline in hydro and nuclear generation, the growth in total electricity generation was positive due to an over five per cent growth in thermal generation. However, a decline in the flow of water into reservoirs in the case of hydro stations and fuel supply constraints for other power stations have led to a negative growth in power generation, according to the Survey.

The National Electricity Policy 2005 envisages a capacity addition of 78,700 MW in the XIth Plan, of which 19.9 per cent is in the hydel sector, 75.8 per cent thermal and the rest nuclear power. The number of projects envisaged for the XIth Plan have made steady progress, with most of these in a position to be commissioned within the plan period.