CHAPTER-II

INFRASTRUCTURE AND ECONOMIC DEVELOPMENT-A

CONCEPTUAL CLEARIFICATION
2.1 INTRODUCTION:
The role of infrastructure in spearheading economic development of a
country and also setting its pace can hardly be over emphasized. Like a
foundation in an edifice, the place of infrastructure as well as its soundness,
are crucial to the nations total development. The economic growth of a
country has evidently happened hand in hand with the development of its
infrastructure. To quote famous economist Dr. V.K.R.V. Rao, the link
between infrastructure and development is not a once for all affair. It is
a continuous process and progress in development has to be preceded
accompanied and followed by progress in infrastructure, if we are to
fulfill our declared objectives of a self-accelerating process of economic
development.
A sound infrastructural foundation is the key to the overall socioeconomic development of a state. This acts as a magnet for attracting
additional investment into a state and thus provides a competitive edge to it
over other states. Availability of adequate and efficient infrastructural set up
not only promotes rapid industrialization but also improves the quality of life
of the people. The all pervading importance of infrastructure would be more
clear from the fact that it encompasses the whole spectrum of vital services
such as roads, railways, civil aviation, shipping, power generation
transmission, telecommunications, postal facilities and urban development.
Adequate infrastructure facilities are an absolute necessity for rapid
achievement of sustainable economic growth. Infrastructure facilities are like
wheels of development without which the economy cannot function
properly.

39

2.2 ORIGIN AND MEANING:

The term INFRASTRUCTURE seems to have originated in 19th
century in France and till the first half of the 20th Century it was used to refer
primarily to military installation. The term has been used since 1927 to refer
collectively to the roads, bridges, railways and similar public works that are
required for an industrial economy, or a portion of it to function. The new
era of American infrastructure started during the great depression of 1929. In
1932 Americans elected a president and congress that believed in an active
role for the federal government in creating jobs for the unemployed
Americans. Within the framework of a newly coined economic theory in
macro economics by J. M. Keynes, the new president started with a modest
list of infrastructure projects such as federal administrative buildings. He
soon extended the enterprise to railway stations, bus stands, post office
buildings, irrigation projects, road repairing and expansion, hydroelectric
dams, rural electrification. Following the example of the federal government,
many states initiated plans for infrastructure systems in their territories.
Infrastructure facilities grew in leaps and bounds. The intervention of the
Second World War interrupted this stream of initiatives through out the
country. But at the same time, additional infrastructure components were
added as new airports, new towns and new harbors appeared on the map as a
result of war effect.
The concept of infrastructure or overhead capital was first used by
H.W. Singer.1 He identified it with various kinds of investments which are
not directly productive but they help in fostering development process.
Examples of such investments are transport, power and irrigation. Ragnar
Nurkse2 and Gunnar Myrdal have also recognized the importance of
1. H.W. Singer, Development Projects as part of National Development Programme:, in
Formulation and Appraisal of Development Porjects, 1951.
2. Ragner Nurkse Problems of Capital Formation in Underdeveloped Countries- Oxford1955

40

infrastructure. Singer Nurkse, and Myrdals concept of social overhead

capital encompasses transport facilities, public utilities, training schemes,
railways, power plants and water works. However, the term came to main
stream in entire United States during 1980s following publication of
America in Ruins written by Choate and Walter in 1981, which initiated
a public policy discussion of nations infrastructure crisis purported to be
caused by decades of inadequate investment and poor maintenance of public
facilities.
The term infrastructure literally means structure below, i.e. the
foundation. The word is a combination of infra and structure.
Infrastructure is generally a set of interconnected structural elements that
provide the framework supporting an entire structure. It refers to some kind
of permanent installations, which are used over a long period of time. The
term has diverse meanings in different fields, but is perhaps most widely
understood to refer to the fundamental facilities and systems serving a
country, city or area such as transport and communication system, water and
power lines, schools, hospitals etc. Economically, Infrastructure would be
seen to be the structural elements of an economy which allows for
production of goods and services without themselves being part of the
production process.

2.3 DEFINITIONS:
The Readers Digest Universal Dictionary defines the term
infrastructure as an underlying base or supporting structure, the basic
facilities, equipment, services and installations needed for the growth and
functioning of a country, community, operation or organization.
The Infrastructure Development Department (IDD) of Government of
Karnataka defines the term infrastructure as any public work relating to

41

facilities for utilization of natural resources or provision of services, by way

of Physical structures or systems.
Infrastructure is generally defined as the Physical framework of
facilities through which goods and services are provided to the public. Its
linkages to the economy are multiple and complex, because it affects
production and consumption directly, creates positive and negative spillover
effects, and involves large flow of expenditure3.
Thus, infrastructure refers to those basic facilities without which
primary, secondary and tertiary productive activities cannot function. It is a
sine-qua-non of economic development.
While Infrastructure is recognized as a crucial input for economic
development, there is no clear definition of infrastructure according to the
current usage of the term in India. For policy formulation, setting of sectoral
targets and monitoring projects, a clear understanding of what is covered
under the rubric of infrastructure is necessary to ensure consistency and
comparability in the data collected and reported by various agencies over
time. The National Statistical Commission headed by Dr. C. Rangarajan,
attempted to identify infrastructure based on some characteristics.
This Note compiles definition of infrastructure from various reports/
notifications of different agencies and concludes with decision taken by the
Empowered Sub-Committee of the Committee on Infrastructure on this
subject in the meetings held on 11th January, 2008 and 2nd April, 2008 under
the chairmanship of Deputy Chairman, Planning Commission.
Dr. C. Rangarajan Commissions Notion of Infrastructure (2001):
The Rangarajan Commission indicated six characteristics of
infrastructure sectors, (a) Natural monopoly, (b) High-sunk costs, (c) Nontradability of output, (d) Non-rivalness (up to congestion limits) in
consumption, (e) Possibility of price exclusion, and (f) Bestowing
externalities on society. Based on these features (except b,d and e), the
3. K. Narindar Jetli and Vishal Sethi Infrastructure Development in India Post
Liberalisation Initiatives and Challenges New Century Publications, New Delhi.

42

Commission recommended inclusion of following in infrastructure in the

first stage:
Railway tracks, signaling system, stations
Roads, bridges, runways and other airport facilities.
T and D of electricity
Telephone lines, telecommunications network
Pipelines for water, crude oil, slurry, waterways, port facilities
Canal networks for irrigation, sanitation or sewerage.

The Commission further recommended that considering characteristics (b),

(d) and (e) also, the above list may be extended to include the following in
the second stage:
Rolling stock on railways
Vehicles, aircrafts
Power generating plants
Production of crude oil, purification of water
Ships and other vessels

However, the Rangarajan Commission recommended that the list of

infrastructure activities should be finalized by the Ministry of Statistics and
Programme Implementation (MOSPI) on the basis on the characterists
recommended by them for identification of infrastructure.

Dr. Rakesh Mohan Committee Report (1996) and the Central Statistical
Organisation (CSO):
Dr. Rakesh Mohan Committee in The India Infrastructure Report
included Electricity, gas, water supply, telecom, roads, industrial parks,
railways, ports, airports, urban infrastructure and storage as infrastructure.

43

Except industrial parks and urban infrastructure, all these sub-sectors are
treated by CSO also as infrastructure.

Reserve Bank of India (RBI) circular on Definition of Infrastructure:

As per the RBI, a credit facility is treated as infrastructure lending to
a

borrower company which is engaged in developing, operating and

maintaining or developing, operating and maintaining any infrastructure

facility that is a project in any of the following sectors, or any infrastructure
facility of a similar nature;
i)

a road, including toll road, a bridge or a rail system;

ii)

a highway project including other activities being an integral part

of the highway project;

iii)

a port, airport, inland waterway or inland port;

iv)

a water supply project, irrigation project, water treatment system,

sanitation and sewerage system or solid waste management system;

v)

telecommunication services whether basic or cellular, including

ratio paging, domestic satellite service (i.e. a satellite owned and
operated by an Indian company for providing telecommunication
service), network of trunking, broadband network and internet
services;

vi)

an industrial park or special economic zone;

vii)

generation or generation and distribution of power;

viii) transmission or distribution of power by laying a network of new

transmission or distribution lines;
ix)

construction relating to projects involving

agro-processing and

supply of inputs to agriculture;

x)

construction for preservation and storage of processed agroproducts, perishable goods such as fruits, vegetables and flowers
including testing facilities for quality;
44

xi)

construction of educational institutions and hospitals;

xii)

any other infrastructure facility of similar nature.

For raising external commercial borrowings funds, the RBI has

defined infrastructure to include (i) power, (ii) telecommunication, (iii)
railways, (iv) road including bridges, (v) sea port and airport, (vi) industrial
parks and (vii) urban infrastructure (water supply, sanitation and sewage
projects) vide their circular dated 2nd July, 2007.

Insurance Regulatory and Development Authority (IRDA)

The IRDA (Registration of India Insurance Companies) (Second
Amendment) Regulation, 2008 defined infrastructure to include followings:
(i)

Road, including toll road, bridges or a rail system.

(ii)

Highway projects including other activities being integral part of

the highway project.

(iii)

Port, airport, inland waterways or inland port.

(iv)

Water supply project, irrigation project, water treatment system,

sanitation and sewerage system or solid waster management
system.

(v)

Telecommunication services whether basic or cellular including

ratio paging, domestic satellite services (i.e. a satellite owned and
operated by an Indian company for providing telecommunication
services), network of trunking, broadband network and internet
services.

(vi)

An industrial park or special economic zone.

(vii) Generation or generation and distribution of power.

(viii) Transmission or distribution of power by laying a network of new
transmission or distribution lines.

45

(ix)

Construction for preservation and storage of processed agroproducts, perishable goods such as fruits, vegetables and flowers
including testing facilities for quality.

(x)

Construction of educational institutions and hospitals

(xi)

Any other public facility of similar nature as may be notified by the

authority in this behalf in the Official Gazette.

Income Tax Department:

For an infrastructure company, section 80-IA of the Income Tax
allows deduction of 100% profit from its income during initial 5 years of
operation and then 30% deduction of profit from income during another 5
years. For this purpose infrastructure covers electricity, water supply,
sewerage, telecom, roads & bridges, ports, airports, railways, irrigation,
storage (at ports) and industrial parks/SEZ.

World Bank:
The

World

Bank

treats

power,

water

supply,

sewerage,

communication, roads & bridges, ports, airports, railways, housing, urban

services, oil/gas production and mining sectors as infrastructure.

Economic Survey:
The

Economic

Survey

considers

power,

urban

services,

telecommunications, posts, roads, ports, civil aviation and railways under

infrastructure sector.

Decision of the Empowered Sub-Committee of the Committee on

Infrastructure on definition of infrastructure:
The Empowered Sub-Committee of the Committee on Infrastructure
in its meetings held on 11th January, 2008 and 2nd April, 2008 under the
46

chairmanship of Deputy Chairman, Planning Commission discussed the

subject matter. There was consensus on including the following in the broad
definition of infrastructure:
i)

Electricity (including generation, transmission and distribution) and R

and M of power stations,

ii)

Non-Conventional Energy (including wind energy and solar energy),

iii) Water supply and sanitation (including solid waste management,

drainage and sewerage) and street lighting,
iv) Telecommunications,
v)

Roads and bridges

vi) Ports,
vii) Inland waterways,
viii) Airports
ix) Railways (including rolling stock and mass transit system),
x)

Irrigation (including watershed development),

xi) Storage,
xii) Oil and gas pipeline networks.

A Comparative Table on definition of Infrastructure sector and

decision of the Empowered Sub-Committee of Committee on Infrastructure
(Col) is given below:
Table 2.1 Infrastructure sector and Decision of the Empowered SubCommittee On Infrastructure (COI).
Sector

Rangaragan
Commission

Rakesh
Mohan
report/CSO

RBI

Income
tax

IRDA

Ministry
of Finance
Survey

World
Bank

Decision of the
empowered
sub-committee
of CoI

Electricity

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Water
Supply

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes (incl. R &

M of power
stations)
Yes

47

Sewerage

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes (incl.
SWM and
street lighting)
Yes

Telecommu
nications
Roads &
Bridges
Ports

Yes
Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Airports

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes (incl.
Inland
waterways)
Yes

Rail
(rolling
Stock)
Railways

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes (at
ports)

Yes

Yes (incl.
MTS)
Yes (incl.
Solar Energy)
Yes (incl.
watershed
Development)
Yes

Wind
Energy
Irrigation

Yes (CSO)
Yes

Storage
Housing
Urban
Services; as
Street
lighting,
Solid
Waste
Manageme
nt (SWM)
Oil
production
pipe lines
Mining
Gas
distribution
Aircrafts
Vehicles,
trucks,
buses etc.
(Road
Transport
System)
Industrial
Park/SEZ
Educational
Institutions
Hospitals

Yes
Yes (Rakesh
Mohan),
No(CSO)

Yes

Yes
(SW
M)

Yes

Yes

Yes

Yes

Yes (oil
pipelines only)

Yes
Yes
Yes

Yes

Yes

Yes

Yes (RM),
No (CSO)

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Posts

Yes

48

Yes (gas
pipelines only)

2.4 RELATION BETWEEN INFRASTRUCTURE AND ECONOMIC

DEVELOPMENT:
Infrastructure considerably affects the economic development of a
country. A number of interchangeable terms such as, social overhead,
overhead capital basic economic facilities, etc have been used to denote
services which are generally identified with infrastructure. In recent years the
term infrastructure has been used more frequently in literature of economic
development and is often qualified by a prefix such as economic or social
to distinguish different types of infrastructure. Historical records corroborate
the fact that the countries or regions which have industrilised rapidly had
well developed infrastructure. If the infrastructure of an economy is stronger,
one can build up the super structure without much difficulty. The
development history of all countries clearly tells us that unless the
infrastructure is built on sound lines, it is not possible to achieve rapid
economic development.
A fast growing economy like ours requires infrastructure of truly
world class. This would also promote global competitive efficiency as a
major thrust area. The infrastructure needs have to keep pace with the
burgeoning needs of the different sectors of economy. The widening chasm
between rural and urban infrastructure is a core area of development.4
Development of rural infrastructure including safe-drinking water, roads,
housing, health-care, sanitation, etc is a necessary prerequisite for the
accelerated growth of the rural areas.
A robust economy needs a robust infrastructure. Infrastructure being a
sine qua-non of economic development, its development is not a luxury but a
necessity. Infrastructure development is of two types-demand driven or
supply driven. For example, in the context of congested urban areas there is
a demand for by passes and bridges and when by passes are constructed or
4. K.Ranga Reddy, Amitabh Ray and Prem Singh Infrastructure Status and Policy OptionsPlanning Commission New Delhi.

49

bridges are made it is because there is a demand for it. On the other hand in
the construction of express ways, which are meant to cater to fast moving
traffic and to the requirements of the industrialists and traders who are
willing to pay more for better service, we would say that their construction is
supply driven. These facilities are made available and those who need it use
it. Demand driven infrastructure is a must for development whereas supply
driven infrastructure is one which is desirable but not a must. Normally
infrastructure develops at a slow pace as it is given least importance in the
early stages of economic growth.
Infrastructure works directly and indirectly on a number of
determinants of economic development. On the demand side, it opens up
possibilities of investment by making available a number of necessary inputs
and services, opening up the size of the market as well as increasing the
supply elasticity and efficiency of factors of production. On the supply side
also the development of infrastructure helps in mobilizing potential saving
and channelising them into productive investment. Adequate quantity,
quality and reliability of infrastructure are key to the growth of any
economy. Importance of infrastructure has been generally taken as selfevident. It has been repeatedly emphasized that availability of infrastructure
is a necessary precondition of development. The function of infrastructure
is to release latent productivity in the factors of production singly and in coordination and bring about not only an increase in the output of individual
factors and units of production but also mutually additive effect through coordination in inputs, output, space and time and thus maximize the overall
rate of economic growth.5
The relationship between infrastructure and economic development
may be analysed by focusing on its impact on the basic determinants of
5. Dr. V.K.R.V. Rao- Cit. Issues in Economic Development by Sher Singh Somra RBSA
Publishers, Jaipur P. 179.

50

development particularly through its links with capital formation and

technological change. The phase at which the economic development takes
place depends mainly on the level of infrastructure. The strong positive
correlation between the level of infrastructure and the economic
development has been a well established fact in the development economics
literature. In Keynesian macro economic model, the income or output in the
economy derives also from the level of investment made in the economy. It
should be noted that out of all the four factors contributing to income of a
nation,

namely,

consumption

expenditure,

investment

expenditure,

government expenditure and net income from abroad, income from

investment comes from government spending. Though the income in the
Keynesian model6 refers to short-term income, usually measured on annual
basis, the investment made also includes long-term investment such as
investment in basic infrastructural facilities. Since the model is based on the
notion that there is a direct positive correlation between income and the
investment, investment in infrastructure is economically justified. The
expansion and improvement of the infrastructure is a necessary pre-condition
for capital formation and increase in the production and productivity7.
The development of agriculture to a considerable extent depends on
infrastructure. Development of irrigation, power credit, transport marketing,
education and training research and development and other facilities
contribute a lot to the development of agriculture. Industrial development
also to a large extent depends on the sound infrastructure base. Infrastructure
plays a significant role in the generation of employment opportunities. They
improve mobility, productivity and efficiency of labour. Infrastructure
facilities play a vital role in the development of trade and commerce. In fact
they act as a platform for the expansion of trade and other commercial
activities at a rapid speed.
6. J.M. Keynes, Cit. Economic Development by M.L. Jingen
7. W.W. Rostow-Stages of Economic Growth

51

Proper and adequate infrastructure is of utmost importance for the

defence of the nation. For instance, transport and communication, scientific
inventions play an important role in national defence. An old adage says, to
be prepared for the war is one of the best ways of preserving peace.
Therefore it is apt for any nation to give due importance for the national
defence for which adequate infrastructure is a foundation.
The infrastructure development can have a significant impact on
economic growth. For low income countries basic infrastructure such as
water, irrigation and to lesser extent transport are important. As the
economies mature into a middle income category the share of power and
transport and telecommunications in infrastructure and investment
increases.8
The infrastructure sector covers a wide spectrum of services inter-alias
roadways, railways, airways and water transport services, power generation
including the transmission and distribution thereof telecommunications, port
handling facilities, water supply and sewerage disposal, mass transport
systems, and other elements of social infrastructure including medical and
educational facilities and other primary services. While some of these sectors
have direct impact on the workings of the economy others are important
from the societal point of view and therefore need to be developed on a
concurrent basis.
Infrastructure contributes a lot for the development of backward
regions and removal of regional imbalance. Infrastructure facilities act as an
instrument of social change. Development of industry, transport facilities,
education, science and technology, growth of towns and cities etc may
change the very outlook of the society. The pressing need of keeping pace
with the globalised scenario and the increasing progress of technological
8. World Development Report 1994, World Bank.

52

innovations, coupled with paucity of much needed resources and innovations

in the country highlights the need for better infrastructure. The World Bank
said-Infrastructure could deliver major benefits in economic growth,
poverty alleviation and environmental sustainability. Infrastructure, also
referred to as social overhead capital, renders service to the common man
and has direct interface in determining the quality of life in terms of facilities
he enjoys namely, water and sanitation facilities, housing, transport and
communication, power, health, education etc. Thus infrastructure plays a
pivotal role in influencing the level and nature of economic and social
activities in a country. Extensive studies undertaken by the World Bank
showes that 1% increase in investment in the stock of infrastructure
leads to a corresponding 1% increase in the Gross Domestic Product of
a nation.

INVESTMENT IN INFRASTRUCTURE IN INDIA

AMOUNT (RS. LAKH CRORE)

2.7
2.35

2.5
2.04
2
1.5

1.61
1.28

1.45

1.45

1.44

1
0.5
0
200001

200102

200203

200304

200405

200506

200607

200708

YEAR

Figure 2.1 Investment in Infrastructure9.

9. Ravi Mittal Private Participation in Infrastructure Sector in India. Published in YOJANA

a Development Monthly July-2009.

53

INFRASTRUCTURE INVESTMENT AS A PERCENT

OF GDP

PERCENTAGE OF GDP

7
6
4.8

5.1

5.3
4.9
4.5

5.7

4.7

4
3
2
1
0
2000-01

2001-02 2002-03

2003-04 2004-05

2005-06 2006-07

2007-08

YEAR

Figure 2.2 Infrastructure Investments as a Percentage of GDP10.

Experience world wide indicates that the purpose of industrialization

is better served in the presence of efficient infrastructure than in its absence.
Unfortunately, the infrastructure services enjoyed by the developing
countries are abysmally low compared to developed countries. Therefore the
developing countries should augment their infrastructure to achieve overall
development of the country. Good infrastructure raises productivity and
lowers cost of production and ultimately leads to better standard of living.
Therefore, infrastructure may be considered as the WHEELS of the
ECONOMY.

10. Ravi Mittal Private Participation in Infrastructure Sector in India. Published in

YOJANA a Development Monthly July-2009.

54

2.5 TYPES OF INFRASTRUCTURE:

There is no unanimity of opinion among developmental economists
with regard to the items to be included in infrastructure. A large number of
items extending from transport and power to education, law and order and
social values have been included in infrastructure given by various
economists.
Singer11 has included education system, health services, housing,
transport, power and irrigation among over head capital.
Ragnar Nurskse12 identifies these activities as public activities,
transport facilities, training schemes, water works, power plants, hospitals,
schools and various basic services.
To North13, banking, insurance, postal facilities, warehousing, the
development of distribution system for imports development of roads and
turnpikes are included as social overhead investment.
Arthur Lewis14 has used the term infrastructure in a wider sense
covering economic, social and administrative services in it. He includes in
addition to ports, electricity, motor transport, irrigation and drainage scheme,
Government department concerned with discovering new sources and better
ways of utilizing known resources, such as departments of agriculture,
industry and economic research. Lewis observed that a good civil service is
a crucial part of the infrastructure, since the quality of other public services
will depend upon the quality of civil services.
Rostow15 has identified infrastructure with transport services, literate
and technically trained personnel, power resources and adequate flow of
working capital.
11. Singer H.W. OP.Cit, 1951, P 7
12. Nurkse Ragnar Problems of Capital Formation in Under Developed Countries, Oxford,
London, 1955, P 152
13. North DC- Industrialization in United States (1859-60), in Rostow W.W. (Ed) The
Economics of Take-off into self-sustained Growth, MacMillan, London, 1944, P 97-102.
14. Lewis W.A. Development Planning, the Essentials of Economic Policy George Allen and
Unwin, London 1966.
15. Rostow W.W. OP. Cit, 1964 P. XXV

55

According to Hirschman16 the hardcore infrastructure includes the

basic sectors like, transport and power but in a broader concept of
infrastructure he has included law and order, education, public health,
transport, communication, power, water supply, irrigation as well as
drainage system.
Shah17 has categorized it under eight different heads such as power,
irrigation, transport, communication, education, research and development,
health and other facilities including law and order as part of infrastructure.
A very broad and comprehensive picture of components of
infrastructure is observed in the analysis provided by Dr. V.K.R.V. Rao18.
The various components included in infrastructure in his analysis are as
follows:
Economic Infrastructure:
1. Transport:
Roads
Railways
Shipping ports and harbours
Airports
Transport Equipments.
2. Communication:
a. Ports
b. Telegraphs
c. Telephones
d. Radio
e. Television
f. Cinema etc
16. Hirschaman A.O. OP Cit, 1958, P 83
17. Shah N. Infrastructure for Indian Economy Commerce Annual No. 3061, Vol 119,
1969, P.9
18. Rao V.K.R.V, - Investment Income and Multiplies in an under Developed Economy in
Agarwala A.N. and Singh S.P. (Ed) The Economics of Underdevelopment Oxford
University Press, Bombay, 1968, P.9

56

3. Energy/Power:
a. Coal
b. Electricity
c. Wind power
d. Solar energy
e. Oil
f. Gas and Bio-gas
4. Intermediate goods and output:
a. Minerals
b. Steel
c. Metals other than steel
d. Basic chemicals
e. Fertilizers and pesticides
f. Machinery and machine tools
5. Increasing productivity of natural resources:
a. Reclamation of land
b. Irrigation (Major/Medium/Minor)
c. Drainage
d. Contour building and land reshaping.
e. Consolidation of holdings
f. High yielding bovine varieties
g. Fishing boats
h. Fishing equipments and refrigeration
i. Afforestation and development of commercial projects.
6. Science and Technology:
a. Teaching basic and applied research
b. National laboratories
c. Liaison with production units

57

7. Information system:
a. Mass Media
b. Libraries and Museums
c. Fairs and exhibitions
d. Books and journals.

Finance Infrastructure:
i. Finance and Banking
a. Savings institutions (public private and co-operative sectors)
b. Credit and lending institutions.
c. Capital Markets
Social Infrastructure:
1. Human Resource Development:
a. Health
b. Clean drinking water
c. Disease eradication
d. Public hygiene
e. Family Planning
f. Medical facilities
g. Education, Literacy
h. Schools, Colleges and Universities
i. Professional Education
j. Technical and industrial schools
k. Development disciplines
Thus, the scope of infrastructure is growing rapidly over time. The
items to be covered in the term infrastructure are rather difficult. They differ
from country to country depending on the level of economic development. A
country may go in for broader base of infrastructure development as
development proceeds over the time periods.
58

Infrastructure is also classified into different categories based on the

purpose of the study. It is classified as hard and soft infrastructure,
development and rehabilitative infrastructure (on the basis of stages of
development) urban and rural infrastructure and institutional and noninstitutional infrastructure19.
In the economic category all these facilities are included which are
directly required for the process of development of productive activities.
They are mainly
i.

Irrigation

ii.

Power

iii.

Transport and

iv.

Communication

On the other hand the term social infrastructure refers to those

overhead facilities which lead to the improvement in the quality of the
population. These may include facilities like,
1. Health Services
2. Educational facilities.
3. Provision of nutrition
4. Water supply (Clean drinking water)
5. Sanitation etc

Rural and urban Infrastructure:

While the overhead facilities serve the needs of economy in general
and the same facility may be used by different sectors, it may
be used to distinguish between facilities which primarily cater to specific
sectors or segments of the economy. On the basis of this, infrastructure may
19. Rosenstein Rodan P.N. The Big Push Argument in Meier G. M. (Ed), Leading Issues in
Development Economics, Oxford University Press, 1964, P. 431-436

59

be classified as rural and urban infrastructure. But the distinction is not a

water-tight compartment, it is over-lapping. For example, irrigation facilities
primarily serve the agricultural sector, but the training facilities required by
industry and agriculture would be of different types. Similarly credit,
marketing or warehousing services are commonly needed by both the sectors
while the specific type of these services differ from one to another. In our
country generally these services are being provided by co-operative societies
in rural area and in urban areas these services are provided by some private
and public institutions. To find out the growth in different sectors of the
economy it would be appropriate to take into account the infrastructure
specific to the sector rather than overall development of infrastructure.

Institutional and non-institutional infrastructure:

The recent tendency has been towards an enlargement of concept of
infrastructure including various items like law and order, administrative and
extension agencies, financial organization etc. In this connection it is
appropriate to draw a distinction between institutional and non-institutional
infrastructure. The Governments of developing countries have been taking
increasingly the responsibility of creating a number of institutions or
organizations to promote the pace of development. These include the
financial institutions and extension agencies as well as marketing and
general administration. Many of these developmental institutions fulfill most
of the criteria of infrastructure. The Provision of other types of overhead
facilities may be included among non-institutional infrastructure.
These various types of classification of infrastructure have their own
merits and limitations and they are of specific use in different kinds of
studies. For the purpose of present study, only a few aspects of economic
and social infrastructure which are most common in use are being
considered.
60

In the present study the researcher has made an attempt to analyse the
following components of infrastructure.
Infrastructure

Economic Infrastructure

Social Infrastructure

Transport and Communication

Education

Energy

Health

Banking
Cooperatives
Irrigation

2.6 TRANSPORT AND COMMUNICATION:

Transport an important component of the tertiary sector is of immense
significance in a countrys economic development. With the advancements,
complexities and sophistications of the modern world, a country cannot think
of attaining economic prosperity in the absence of a rapid development of
the transport sector. Transport is an essential economic infrastructure for the
rapid development of any region. The lack of transport facilities retards the
process of economic development even if a region is endowed with rich
natural resources. Transport has been recognized as an indispensable
ingredient of a countrys overall development.
Alfred Marshall defines transport as a mere movement of persons and
things from one place to another20
Frank H. Mossman and Newton Morton defines Transport as a
service or facility which creates time and place utility through the physical
transfer of persons and goods from on location to another21
20. Marshall, Alfred Industry and Trade, London 1921 Page 423
21. Frank H Mossman and Newton Morton, principles of Transportation, New York, 1957, P.3.

61

According to the Encyclopedia of social sciences the transport

system is the culmination of all technical instruments and organizations
designed to enable persons, commodities and news to master space.22
Therefore, transport can be referred to as a process of moving people
and goods from one place to another with some predetermined objective.
Transport in the modern world, may assume different forms like road
transport, railway transport, water transport and air transport. Transport is
indispensable for the economic development of country. It occupies a pivot
place in the economic development process. It has been often remarked if
agriculture and industry are regarded as the body and bones of the economy,
transport and communication constitutes its nerves.

Road Transport:
Road transport is one of the oldest forms of the transport system. It
plays a decisive role in the economic development of a country. Because of
its flexibility of operations and the prevalent opportunities to render door-todoor service, road transport is the only means of transport available to a
majority of the rural people in India. The seventh plan draft clearly outlined
the importance of road transport as follows.
Since the countrys economy is still largely agrarian in character . . .
roads constitute a critical element of the transportation infrastructure. Road
construction and maintenance generate sizeable employment opportunities, a
factor that has assumed considerable importance with demographic
expansion and the growth of labour force. Better roads also achieve economy
in fuel consumption and improve the overall productivity of the road
transport sector. Road development will thus continue to play and important
role . . . .23

22. Weidnefelt Kurt, Encyclopedia of social sciences Vol.XV P.80

23. Government of India, Seventh Plan, 1985

62

Playing a complementary role to railway transport, road transport

assists the proper functioning and development of railways. It connects the
interior villages and hilly regions of India with towns and cities. It helps for
the security of the nation by facilitating the movement of troops, arms and
ammunitions in times of war. It contributes to the development of agriculture
and industry. Road transport also helps to spread education and culture. It
assists in efficient administration of the country by facilitating the movement
of police, army etc, in order to maintain the law and order.

Classification of Roads:
The chief Engineers of all the provinces met at Nagpur in 1943 and
evolved a road plan based on the minimum requirements of the country. This
plan known as the Nagpur Plan has classified roads into four groups.

Roads

National Highways

State highways

District Roads

Rural/ Villages
Roads

National Highways connect the national capital Delhi with state

capitals and important cities. The present National Highway System includes
a total length of 65569 kms. It constitutes about 3% of total road length and
carries nearly 40 percent of the road traffic. The construction repairs and
administration of these roads is the responsibility of the central Government.
Considering the importance of the National Highways and the rapid increase
in traffic, the government has taken-up the National Highway Development
Project in different phases. The NHDP Phase-I includes the Golden

63

quadrilateral of 5846 kms., connecting the four major cities viz. Delhi,
Mumbai, Chennai and Kolkata. The NHDP phase-II includes North-South
and East-West corridors of 7300kms., connecting Srinagr in the North to
Kanyakumari in the Sorth and Silchar in the East to Porbandar in the West.
The phase III of the NHDP will take steps for four-laning of 4015 kms at an
estimated cost of

22000 crore. Phase IV comprises two laning of 20000

kms of single-lane highways. Under phase V 5800 kms of the Golden

Quadrilateral will be six-laned. In the next phase ring roads, by passes,
service roads and flyovers are proposed to be developed to ease congestion
in the major cities. The NHAI is the nodal implementing agency for national
highway projects in the country. The prime ministers panel on infrastructure
has set high targets for highway development involving a total investment of
22000 crore for nearly 46000 kms of national highways.

Table2.2 Road Network in India

Category

Length (in kms)

National Highways

65569

State Highways

131899

District Roads

467763

Village Roads

2650000

Source: Economic Survey 2003-04

State highways and major district roads constitute the secondary

system of road transportation in the country. The state highways provide
linkages with the National Highways, district headquarters, important towns,
tourist centers and minor ports. Their total length is about 124300kms. Major
district roads run within the district connecting areas of production with
markets, rural areas to the district headquarters and to state highways or
national highways. It is assessed that the secondary system carries about
64

40percent of the total road traffic and comprises 12 percent of the total road
length. By acting as the link between the rural and urban areas, the state
highways and major district roads contribute significantly to the rural
economy and industrial growth of the country.
Village roads connect villages with one another and also connect the
nearest district roads, highways, railway stations or ports. The rural network
in India comprises of about 26.50 lakh kms. only 64 percent of the villages
of the country have rural road connections. As early as 1943, the Nagpur
plan suggested the accessibility standards for villages in highly developed
agricultural and non-agricultural areas. This was followed by the proposal of
the Bombay plan which prescribed of these roads received fillip during the
Fifth plan when construction of these roads was made a part of the Minimum
Needs Programme (MNP). The MNP under fifth plan envisaged connection
of villages with all weather roads. Similarly the sixth plan had the target that
all villages with population between 1000 and 1500 should be connected
with all weather roads by 1990.
Besides the Nagpur plan and the Bombay plan another plan that gave
emphasis on the development of rural roads was the Lucknow plan (19812001). Apart from the MNP outlay, funds were also available for
construction of rural roads under Jawahar Rojgar Yojana (JRY). The Ninth
plan set a target of connecting all villages by the end of the plan period. It
was estimated that about 56.55 percent of total villages had been connected
by all weather roads by the end of the Eighth plan. Despite all the efforts
made by the centre and state Governments through different programmes,
about 40 percent of the villages in the country still remained to be connected
by all weather roads.

65

Railway Transport:
The history of economic development of Europe, USA and many
other parts of the world shows that their economic development owes a great
deal to the development and expansion of railways. According to Rostow,
Railways were crucial for the economic development of United States24 He
states that the introduction of the railroad has had three major kinds of
impact on economic growth during take off period. First, it has lowered
internal transport costs, brought new areas and products into commercial
markets and performed the Smithian function of widening the market.
Secondly it has been a prerequisite in many cases to the development of a
major export sector which in turn has served to generate capital for internal
development. Thirdly, the development of railways has led on the
development of modern coal, iron and engineering industries.
The Indian Railways which made a modest beginning in April 1853
has become the second largest rail network in the world. It has been
contributing to the industrial and economic landscape of the country for the
last several decades the Indian Railways is the principal mode of transport
for carrying bulk goods and long distance passenger traffic Given Indias
continental size geography resource endowment and diversity the Railways
play a key role in not only meeting the transport needs of the country but
also in binding together dispersed areas. It also plays a key role during war
and emergencies when huge quantities of materials and men are required to
be moved across the country at short notice. The Indian Railways entered
into a phase of dynamism and active development during the plan period.
The plans included the projects which created new facilities and
improvements.

24. W.W. Rostow, The Stages of Economic Growth Cambridge University Press, 1964.

66

Because of the increasing emphasis on the railway sector the railway

route length has been increasing in the country. It was 53596kms in 1950-51
which increased to 63465kms in 2004-05. The state wise data reveal that
states like Uttar Pradesh, Maharashtra, Rajastan, Madhya Pradesh, Gujarat
and Andrapradesh have benefited a lot from the railway development in the
country which is seen from the figures of railway route length in those states.
States which are lagging behind in this respect are Chattisgarh, Haryana,
Uttranchal and Orissa.

Table 2.3 State wise Railway Route Length (in kms)

States
Andhra Pradesh
Assam
Bihar
Chattisgarh
Delhi
Gujarat
Haryana
Jharkhand
Karnataka
Madhya Pradesh
Orissa
Punjab
Rajastan
Tamilnadu
Uttar Pradesh
Uttaranchal
West Bengal
Maharashtra
India

2000-01
5135
2516
3442
1180
200
5312
1548
1797
2974
4785
2309
2102
5926
4188
8572
356
3662
5459
63028

2001-02
5197
2516
3429
1180
200
5310
1548
1797
2974
4845
2320
2102
5894
4189
8578
356
3681
5459
63140

2002-03
5197
2516
3224
1180
200
5285
1554
1798
2974
4825
2324
2102
5900
4184
8799
345
3680
5450
63122

2003-04
5196
2517
3377
1159
178
5283
1623
1943
2960
4849
2284
2098
5835
4201
8566
345
3706
5497
63221

2004-05
5205
2506
3379
1159
205
5284
1597
1941
2982
4905
2280
2098
5838
4171
8545
345
3856
5527
63465

Source: Centre for monitoring Indian Economy, Infrastructure 9Mumbai: CMIE, May-2006.

67

Air Transport
Civil aviation is the most modern mode of transport. The phenomenal
growth of the global aviation industry can be gauged from the fact that
where as in 1945 only nine million passengers traveled on scheduled
services in the whole world, in 2003 about 1.66 billion passengers were
carried over 180-fold increase. India has not remained insulated from the
global trend. Air traffic is growing but at a slightly lower rate than the global
rate.
In 2004, there were five domestic passenger lines flying in the Indian
sky which increased to nine in 2006. The growth in Indian air traffic both
domestic and international is the second fastest in the world. The airports
have grown on all the three major parameters, passenger number, aircraft
movements and cargo carriage. Domestic air traffic has outpaced
international. For instance, in 2003, the total domestic passenger traffic was
32076000 as against 16625000 international passengers. It is also estimated
that the total air passenger traffic of India would escalate up to 124650000 in
2025. The aircraft movement in India is also rapidly increasing.
The Airport Authority of India manages 126 airports which include
fifteen international airports. Growth of Indian airports is second only to
China. The civil aviation sector has played an important role in the Indian
economy. It provides fast and reliable mode of transport across the country
and is particularly important for many areas and places. Which are not yet
adequately connected by rail or road. With increasing globalization this
sector will play a more significant role in integrating the Indian economy
with the rest of the world. The demand for air traffic has picked up suddenly
since 2004-05. Air traffic could grow over 2.5 times during 2010 to 2011.
However, the airport infrastructure is not modernized in tandem with the
growth. The airports are not suitably developed and the standard of service
provided by them is generally poor. Major airports are congested during
68

night in respect of international operations. Domestic operations create

congestions during morning and evening hours at major airports. Paucity of
parking bays in airports and runway capabilities in terms of number of
flights it handles in an hour are the biggest concerns for airlines.

Table: 2.4 Air Traffic in India-past Trends and Forecasts for 2025
Year

Aircraft movement (000

Passenger (000)

International

Domestic

Total

International

Domestic

Total

1995

92

315

407

11450

25564

27014

1996

95

324

419

12224

24276

36500

1997

98

318

416

12783

23849

36632

1998

100

325

425

12917

24073

36990

1999

100

368

468

13293

25742

39035

2000

103

387

490

14009

28018

42027

2001

108

402

510

13625

26358

39983

2002

106

404

510

14827

29161

43988

2003

133

506

639

16625

32076

48701

2025
(forecast)

315

1079

1397

48632

76018

124650

Source: FICCI, Strengthening Policy Reforms for Transport Infrastructure Development Policy
Retreat and Dissemination Workshop, New Delhi, 23-03-2005.

Water Transport
The importance of maritime trade in world economy is huge. With
newer technology and bigger sips the share of cargo movement by sea is on
the rise. The sea trade in India dates back centuries and in more recent times
it has been growing in importance, with 12 major ports and 187minor and
intermediate ports dotting its coast. The role of shipping in promoting trade
and development has been well recognized. The shipping sector assumes
special significance in India as over 90 percent of the countrys overseas
trade in terms of volume and 68 percent in terms of value are sea-borne.
Water transport, especially the shipping transport is indispensable for the
69

growth of foreign trade of a country. Though the slowest in terms of speed

this is the cheapest mode of transport. Dependence on shipping transport is
almost cent percent in the carriage of bulky goods and heavy machinery to
far off countries. Its importance in the accumulation of valuable foreign
exchange reserves for a country cannot be underestimated. Our country,
having an extensive coastal line of 6720kms has immense potentialities for
the development of the shipping industry on sound lines.
Liberalization and simplification of ship acquisition was initiated in
the Eighth Plan and it continued in the Ninth Plan also. The earlier
requirement of approval by the ship acquisition Licensing committee of the
Ministry of shipping has been dispensed with. All vessels have been put
under open general license from 2001 to make their imports easier. The need
for improving ports and maritime facilities has increased with the foreign
trade policy for 2004-09 aiming at doubling Indias share of global
mercantile trade. Inspite of these there is an urgent need to develop a portcentered approach by way of providing land and other facilities for industry
to come and stay near ports. There is also a need to adopt an integrated
approach by linking ports with roads railway network and even airports.
Thus transport has given to the people at large mobility hitherto
undreamed of contributing strongly to the development of greater nationwide homogeneity in thought and experience and breaking down most of the
last remnants of local interests. Transport has succeeded in building up a
social structure where people can better understand their indigenous culture
and tradition. The more they know about their country, the more proud will
they be about it and thus develop better social relations even in the midst of
diverse religions, cases languages customs food habits etc. There fore,
transport has been considered a basic prerequisite of the modern economy.
Without it, the life of the country gets itself paralysed. It acts as a catalytic
agent for a comprehensive development of the country.
70

Telecommunication
Telecommunication is one of the prime support services needed for
rapid growth and modernization of various sectors of the economy. It has
become more important in recent years because of the rapid growth of
information technology and its significant impact on the economy. Keeping
in view all its advantages the Tenth Plan focused on the provision of world
class telecommunication facilities at reasonable rates. Provision of telecom
services in rural areas would help to attain the goal of accelerated economic
development and social change. Because of its importance the telecom sector
in India has been witnessing a continuous process of reform since 1991.
Because of the various steps taken during the last one and half decade,
telecommunication has become one of the fastest growing sectors in India.
The basic telecom services network has expanded from about 84,000
connections at the time of independence to about 385.95 lakh on March
31,2002. The total number of telephones including basic and mobile rose
from 22.8 million in 1990 to more than 125 millions at the end of December
2005. Although India has a 125 million strong telephone network, the
telephone penetration rate continuous to be low. However, viewed in the
context of global patterns and indicators, the sector is still in the early stages
of development. Our teledensity was only 4.01 as compared to the global
average of 32.78(in 2001). The comparative position of teledensity in a cross
section is presented in the following table. It is seen that India is till way
behind China and other global players such as the US, Brazil, Japan,
Germany and Russia.

71

Table: 2.5 Teledensity-International Comparisons 31 12-2001)

Country
USA
UK
Australia
Brazil
Mexico
South Africa
Egypt
Japan
Malaysia
China
Pakistan
India
Assia
World

Main Telephone Lines(in lakh)

1995
2001
CAGR(%)
1597.35 1900.00
2.9
294.11
353.26
3.1
89.00
100.60
2.1
132.63
374.30
18.9
88.01
137.73
7.7
40.02
49.69
3.7
27.16
66.50
16.1
622.92
760.00
3.4
33.32
47.38
6.0
407.05
179.34
28.0
21.27
34.00
8.1
119.78
347.32
19.4
1816.88 3911.79
13.6
6892.51 10460.9
7.2

1995
60.73
50.18
49.25
8.51
9.39
10.14
4.67
49.61
16.57
3.30
1.87
1.29
5.46
12.29

Teledensity
2001
CAGR(%)
66.45
1.5
58.8
2.7
52.02
0.9
21.78
17.0
13.72
6.5
11.35
1.9
10.30
14.1
59.69
3.1
19.91
3.1
13.81
26.9
2.35
5.8
3.38
17.4
10.85
12.1
17.21
5.8

Source: Government of India, Tenth Five plan vol.11 p.1051

But the current growth rates will almost certainly spell a new order in
the future. It is estimated that India will have 270 Million Phone lines by
December 2007 and that should put us second globally only to china.
However, with over a billion people, these figures translate to a teledensity
of only slightly over 9 percent.
Though this is quite low, it is increasing at a rapid rate. The
teledensity increased by 1.91 percent in 2004.2005. On the country, India
teledensity increased by 1.92 percent in the 50 years from 1948-1998. The
growth is also being buoyed by the fact that India has lowest rates of mobile
telephony in the world today, which is shown in the following table. India
also has among the largest number of cellular operators and the competition
is helping boost growth rates.

72

Table:2.6 Cellular subscribes in selected countries in

Country
India
China
U.S.A
Japan
Germany
Italy
U.K
France
Korea
Brazil
Spain
Maxico
Taiwan
Turkey
Netherlands
Australia
Philippines
Canada
Malaysia
Hong Kong
Indonesia
Singapore
Saudi Arebia
Bangladesh
World

1995
76
3629
33,785
1171
3725
3923
5736
1303
1641
1285
945
688
722
437
539
2242
493
2589
1005
798
210
306
16
2
90692

2001
6431
144,820
128,374
74819
56245
51246
46282
35922
29045
28745
29658
21757
21633
19573
12352
11132
12159
10861
7128
5776
6520
2991
2528
520
956412

Source: Tata services limited, statistical outline of India. 2003-04 (Bombay Tata Services limited,
Jan 2004).

Access to telecommunication in different states of the country shows

that there are 29 telephones per 1000 in Karnataka which is shown in the
following table.
Table: 2.7 Access to Telecommunication in Selected States.
States
Telephones per
Internet connections per
1000 people
1000 people
Maharashtra
43
8.21
Punjab
47
1.24
Kerala
43
0.87
Karnataka
29
2.73
West Bengal
16
2.51
Orissa
09
0.12
Uttara Pradesh
10
0.12
Source: Quality of life: India improves by 13 notches Times of India, 12 July 2001.

73

Rural Teledensity
Every village is a knowledge center. Rural infrastructure has to be
enhanced for the information revolution to reach villages. While horizontal
connectivity was needed between villages to harness and share local
resources, vertical connection was needed at the administration level. If
connectivity is taken to downwards, it will strengthen rural employment and
the Sarva Shiksha Abhiyan Movement. Despite its potential benefits, the
impact of telecom revolution on rural India has been insignificant. Indias
rural populace hardly has any mobile coverage, despite accounting for 70
percent of the countrys population. Rural teledensity, measured as the
availability of phones per 100 persons, is very low at 1.9 percent compared
to urban teledensity of 31.1 percent as showen in the following table.
Table:2.8 Teledensity: Urban-Rural Divide
Year
Urban
Rural
1998
5.78
0.43
1999
6.87
0.52
2000
8.23
0.68
2001
10.37
0.93
2002
12.2
1.21
2003
14.32
1.49
2004
20.79
1.55
2005
26.2
1.74
2006
31.1
1.94
Source: Rural India Cell-dom connects with Urban The Economic Times 14 October 2005

Rural teledensity, at present, is about one- third of the urban

teledensity. The rural-Urban divide has not shown any sign of reducing.
Mobile network covered 1700 out of 5200 towns with a total population of
200million in 2003-04. In contrast, hardly any rural areas had mobile
coverage. In Karnataka, for example, rural teledensity is only 2.79 percent
while urban teledensity is 44.27 percent. Uttar Pradesh, Bihar, Chhattisgarh
and Assam have teledensity below 1 percent. Kerala has the highest rural

74

teledensity of 10.66 percent. Punjab has the highest overall teledensity of

28.15 percent. However, only 5.20 percent of its total rural population has
telephones, while 65.05 of its urban population had telephones as on April
30, 2006. Jharkhand has the lowest teledensity of 2.10 percent. Only 0.5
percent of its total rural population has telephones, while 7.86 per cent of its
urban population had telephones. It appears that the whole development in
the telecom sector is taking place only in the urban areas.
Internet Use:
Internet use in India has grown more than 11 times over the last seven
years which is shown in the following table.
Table: 2.9 Internet use in India (in lakhs)
User in
2000
2007
Growth(%)
Top 8 metros
10.78
58.52
543
Smaller metros
1.82
32.34
1777
Non-metro towns
0.56
18.48
3300
Small towns
0.7
44.66
6380
Total users
14
154
1100
Note: Metros population of 40 lakh or above, small metro 10 lakh to 40 lakh, non metros -5 lakh
to 10 lakh, small towns-below 5 lakh.
Source: Small-towns Drive Internet Boom Times of India October 2007.

The boom is driven not by metros, but by smaller and non-metro

towns, where the number of users has risen by a whopping 69 times and 33
times respectively since 2000. The number of users has grown in all socioeconomic categories, as well as in all metros and non-metros towns. In
absolute terms, the top eight metros still have the largest numbers. However,
the growth has been the fastest in the smaller and non-metro towns. In fact,
small towns have the second largest numbers of total users after the top eight
metros put together, where the total number has grown by just over five
times. Using the internet in schools and colleges is the fastest growth
category -22 times that it was in 2000- indicating increasing computerization
of educational institution. However, in absolute numbers, cybercafs have

75

the largest numbers accessing the internet, about 57 lakh, followed by those
logging on from home. In terms of activities on the net, E-mail and
information search are still the biggest drivers of internet use. More than
78.5 lakh people use the net for E-mail compared with less then half that
number, nearly 37 lakh for information search. With the highest jump of 27
times in the number of user since 2000, the entertainment segment comprises
games, ring tones, music, video downloads has caught up with the chat
segment. Both have about 15.4 lakh users followed by e-commerceincluding online travel, share trading, banding and buying products, which
has grown nearly 25 times since 2000. On account of this reason that Indian
will emarge as an economic power house by 2020.
2.7 ENERGY INFRASTRUCTURE:
Energy has been called the fuel of economic progress. Inadequate
supply of energy can inhibit development. Taking the data of 153 countries,
Fremont Felix25 has shown that there is a close relationship between per
capita income and per capita energy consumption. Darmstadtes26 and others
have also recognized this fact. A.O. Hirschman27 using the categories of
social overhead capital (SOC) and directly productive activities (DPA) has
highlighted the importance of energy in sustained economic growth. Energy
inputs such as electric power and coal are required to support a growing
industrial sector. The steady availability of cheap energy may serve to
stimulate industrial development. According to Robinson a 3 percent hike in
industrial production in the world is accompanied by a 2 percent increase in
energy consumption. Consequently energy supply policy could be crucial to

25. Felix Freemont-Growth of Energy Consumption and National Income throughout

the world IEEE spectrum, July 1964, PP 81 to 102
26. Darmstadter et. Al Energy in the world Economy (Baltimore, John Hopkins Press,
1971)
27. Alberto O. Hirschman, The strategy of Economic Development New Haven, Yale
University Press, 1958

76

future resource development and economic growth in India. Power shortages

in the past in India have affected a wide range of economic activity in both
the industrial and agricultural sector. Coal shortages have caused curtailment
in steel production and power generation. Fertilizer production has been
adversary affected by inadequate energy supplies. The drastic price increase
and supply constraints on petroleum products caused disruptions in transport
and industrial activity. Uncertainty regarding future availability and cost to
energy would act as a determinant to both private and public sector
investment in the current period, similarly expectations of abundant energy
supplies at reasonable cost could provide a stimulus to investment.
In India the total energy requirement is obtained from commercial and
non commercial sources. About 40 percent of the energy consumed is
obtained from non-commercial sources such as firewood, dung-cakes and
agricultural wastes28. Mostly, the population living in the rural areas of the
country depends upon the non commercial sources, which are renewable in
nature. The other types of energy are called commercial energy which
accounts for 60percent of the total energy supplies. Its supply was only 26
percent in 1950-51. The primary sources of commercial energy available in
India are coal, oil, natural gas, hydropower nuclear power etc. The overall
indigenous production of commercial energy in India increased from 53
million tones of oil equivalent in 1972-73 to 195 million tones of oil
equivalent in 1995-96 at an average growth late of 6 percent coal accounted
for as much as 64percent of total energy availability in 1972-73 and its share
declined to 58-60percent in 1996-97, where as the share of Oil and natural
gas increased over the years. It was 17 percent in 1972-73 and increased to
28 percent in 1995-96.
28. Nand Dhameja, Power Sector Reform: Warrant Good Government, in S.P.Verma (ed)
Infrastructure in Indias Development Kanishka publication,New Delhi. 2004

77

Commercial Sources of Energy:

Hydroelectricity: The development and distribution of hydro power
depends upon supply of water in river, lakes reservoirs etc. These hydel
power resources are available in Punjab, Himachal Pradesh, Jammu and
Kashmir, Kerala, Karnataka and the States of the North-East. Nevertheless,
hydro power in India is the most neglected power sector out of the total
installed capacity of about 1,27,673 M.W. contribution of hydro power is
about 33,600 M.W. which is about 26 percent of the total installed capacity.
There is abundant scope for rapid addition of hydro power and increasing its
share in the total installed capacity of the country. India has huge hydro
potential to the tune of 1,48,700 mw of installed capacity. Out of this, only
33,600mw has been developed so far. This clearly indicates that out country
has over 74 percent of hydro potential that is available for development.
Lack of investment in the segment has been identified as the main cause of
worsening hydro-thermal mix. The other major constraints that dampened
hydro development in the country in the past are technical issues like nonavailability to bankable DPRs, inadequacy in tunneling methods, shortage of
competent contacting agencies especially for civil works,

geological

surprises, financial issues like highly capital intensive sector, deficiency in

providing long term financing, tariff issues, infrastructure and administrative
issues like delays in land acquisition rehabilitation and resettlement issues
law and order etc.
However, hydropower development in the country has now been well
recognized as national priority and attention of the government for its future
development. Many key initiatives have been taken by the Government of
India like introduction of Hydro policy, ranking study of potential
hydroelectric sites etc. This has definitely given a major boost to the hydro
sector which is now gearing up to meet the future challenges in meeting the
huge power demand of the country. Presently the National Hydroelectric
78

Power Corporation (NHPC) is operating10 hydro power stations with total

installed capacity of 3755 mw. Another 13 projects totaling 5712mw are
under active construction stage. The NHPC has set an ambitious target of
adding 1970mw during the Tenth plan against which projects with aggregate
capacity of 1580mw have already been commissioned. Another 14 projects
with installed capacity of 5837mw are targeted to be completed during the
Eleventh Plan (2007-12) and 13 projects totaling 12,610mw during 12th plan
(2012-17).
Table:2.10 Trends in commercial Energy Production
Fuel
Coal(Mt)
Crude Oil (Mt)
Natural Gs
(BCM)
Hydro Power
BKwh
Nuclear Power
(BKHW)
Wind Power
(Bkhw)

1960-61
55.67
0.45
-

1970-71
72.95
6.82
1.44

Units Production
1980-81 1990-91
114.01
211.73
10.51
33.02
2.35
1.79

2001-02
325.65
32.03
29.69

2006-07
405.00
33.97
37.62

7.84

25.25

46.54

71.66

82.80

103.49

2.42

3.00

6.14

16.92

19.30

0.03

1.70

4.04

Source: Gopalji and Suman Bhakri, Statistical Data on Indian Economy (New Delhi, Allied
Services 2005)

It is estimated that about

41,000 crore will be required till the year

2012 to meet the capacity addition within the Eleventh Five Year plan. For
this capacity addition the Government of India is expected to provide
budgetary support of about

11,200 crore. The NHPC plans to raise about

4800 crore through internal resources during the coming few years. For the
balance, the NHPC is likely to approach the domestic and international
market for long term loans.

79

Power Consumption:
The Indian power sector characterized by inadequate capacity remains
poor in supply. The per capita electricity consumption in India is one of the
lowest in the world. It was 283 units in 1993 and reached 338 units in 199697 and 592 in 2004, Globally India ranks 119th in per capita power
consumption. The countrys average per capita consumption is less than 5
percent of U.S. which tops the international list at 13,228kwh. The US is
followed by Australia (10,502kwh), France (7,366kwh) and Germany
(6,742kwh). Pakistans power consumption is 384kwh, much lower than
Indias. However, in terms of total consumption, India is 7th in the world
with total consumption of 497 billion kwh per annum, while us comes first
with 3,602 billion kwh, which is shown in the table 2.11 below.

Table: 2.11 Power Consumption and Ranking of Selected countries.

Country
USA
China
Japan
Germany
India
Pakistan

Per Capita
(kwh)
33,228
1,208
7,606
6,742
592
384

Ranking
9
93
15
24
119
124

Total (Bn Ranking

Wkh)
3,602
1
1,312
2
964
3
506
5
497
7
62
33

Source: State Ranks 25th in per capital power usage. The Economic Times 9th August 2005.

The per capita power consumption in various states and union

territories shows that Dadra and Nagar Haveli tops the list with per capita
consumption of 7,497kwh followed by Daman & Diu at 7,038kwh. Goa is
third in the list at 2,178kwh followed by Pondichery (1894kwh), Delhi
(1,542kwh) and Chandigarh(1499kwh). The figures are 410kwh in West
Bengal, Madhya Pradesh 474kwh, Bihar 75kwh, Nagaland 156kwh. The
north-eastern states have not fared well in the power race. Their per capita
power consumption range from 156kwh for Nagaland to 360kwh for

80

Mizoram, Assams consumption was just 160kwh, Sikkims consumption is

765kwh. In the southern region Kerala has the lowest per capita
consumption, lower than the all India average. One of the reasons for this is
the high density of population which results in restricted energy supply.

Rural electrification:
Rural electrification can play a vital role in the economic development
of a country. In the developing countries like India, access to electricity
services can be a key driver of economic development and poverty
alleviation. In rural areas where electricity supply is reliable, there is an
increase in on and off-form growth rate. Electricity powered pump sets and
also processing machinery enable the formers to irrigate and improve fields.
The non-form sector also benefits from increased productive activities and
the highest efficiency of mechanical processes. Data from a household
survey in India shows that both education and electricity can lead to a higher
non-farm income, delivering these services increase the household income
by 2-3 times.29
There has been considerable progress in the rural electrification
programme since independence. From a mere 1500 villages that had access
to electricity in 1947, close to 4,99,000 villages have been electrified in 2005
which is shown in the following table no.-- Thus about 85 percent of the
villages in the country are covered. Moreover, eight states such as Andhra
Pradesh, Goa, Haryana, kerala Punjab, Tamilnadu, and Nagaland have
achieved 100percent electrification. States such as Himachal Pradesh,
Jammu and Kashmir, Karnataka, Madya Pradesh, Mizoram, Rajasthan and
Tripura have achieved more then 95 percent electrification
29. Douglas F. Barnes Kevin B Fitzgerald and Hendry M. Peskin-The Benefits of Rural
Electrification in India: Implications for Education, Household lighting and Irrigation
World Bank Washington D.C. 2004

81

Table: 2.12 Number of Villages Electrified

Year

No. of villages Electrified

1947

1500

1970

74000

1990

471000

2005

499000

2012*

587000

*Projected figure

Table: 2.13 Indias Village Electrification by State

State
Andhra Pradesh
Arunachal Pradesh
Assam
Bihar
Goa
Gujarat
Haryana
Himachal Pradesh
Jammu & Kashmir
Karnataka
Kerala
Madya Pradesh
Maharashtra
Manipur
Meghalaya
Mizoram
Nagaland
Orissa
Punjab
Rajasthan
Sikkim
Tamilnadu
Tripura
Uttar Pradesh
West Bengal
Chattisgarah
Uttaranchal
Union territories
All India

Inhabited villages
(1991 census)
26,586
3,649
24,685
67,513
360
18,028
6,759
16,997
6,477
27,066
1,384
51,806
40,412
2,182
5,484
698
1,216
46,989
12,428
37,889
447
15,822
855
97,122
37,910
19,720
15,681
1,093
4,90,233

villages
Electrified
100
64
77
71
100
100
100
99
97
99
100
97
100
92
47
99
100
75
100
96
100
100
95
80
78
92
81
100
88

Source: World Bank, Rural Access to Electricity (Washington D.C) World Bank 2004.

82

Power Sector Scenario in India:

Power is one of the prime movers of economic development. The level
of availability and accessibility of quality power is one of the important
determinates of quality life. Therefore, the Government has been giving
increasing emphasis on this sector since the dawn of the planning era. The
installed generating capacity has increased term 1362mw at the time of
independence in 1947 to about 127673mw in 2006. On the whole, the
increase in installed capacity of power during the period from 1950 to 2000
has been a 60 fold increase with an annual growth rate of 8.5 percent.
Similarly, there was 95 times increase in energy generation from 5.1 billion
kwh in 1950-51 to 480.1 billion kwh in 1999-2000 with an annual rate of 10
percent. Despite the increase, the power sector has not kept pace with the
growth.
Table: 2.13 Statewise Growth of Installed Capacity
States

Installed Capacity(MW)

Andra Pradesh
Assam
Bihar
Delhi
Gujarat
Haryana
Himachal Pradesh
Jammu & Kashmir
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Meghalaya
Orissa
Punjab
Rajasthan
Tamil Nadu
Uttar Pradesh
West Bengal
All India

1970-71
608
180
499
252
907
504
51
40
878
547
727
2119
68
564
680
541
1966
1351
1212
14709

1980-81
2240
228
941
276
2197
1141
129
206
1470
1012
1631
3992
131
923
1536
810
2329
3612
1726
30214

1997-98
5764.2
616.7
1988.4
653.6
4883.2
1780.3
299.5
365.8
3434.5
1775.8
3875.9
8289.8
188.8
1693.0
2465.1
1369.8
5763.0
6168.8
2904
89090.5

83

Annual Average Compound

Growth rate (%)
1970-81 1980-98 1970-98
13.92
5.72
8.68
2.39
6.02
4.66
6.55
4.45
5.25
0.91
5.20
5.39
9.25
4.81.
6.43
8.51
2.65
4.78
9.72
5.08
6.77
17.81
3.43
8.54
5.28
5.11
5.18
6.35
3.36
4.46
8.41
5.22
6.39
6.53
4.39
5.18
14.01
2.17
4.75
5.04
3.63
4.15
8.49
2.82
4.88
4.11
3.13
3.50
1.70
5.47
4.06
10.33
3.19
5.78
3.59
3.10
5.78
7.46
6.56
6.99

2.9 BANKING:
Banking in India has its origin as early as the Vedic period. It is
believed that the transition from money lending to banking must have
occurred even before Manu, the great Hindu Jurist, who has devoted a
section of his work to deposits advances and laid down rules relating to rates
of interest. During the Mogul period, the indigenous bankers played a very
important role in lending money and financing foreign trade and commerce.
During the days of East India Company it the turn of the agency houses to
carry on banking business. The Central Bank of India was the first joint
stock bank to be established in the year 1786. The others which followed
were the bank of Hindustan and the Bengal Bank. The Bank of Hindustan is
reported to have continued till 1906 while the other two failed in the
meantime. In the first half of the 19th century the East India Company
established three banks, the Bank of Bengal in 1809, the Bank of Bombay in
1840 and the Bank of Madras in 1843. These three banks also known as
presidency Banks, were independent units and functioned well. These three
banks were amalgamated in 1920 and new bank, the imperial Bank of India
was established on 27th January 1921. With the passing of the State Bank of
India Act in 1955 the undertaking of the Imperial Bank of India was taken
over by the newly constituted state Bank of India. The Reserve Bank which
is the Central Bank was established in 1935 by passing Reserve Bank of
India Act 1934. In wake of the Swadeshi Movement, a number of banks with
Indian management were established in the country viz, Punjab National
Bank Ltd., Canara Bank Ltd., Indian Bank Ltd, the Bank of Baroda Ltd, The
Central Bank of India Ltd. On July 19 1964, 14 Major Banks of the country
were nationalized and on 15th April 1980 six more commercial private sector
banks were also taken over by the Government. Today the commercial
banking system in India may be classified into public sector banks which
includes
84

a. State Bank of India and its associate banks called the State Bank
Group.
b. 20 nationalized banks
c. Regional Rural Banks mainly sponsored by Public Sector Banks.

Private sector Banks which includes:

a. Old generation private banks
b. New generation private banks
c. Foreign banks in India
d. Scheduled Co-operative banks
e. Non scheduled banks

Co-operative Banking Sector:

The co-operative banking sector has been developed in the country to
supplements the village money lenders. The co-operative banking sector is
divided in to the following components.
i)

State co-operative Banks

ii)

Central Co-operative Banks

iii)

Primary Agriculture Credit Society

iv)

Land Development Banks

v)

Urban Co-operative Banks

vi)

Primary Agricultural Development Bank

vii)

Primary Land Development Banks

viii) State land Development Banks

Development Banks, which includes:

(i)

Industrial Finance Corporation of India (IFCI)

(ii)

Industrial Development Bank of India (IDBI)

(iii)

Industrial Credit and Investment Corporation of India (ICICI)

85

(iv)

Industrial Investment Bank of India (IIBI)

(v)

Small Industries Development Bank of India (SIDBI)

(vi)

National Bank for Agriculture and Rural Development (NABARD)

(vii) National Housing Bank

Currently, overall banking in India is considered as fairly mature in
terms of supply, product range and reach-even though reach in rural India
still remains a challenge for the private sector and foreign banks. Even in
terms of quality of assets and capital adequacy, Indian banks are considered
to have clean, strong and transparent balance sheets as compared to other
banks in comparable economies in its region. The Reserve Bank of India is
an autonomous body, with minimal pressure from the Government. The
stated policy of the bank on the Indian Rupee is to manage volatility without
any stated exchange rate and this has mostly been true.
With the growth in the Indian economy expected to be strong for quite
some time especially in its service sector the demand for banking services
especially retail banking, mortgages and investment services are expected to
be strong.
Currently, India has 88 scheduled commercial banks, 28 public sector
banks (that is with the Government of India holding Stake), 29 private banks
and 31 foreign banks. They have a combined network of over 53,000
branches and 17,000 ATMs. According to a report by 1CRA Limited, a
rating agency, the public sector banks hold over 75 percent of total assets of
the banking industry with the private and foreign banks holding 18.2 percent
and 6.5 percent respectively.

86

2.10 CO-OPERATIVE SECTOR:

A co-operative form of business organisation is a voluntary
association of persons for mutual benefit and its aims are accomplished
through self-help and collective efforts. It is a voluntary association of the
people organized on the basis of equality for some common purpose. The
basic principle of co-operation is Each for All and All for Each. A
minimum of ten persons are required to form a co-operative society. To be
called a co-operative society, it must be registered with the Registrar of cooperative societies under the co-operatives societies Act.
Originally, the word co-operation is derived from the Latin term
co-operari which means to work with. Thus, etymologically speaking, a
co-operative is an enterprise which is collectively owned and operated for
the mutual benefit.
Apart from this, some of the definitions given by the experts also
throw light on the meaning of co-operation or co-operative societies.
A co-operative is a form of organization where in persons voluntarily
associate together as human beings on the basis of equality for the promotion
of the economic interests of themselves.
-H.Calvert.
Co-operative organization is an association of persons, usually of
limited means, who have voluntarily joined together to achieve a common
economic end through the formation of a democratically controlled business
organization, making equitable contributions to capital required and
accepting a fair share of risks and benefits of the undertaking.
-International Labour Organisation.
A co-operative Society is a society which has as its objectives the
promotion of economic interests of its members in accordance with cooperative principles.
-The Indian Co-operative Societies Act, 1912.
87

Principles of Co-operation:
The International Co-operative Alliance, appointed an Authoritative
Commission, after World War-II. This Commission formulated rather,
formalized the principles of co-operation. They are1. Voluntary and open membership.
2. Democratic Management.
3. Limited Interest on capital.
4. Patronage dividend in proportion of members transactions.
5. Education and Training.
6. Co-operation among co-operatives.
There have been also other principles like the principles of political
neutrality, correct weight and measures, purity of goods and thrift which
were also taken into consideration.

88

Fig. 2.3 Classification of Co-operative Societies

CO-OPERATIVE SOCIETIES

Co-operative Noncredit societies

Co-operative
Credit Societies

Agricultural
Credit Societies

Long-Term
Credit
Societies

Agricultural Non
Credit Societies

Nonagricultural
Credit Societies

1. Co-operative Marketing
Societies
2. Co-operative Farming
Societies.
3. Multi purpose Societies.

Short-Term
Credit
Societies

1. Primary Land
Development
Banks
2. Central Land
Development
Banks.

Urban
Banks

1. Primary
Agricultural
Credit
Societies.
2. Central Cooperative
Banks
3. State Cooperative
Banks

Salary
Earners
Societies

Non Agricultural
Non Credit Societies

Others

89

Producers Co-operative Societies

Consumers Co-operative Societies
Housing Co-operative Societies.
Workers Co-operative Societies
Milk Producers Co-operative Societies
Fisheries Co-operative Societies

Fig.2.4 Structure of co-operative credit Institutions

Co-operative Credit Institutions

Rural co-operative
credit Institutions
(1,06,919)

Urban co-operative
Banks(1,872)

Short term structure (1,06,131)

State cooperative
Banks 31)

Central
cooperative
Banks(365
)

Long-term structure(788)

Primary
Agricultural
credit
societies
(1,05,735)

State co-operative
Agriculture
Rural
Development
Banks(20)

Primary cooperative
Agriculture
and Rural
Development
Banks(768)

Note: Figures in parenthesis are as on 31-3-2004

Source: Report on Trend and Programme of Banking in India, 2004-05, RBI, Mumbai30.

Adequate and timely financial support is vital to sustain production

and productivity in any sector of economy. Co-operatives are the
organization of the economically weak and poor people who have come
together for improving their economic conditions with the help of thrift, selfhelp and mutual help. In the initial stages co-operatives were considered to
be most ideally suited institutions for disbursing agricultural credit and the
main objective was to save the agriculturists from the clutches of the money
lenders. In due course of time co-operatives spread its activities through out
the length and breadth of the country.

30. Jyotsna Sethi and Nishwan Bhatia Elements of Banking and Insurance

90

Defining the role of co-operative in the economy, the Third Five Year
plan observed In a planned economy, pledged to the values of socialism
and democracy, co-operation should become progressively the principal
basis of economic life, notably in agriculture.
The former Prime Minister of India Smt. Indira Gandhi while
describing the importance of co-operative movement exclaimed. I know of
no other instrument as potentially powerful and full of social purpose as
the co-operative movement.
In February 1988, while presenting his budget, the Finance Minister of
India declared, co-operatives are the best instrument for reaching our
farmers; they are also a symbol of self reliance at the village level. I believe
that we must now devote special attention to revitalizing the entire
structure.31 These policy statements and their follow up in practice foster
the growth of co-operatives in India.
In all developing economies, co-operative sector has been assigned the
role of a major agency rural reconstruction and programmes for its
expansion have been prepared and implemented. A rapidly growing cooperative sector, with special emphasis on the needs of the peasants, the
workers and the consumers can become a vital factor for social opportunities
and the economic development. It does provide to the social structure and
the national economy, balance, directions and a sense of values. Thus, cooperative sector can help for bringing about the changes of a fundamental
nature within the economy.
In a large country like India with diversified economic structure,
development of agricultural and allied activities in the rural sector has been
accorded an important place, co-operatives play a vital role in the strategy of
balanced regional development. The Father of the Nation Mahatma Gandhiji
31.C.Shrinivas Shastry, Co-operatives and National Development Indian Experience citCo-operation, published by National Co-operative Union of India-1989, PP-271-75

91

described the co-operatives as ideally suited organizations for promoting

group efforts. He further added co-operation is the Gateway to Economic
Freedom. Pandit Jawaharlal Nehru, the main architect of modern India
declared, In the economic structure of India co-operation is not even a free
choice, it is a necessity. The great leaders, who shaped the destiny of free
India, recognized and showed immense faith in the potential of the cooperatives for the transformation of Rural India.
2.11 EDUCATION:
Education plays a key role in economic thought. The classical
economists accepted education as a means to increase production. Adam
Smith deemed acquisition of skills through education and study.32 David
Ricardo and Thomas Malthus considered education as means to develop
habit that would be helpful to check population growth. Alfred Marshall in
his Principles of Economics refers education as a national investment.
Marshall viewed that the most valuable of all capital is that invested in
human beings. He advocated that general education is required to make
people more intelligent and trustworthy. Education is also an important
means for the production of material wealth. There was growing interest in
the economic values of education during the 1960s which has been rightly
termed by Bowman as the human investment revolution in economic
thought.33 During the early 1960s economists like Schultz34, Denison35 and

32. John Vaizey, What some Economists said about Education, in UNESCO, Readings in
the Economics of Education (Parisi UNEXO 1968).
33.M.J. Brown-The Human Investment Revolution in Economic Thought, Sociology of
Education, spring 1966 PP 111-137
34. T.W. Schultz, Education and Economic Growth, in N.B. Hendry (ed), Social Forces
Influencing American Education, National Society for the study in Education, University of
Chicago Press 1961.
35. E.F. Dension-The sources of Economic Growth in the United states and the Alternative
Before US, NewYork committee for economic Development 1962.

92

Kruger36 tried to measure the contribution of education to economic growth,

Gary S. Becker37 examined the concept of investment in human capital.
According to Galbraith the role of education is paramount in the social and
economic development of a country38. Education not only improves the
productivity of labour but also permits greater specialization, said Eckus39.

Education & Economic Development:

Education is generally regarded as a public good as well as a merit
good which produce a variety of externalities.40 Contribution of education to
economic growth, distribution, reduction in fertility rates etc. are the
different ways in which education generates public good. Education not only
increases the income levels of those who receive it, but also of others.
Education benefits each individual in the society, improves educational
flexibility and social mobility, promotes voluntary responsibility for welfare
activities, creates healthy environment for national development and helps to
redistribute income and well being. Some of the non-economic benefits of
education are better citizenry, reduction in crime, improved health conditions
and political democracy which are also important for accelerating the
economic development of a country.

36. A.O. Kruger Factor Endowment and per capita Income Differences Among Countries,
Ecomonic Jounal Sept, 1968, Vol.78, PP 641-659
37. Gary S. Becker, Human Capital: A Theoretical and Empirical Analysis, with Special
Reference to Education, National Bureau of Economic Research New York, 1975.
38. Narendra Prasad- Economics of Education: The Real issue of Indian Economic
Development in 21st century in B.N. Singh, M.P. Shrivastava and N Prasad, Indian Economy in
the Thirty First Century, New Delhi, Anmol Publication, 2000.
39. Richard S. Eckaus-Education and Economic Growth, in UNESCO, Readings in the
Economics of Education PP 571-573
40. Jandhyala B.G. Tilak- Cost Recovery Approaches in Education in India. Occasional
Papers, New Delhi, NEPA, 1995.

93

There is a strong relationship between education and economic

growth. Meclelland41 has found that the better educated countries in 1950
developed faster in 1952-58 period compared with the less educated
countries. Harbison and Myers study of 75 nations shows that the
correlation between GNP per capita and Primary School enrollment is 0.67,
between GNP per capita and Secondary school enrollment of 0.82 and
between GNP per capita third level enrollment of 0.74.42 Curle has found a
correlation of 0.64 between per capita income and post-primary enrollment.43
He has further shown that greater wealth of a nation is linked with the
percentage of national income invested in education and the correlation
between the two is 0.53. Denison and others have calculated that between
1930 and 1960, 23 percent of the growth of output in the United States was
accounted for due to increased education of the labour force. A similar
calculation made by Denison, since the period 1950, depicts that its
contribution in the United States was 15 percent, 2 percent in Germany, 12
percent in the UK, 14 percent in Belgium, 25 percent in Canada, 16.5
percent in Argentina and so on which is shown in the following Table
Number 2.14

41.David Mcclelland- Does Education Accelerate Economic Growth, Economic

Development and Cultural Change, Vol. XIV No. 3, April 1966.
42. F. Harbison and C.A. Myres, -Education, Manpower and Economic Growth, New York,
Mc Graw Hill 1964.
43. A Curle-Education, politics and Development comparative Education Review, Vol.VII,
No.3 1964

94

Table 2.14: Contributions of Education to Economic Growth

Sl.No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Country

Percentage contribution to
annual Growth rate
25.0
15.0
14.0
4.0
6.0
2.0
3.0
4.7
7.0
5.0
7.0
12.0
6.7
16.5
3.3
4.5
4.1
4.9
0.8
2.5
2.4
15.9
3.3
14.7
10.5
23.2
121.4
16.0

Canada
United States
Belgium
Denmark
France
Germany
Greece
Israel
Italy
Netherlands
Norway
United Kingdom
Former USSR
Argentina
Brazil
Chile
Colombia
Ecuador
Maxico
Peru
Venezuela
Korea
Japan
Malaysia
Philippines
Ghana
Kenya
Nigeria

Source: George Psacharopoulos-Contribution of Education to Economic Growth: International

Comparisons, in J. Kenderick (ed), International Productivity Comparisons and the causes of
the slow down- Cambridge, Mass Balinger 1984

Wheeler44 has depicted that an increase in literacy rate from 20 to 30

percent gives rise to an increase of GDP by 8 to 16 percent. Marris 45
examined data for 66 developing countries in similar way and concluded that
education influences economic growth in a strong way.
44. D. Wheeler- Human Resource Development and Economic Growth in Developing
Countries, World Bank Staff working paper No. 407 Washington D.D. World Bank. 1980.
45. R. Marris- Economic Growth in Cross Section (London: Birbeck College, Department of
Economies 1982)

95

Investment in education has tangible effects on equity and alleviation

of poverty. In every country, labour earning increases with educational
attainments. Universal Primary education has important egalitarian effect. It
elevates people from literate and low income classes into a higher income
class. Similarly higher education tends to reduce the existing income
differences between the university graduates and other types of labour by
increasing the incomes of the former. Education also makes an indirect
contribution to economic growth in many ways. For instance, Easterlin
examined the relationship between education and economic growth in
twenty-five of the largest countries of the world and found that the spread of
technology in these countries could be possible because of the development
of formal schooling.46 Cochrane has pointed that education has important
links with other aspects of human resource development such as health and
fertility47 improvement in education can help alleviate poverty both directly
and indirectly by increasing income and reducing family size. The
implication of higher investment in education on women has been well
established. Higher enrollment of women in education leads to increasing
female participation in the labour force. There is also a link between
education of women and social welfare factor such as better nutrition and
lower fertility. Another important indirect effect of education is that it raises
the productivity of farmers. Studies in Korea, Malaysia, Nepal and Thailand
have shown that education raises the physical productivity of farmers. Four
years of schooling for farmers, on an average, appears to increase the output
of farmers by about eight percent. The farmers in Thailand are more likely to
use chemical inputs, improved seeds and irrigation if they had primary
education48.
46. R. Easterlin Why is not the whole world Developed 2 Journal of Economic History,
41, March 1981.
47. Susan H. Cochrane- Fertility and Education: what do we Really Know? (Baltimore:
John Hopkins University Press, 1979.
48. David T. Jamison and Laurence J.Lau-Farmer Education and Farm Efficiency,
Baltimoue, John Hopkins University press, 1982

96

Spending on education therefore is not simply consumption but it is

an investment in human capital. Investing on education is highly rewarding
both to society and to the individual. It has been estimated that returns on all
levels of education are about 10 percent and the return is experienced to the
tune of 30 percent as a result of investment in primary schools. The benefit
of education is accrued both by the society and the individual. An individual
who is being education earns in accordance with his or her level of
education. The society is benefited to the extent the individuals contribution
to national income is more than the public resources spent on his or her
education.
Table 2.15 Spending on Education in Selected Countries (in Dollars)
Country
G D P per
Public Expenditure per Student
capita
Primary
Secondary
Tertiary
Education
Education
Education
India
460
7.2
23.01
92.5
Pakistan

420

n.a

n.a

n.a

Indonesia

690

3.2

8.7

12.2

China

890

6.1

12.1

85.8

Russia

1750

n.a

20.5

15.8

Thailand

1940

12.5

12.8

38.2

South Korea

2820

14.0

17.9

7.37

Brazil

3070

12.5

12.6

72.8

Malaysia

3330

12.2

19.9

86.1

Mexico

5530

11.7

13.8

45.2

Source: Gopalji and Suman Bhakri, statistical Data on India Economy, (New Delhi: Taxmann
Allied Scrvices,2005)P.186.

97

Table 2.16: Plan-Wise Expenditure on Different Sectors of Education

(Rs. In crores)
Sector
Elementary

First
plan
870

Education

(58)

(35)

(34)

(50)

(52)

(32)

(37)

(48)

(65.7)

(65.6)

Secondary

80

510

1030

5344

18315

52311

23227

43250

Education

(5)

(19)

(18)

(20)

(24)

(24)

(10.5)

(9.9)

Adult Education

Higher Education

Others

Technical Education

Total

Second
plan
950

Third
plan
2010

Fourth
plan
8414

Fifth
plan
5913

Sixth
plan
8414

Seventh
plan
28494

Eight
plan
103940

Ninth
plan
145233

Tenth
plan
287500

126

248

1535

4696

11427

5204

12500

(2)

(2)

(6)

(6)

(5)

(24)

(2.5)

120

480

870

1883

3188

5604

12011

20944

22709

41765

(8)

(18)

(15)

(25)

(28)

(21)

(10)

(10)

(10.3)

(9.5)

230

300

730

936

1071

2729

1980

7398

392

6235

(15)

(10)

(12)

(13)

(9)

(11)

(3)

(3)

(1.6)

(1.4)

210

490

1250

786

1015

2563

10833

21987

21095

47000

(14)

(18)

(21)

(10)

(9)

(10)

(14)

(10)

(9.5)

(10.7)

1510

2730

5890

7474

11435

26187

76329

218001

220960

438250

(100)

(100)

(100)

(100)

(100)

(100)

(100)

(100)

(100)

(100)

Source: Gopalji and Suman Bhakri, Statistical Data on India Economy,(New Delhi: Taxmann
Allied Scrvices,2005)P.185.

Table 2.17: Literary rate among men and women in India 1951-2011
Census Year
% of citerater in 7+ population
MaleMales
Females Overall Female gap
1951
27.2
8.9
18.3
18.3
1961

40.4

15.4

28.3

25.0

1971

46.0

22.0

34.4

24.0

1981

56.4

29.8

43.6

26.6

1991

64.1

39.3

52.2

24.8

2001

75.3

53.7

64.8

21.6

2011

82.1

65.5

74.0

16.7

Source: Leela visaria-Indias 15th population census some key findings, Yojana, vol.55 July
2011

98

2.12 HEALTH:
Health is an important element of well being. Health facilities
available to a person indicate his level of living. Enjoyment of health
facilities has taken a place among the human rights. Because of its
importance in human development Article 25 of the Universal Declaration of
Human Rights (UDHR) provides that everyone has the right to a standard to
living adequate for the health of himself and of his family including food,
clothing, housing and medical care and social sciences49 Article 12 of the
International Covenant on Economic social and Cultural Rights (ICESCR)
also provides that every one has the right to the enjoyment of highest
attainable standard of physical and mental health50 World leaders realized
the urgent need for a strategy towards health enhancement at the
International conference on Primary Healthcare at Alma Ata in 1978. The
Alma Ata declaration called on countries to take urgent action to improve
primary healthcare. The conference strong affirms that health, which is a
state of complete physical mental and social wet-being and not merely.
The absence of disease or infirmity is a fundamental human right and
that the attainment of the highest possible level of health is a most important
world wide social goal whose realization requires the action of many other
social and economic sectors in addition to the health sector51. consequent
upon the recognition of considerable importance health holds for human
living it has been considered a fundamental human right since the Alma Ata
Declaration of 1978.

49. The Mahabub 41 Hag Human Development Centre, Human Development in South
Assia 2004 (Karachi: Oxford University Press 2005) P. 10
50. Ibid, P 11
51. Ibid, P 146

99

Health and Economic Development:

Good health is both the means and the end of development. A healthy
population is a prerequisite for economic growth. Health is an investment for
human capital formation. Increased investment in health leads to increased
productivity of workers which ultimately gives rise to increased economic
growth. Therefore, investment in public health is viewed in terms of
economic gains arising from higher investment in health.
Health is an engine of growth52 Improvement in health Status
contributed in a great way to the economic growth rates in France and Great
Britain.53 According to Harvey Leibenstein better nutrition is associated with
higher productivity.54 It has been revealed that improvement in nutritional
intake alone accounts for 30 percent per capita growth in the United
Kingdom. An ADB study conducted by the Administrative Staff College of
India, Hyderabad Calculated the Malnutrition cost to Indias

GDP as 3-9

percent in 1996 which comes to about 10-28 billion55. The rapid economic
growth experience in the East Assian Countries is very much associated with
significant improvement in public health. On the country, high incidence of
disease may retard economic growth. It has been estimated that disease
burden is one of the factors responsible for Africas low economic
performance.
During the last one and a half century better health has boosted rates
of economic growth the world over. Better health contributes to rapid growth
in GDP per capita. Bloom, Canning and Sevilla found that one extra year of
life expectancy raises GDP per capita by about 4 percent.56 On the other hand
poor health reduces GDP per capita by reducing both labour productivity the
52. Ibid P.14
53. Ibid
54. Harvey Leibenstein, Economic Backwardness and Economic Growth (New York: Wiley
& sons, 1957)
55. Cited in Veena Rao, Time to Call the Hugel Helpline, The Economic Times 24
December 2004
56. Living on the Edge, Economic Times, 7th May 2006.

100

relative size of the labour force. Because of the substantial Macro-economic

impact of chronic diseases, such as hast diseases, stroke and diabetes, it has
been estimated that countries such as China, India and Russian Federation
could forego between $ 200 billion and $ 550 billion in national income over
the next 10 years.57 Chronic diseases reduces the quantity and productivity of
labour. Medical expenses deplete savings and investment in the education of
children. All theses reduces the earning potential of individuals, ultimately
affecting the national income. In 2005, the estimated losses in national
income from premature deaths due to heart disease, stroke and diabetes were
$ 18 billion in China, $ 11 billion in Russian Federation, $ 9 billion in India
and $ 3 billion in Brazil. The WHO has also estimated that a two percent
reduction in chronic diseases in India will result in an economic gain of $ 15
billion while it will be $ 36 billion in China and $ 20 billion a Russian
Federation.
The economic value of human capital is enhanced when its useful life
is extended. Life expectancy of a population is an important factor both in
determining the incentives to invest in various forms of human capital and
value of the stock of such capital58 Improvement in health also spurs the
economy through its effect on demography.

57. David E. Bloom, David Canning and Sevilla, The Effect of Health on Economic
Growth: A production Function Approach world Development Vol.32, Jan 2004, PP 1-13
58. Theodore W Schultz, Investing in People (Kerkely University of California Press 1981)
P.34

101

Table 2.18: Life Expectancy International comparison

Sl.No
Country
Life expectancy at
Birth
1
Bangladesh
62
2
India
63
3
Russia
66
4
Srilanka
73
5
Switzerland
80
6
USA
78
7
China
70
8
Pakistan
63
Source: World Bank, World Bank Development Report 2000 (Washington, D.C. World Bank
2001)

Women belonging to poor households have higher fertility. It is

because high infant mortality in the poor households gives like to high
fertility rates. They want to go for more children so that at least a few would
survive. An improvement in health care can lower infant mortality rate.

Table 2.19: Infant Mortality Rout: International Comparison

Sl.No
Country
Infant mortality rate
1
Bangladesh
51
2
India
60
3
Russia
18
4
Srilanka
17
5
Egypt
35
6
USA
07
7
China
31
8
Pakistan
84
9
Uganda
79
10
Indonesia
38
11
Vietnam
31
12
Iran
37
Source: P. Bajpai, L. Bhandari and A. Sinha, Social and Economic profile of India (New Delhi
Social Science Press 2005) P. 46

Good health results in gains in worker productivity. There is a greater

opportunity for workers to obtain better paying jobs when they enjoy good
health. Better health enables workers to work for longer working years. The
102

most appropriate example is leprosy which affects in the prime of life. About
30 percent of those affected may be seriously deformed and their working
life will be shortened as well. A study of lepers in the urban areas of Tamil
Nadu has estimated that the elimination of deformity would more than triple
the expected annual earnings of those with jobs. The prevention of deformity
in all the 6,45000 lepers would add an estimated $ 130 million to the
countryis GNP.59 Findings of the research in Bangladesh demonstrated that
healthier workers earn more because they are productive and can get better
paying jobs.
Poor health and nutrition reduce the gains of schooling in three ways:
in enrollment, ability to learn and participation by girls, children enjoying
better health and nutrition during early childhood are more ready to enroll in
school. Health and nutrition problems also affect a childs ability to learn in
many ways. Nutritional deficiencies in early childhood can lead to several
problems. Iron deficiency and anaemia reduce cognitive function iodine
deficiency causes irreversible mental retardation and vitamin-A deficiency is
the primary cause of blindness among children.
Decline in the incidence of disease can also create large savings in
treatment costs. The expenditure incurred to cuce diseases pay-off in a great
way. Calculations regarding the benefits of polio eradication in America
revealed that investing $ 220 million over 15 years to eliminate the disease
would prevent 2,20,000 cases and save between $ 320 million and $ 1.3
billion. The net return for the investment was a much as 12 percent in a year

59. World Bank world Development Report, 1993 (New York Oxford University Press, 1993)
P.18

103

Table 2.20: Maternal Mortality Rate (MMR) in Selected Developing

countries (Per 100000 live birth)
Sl. No
Countries
Maternal Mortality Rate
1
Korea
20
2
Srilanka
92
3
Malysia
41
4
Clina
56
5
Pakistan
500
6
Indonesia
230
7
India
540
8
Bangladesh
380
9
Nepal
740
Source: World Bank World Development Report 2000 (Washington, D.C. World Bank, 2001)

Table 2.21: Investment on Health During the planning periods in India

(Rs. In Crore)
Sl.No
Plan period
Total Plan
Health
Investment outlay
1.
First Plan
1960.0
65.2(3.33)
2.

Second Plan

4672.0

140.8(3.01)

3.

Third Plan

8576.5

225.9(2.63)

Fourth Plan

15778.8

335.5(2.13)

5.

Fifth Plan

39426.2

760.8(1.93)

Sixth Plan

109291.7

2025.2(1.57)

7.

Seventh Plan

218729.6

3688.6(1.69)

8.

Eighth Plan

434100.0

7494.2(1.75)

9.

Ninth Plan

859200.0

19818.4(0.6)

10.

Tenth Plan

1484131.3

31020.3(2.9)

Source: Government of India, Health Information of India, 2002 (New Delhi, Govt. of India
Ministry of Health and Family Welfare 2004 P.79)

104

Table 2.22: Health Expenditure in Selected Countries.

Countries
Total
Private expenditure on
Expenditure on
health as of total
health as of
expenditure on
GDP
health

Australia
Bangladesh
Brazil
Canada
China
France
Germany
India
Iran
Italy
Japan
Maxico
Nigeria
Pakistan
Phillippines
Russia
South Africa
Thailand
UK
Uganda
Tanzania
Zambia

1995
8.2
3.5
7.2
9.1
3.9
9.6
10.6
5.0
5.6
7.4
7.0
5.6
2.8
4.2
3.4
5.5
8.4
3.4
7.0
3.5
5.3
5.2

2000
8.3
3.8
8.3
9.1
5.3
9.5
10.6
4.9
5.5
8.1
7.8
5.4
2.2
4.1
3.4
5.3
8.8
3.7
7.3
3.9
5.9
5.6

1995
32.9
66.1
57.3
28.6
53.3
23.9
23.3
83.8
54.4
27.8
21.8
58.5
85.5
75.2
60.1
18.5
51.3
51.1
16.1
60.5
44.6
46.9

2000
27.6
63.6
59.2
28.0
63.4
24.0
24.9
82.2
53.7
26.3
23.3
53.6
79.2
77.1
54.3
27.5
57.8
42.6
19.0
62.0
53.0
37.9

Source: WHO, The World Health Report (Geneva:WHO, 2002) PP 202-206

105

Government
Expenditure on
health as of total
expenditure on
health
1995
2000
67.1
72.4
33.9
36.4
42.7
46.8
71.4
72.0
46.7
36.6
76.1
76.0
76.7
75.1
16.2
17.8
45.6
46.3
72.2
73.7
78.2
76.7
41.5
46.4
14.5
20.8
24.8
22.9
39.9
45.7
81.5
72.5
48.7
42.2
48.9
57.4
83.9
81.0
39.5
38.0
55.4
47.0
53.1
62.1

2.12 THEORIES OF INFRASTRUCTURE AND DEVELOPMENT AN OVERVIEW:

The seminal discussion on the relationship between infrastructure and
economic development was put forward by Hirschman himself while he was
discussing development strategies. He commented that enlarged availability
of electric power and of transportation facilities are essential preconditions
for economic development practically everywhere (Hirschman 1958). He
went on to add that at least in this regard we have a field where economists
have given full recognition to the principle of efficient sequence. According
to him investment in social overhead capital is advocated not because of its
direct effect on final output, but because it permits and in fact invites
investments to come in. He commented later that the development strategy
to be adopted would depend upon the economic and social condition of the
region concerned.
Social overhead capital has been defined as composing those basic
services without which primary, secondary and tertiary productive activities
cannot function. SOC includes investments on education, public health,
communications, transportation and conventional public utilities like light,
water, power, irrigation and drainage schemes etc.
A large investment in SOC will encourage private investment later in
Directly Productive Activities (DPA). For example cheaper supply of
electrical power may encourage the establishment of small industries. Social
Overhead Capital (SOC) investments indirectly subsidies agriculture,
industry or commerce by cheapening varies inputs which they use by
reducing their costs. Unless SOC investments provide cheap or improved
services, private investments in DPA will not be encouraged. Thus SOC
approach to economic development is to unbalance the economy so that

106

subsequently investments in DPA are stimulated. As Hirschman60 puts it,

investments in SOC are advocated not because of its direct effect on final
output, but because it permits and in fact invites DPA to come in . Some
SOC investment is required as a prerequisite of DPA investment.
An imbalance can also be created via DPA. A government might
directly or indirectly invest in DPA instead of investing in SOC. If
DPA investment is undertaken first, the shortage of SOC facilities is likely to
raise production costs substantially. In course of time political pressures
might stimulate investment in SOC also. Investment sequences are general
by profit expectations and political pressures profit expectations generate the
sequence from SOC to DPA and political pressures from DPA to SOC.
Hirschman calls the first sequence (from SOC to DPA) development
via excess capacity of SOC and the second sequence (from DPA to SOC)
development via shortage of SOC. As to which sequence should be
followed first for economic development, Hirschman prefers that sequences
which is vigorously self-propelling. This can be explained with the help of
Hirschmans slightly modified diagram. DPA investments are measured
along the vertical axis. The curves a.b.c. are isoquants showing various
quantities of DPA and SOC which will give the same gross national product
at any point. As we move to a higher curve it represents a higher gross
national product. The curves are so drawn that the 45 line through the origin
connects the optimal points on the different curves. This line shows the
balanced growth of DPA to SOC.

60. Albert Hirshman, The Strategy of Economic Development, New York 1958

107

Figure 2.5 Relationships between DPA and SOC

If the path to development is followed via excess capacity of SOC, the

economy will follow the dotted line AA1BB1C. When the economy increases
SOC from A to A1 the induced DPA increases to B1 until balance is restored
at B where the whole economy is on a higher level of output. The higher
gross national product thus achieved induces government to increase SOC
further to B1 ; DPA also follows suit to point C via C1.In Hirschmans
unbalanced growth strategy, the state plays an important role in encouraging
SOC investments there by creating disequilibrium. If development starts via
investments in DPA political pressures force the state to undertake
investments in SOC.
In a situation of general pessimism, devoid of any entrepreneurial
motivation, permissive strategies of excess SOC will not be able to persuade
investors to set up DPA. On the contrary in a region of boom and dynamism,
potential investors will take the plunge when they find that SOC is available
in plenty and hence their social marginal cost is low.
This idea was echoed by Rostow61 (1960) in his Theory of stages of
Growth. According to him, SOC is a pre-condition for take off into self61 . W.W. Rostow- The Stages of Economic Growth-1960

108

sustained growth. Investments in SOC and development of those services

encourage potent entrepreneurs to invest in risk bearing business. Those
SOC prepare the base for expansion of economic activities by decreasing the
cost and increasing the profitability of productive activities.
It also helps in the creation of an educated labour force, super
structure of communication networks and mechanism to provide energy,
basic civic amenities and law and order. According to Rostow, all those
create an atmosphere that breeds entrepreneurial capabilities and sustains a
climate which is throbbing with economic activities and optimistic decisions;
consequently, he made investments in SOC, especially in the fields of
transport and power, one of the main pre-conditions for take off.
Hansen, by contrast was more interested in the differential effect that
such investments would have on different socio-economic region. In what is
now famous as Hansen Thesis (1965) he commented that regions can be
classified into three types1. congested
2. lagging
3. intermediate
In congested areas the marginal social cost of expanding infrastructure
would outweigh the marginal social benefit. In lagging regions the dominant
economic activity is agriculture and declining industry and according to
Hansen, the economic impact of infrastructure would be negligible in such
areas. Benefits accruing from increased availability of infrastructural
facilities would be highest in the intermediate regions that do not suffer from
congestion but have access to quality raw materials, efficient labour and
wide market. Making these regions easily accessible, supplying them with
cheap and assured power and looking after the maintenance of social and
human capital of these regions would attract and retain economic activities
in these regions.
109

Paul Rosenstein-Rodan62 and Ragner Nurkse had earlier initiated

similar arguments in support of investment in overhead capital. Their version
of balanced growth calls for simultaneous investments in large number of
activities to break the hurdle of indivisibilities, specially the lumpiness of
social overhead capital.
More recently, Aschawer63 commented that public stock of social
and economic overhead capital exerts a variety of forces upon the spatial
economy. It increases local, regional or national accessibility, infrastructure
attracts resources- both human and physical, mobile labour force settles
down on accessible areas and economic activity is attracted to these areas.
The World Development Report 1994 by the World Bank puts
infrastructure at the centre stage of development planning. It has put forward
the following arguments regarding the benefits accruing from infrastructure
and increased public investment in overhead capital.
1. Overhead capital raises productivity of other economic activities.
2. Cross national studies indicate positive significant correlation between
infrastructural facilities and economic growth.
3. Rural infrastructure leads to agriculture expansion by increasing
yields, farmers access to markets and availability of institutional
finance.
4. Adequate quantity and quality of infrastructure are key factors in
ability of countries to compete in global trade.
5. Infrastructure is an important factor in global rating of an economy by
multinational investors.
6. Proper infrastructural facilities can help in eradication of poverty.
7. Careful implementation of infrastructural projects is compatible with
and necessary for global environment sustainability.
62. Paul Rosenstein Rodan- Theory of Big Push
63. Aschawer Is Public Expenditure Productive?" 1989

110

Thus there appears to be a strong theoretical logic supporting the view

that infrastructure or social overhead capital is a pre-condition for economic
growth and development. A fault even in the balancing of infrastructural
facilities over time, space and components will create bottlenecks in certain
sectors and excess capacity and blocked investment in certain other sectors
thereby creating disequilibrium in the economy. Consequently, the path and
the place of economic development will be at jeopardy. Availability of
infrastructural facilities in adequate quantity, uncompromised quality and
reliability are key factors in shaping not only the present but also the future
of a nations economy. Failure in providing such facilities largely reduces
productivity of economic activities and depresses general living conditions.
As a result, the process of capital formation, both physical and human suffers
a setback, leading to shortage in the future. In fact such lacuna in providing
necessary infrastructure hinders the building of the structure itself and
holds back the economy-national or regional- within the famous Low Level
Equilibrium Trap and prevents its take off into self sustained growth
(Nelson-1956).
The role of infrastructure in fostering economic growth and enhancing
public welfare is more pronounced in developing economies like India. Here
infrastructure projects and increase in public capital outlay have a twopronged effect on the development process. In Hirschmans words, it has
both backward and forward linkages. On the one hand initiation of
infrastructural projects creates demand for labour, land and other heavy
capital goods like cement, iron and steel etc. On the other hand completions
of such projects open up opportunities for a plethora of economic activities
and create a secondary level of employment creation and income generation.
Thus a new road is accompanied by expansion of transport services by local
people; a new bridge facilitates trade and commerce and a new power plant
fosters small manufacturing units. In other words the impact of expanding
111

infrastructural facilities in these countries are comprehensive and

multifaceted in nature and are not limited to providing support to other
productive activities only. In the context of overpopulated labour surplus
economies, this assumes greater significance as a large number of people can
be gainfully employed in creation of physical infrastructure and then these
facilities can lead to expansion of services and related employment
opportunities.
Thus economic theories have justified the linkage between
infrastructure and development and many of them have proceeded to
distinguish several types and forms of such linkages. This has been
accompanied by numerous studies over the years to empirically estimate the
nature and strength of the association between the two.

2.11 ROLE OF INFRASTRUCTURE IN ECONOMIC

DEVELOPMENT OF INDIA:
Economies grow and develop, they expand and advance, and they
progress and prosper. There are phases when they decline too, and there are
economies that experience continuous decay. But in all economies and in all
kinds, infrastructure facilities take predominant role. In the past, the
historical evidences show, various dynasties and the then thinkers
highlighted the need for providing infrastructure facilities like roads,
drinking water supply, irrigation, development of villages and towns etc to
achieve economic development. Kautilya64 the great thinker while explaining
the duties of the king stressed the need for construction of dams across the
river for the purpose of irrigation, construction of tanks for the purpose of
rain water harvesting, construction of small bridges etc. The Mauryan kings
took great care of the health of the people. Hospitals were built and
64. Kautilya- Arthashastra

112

maintained not only for human beings but also for animals and birds.
Elaborate rules were framed for sanitation purposes and those who violated
them were severely punished. The Mauryan rulers constructed a large
number of canals and undertook various irrigation projects. For instance a
Governor of Chandragupta Maurya was responsible for building a dam
across a river near Girinar in Western India. It was the responsibility of the
state to undertake irrigation projects and also construct and maintain public
highways. Megasthenses64 has described the highway which ran from the
North-West to Pataliputra and beyond towards the East. It was 1150 miles
long and quite wide. Trees were planted on both sides of it. Arrangements
were made for its proper maintenance. This shows the importance given to
infrastructure during those days.
During the rule of Cholas, they gave utmost importance to public
works. There were different committees to look-after different facilities. For
instance the garden supervision committee was in charge of keeping roads in
order and repairs them whenever necessary. The tank supervision committee
was in charge of constructing the tank and removing the silt from it. It had
full powers to buy land for purposes of irrigation. Thus, when we go through
the history from ancient times to modern times, we find that various rulers
realized the importance of providing infrastructural facilities for the
development of their kingdom. During the British rule though some
infrastructure facilities were provided in India, their main intention was to
safeguard the interest of the United Kingdom. Thus we had inherited an
economy, which was basically geared to the interest of our colonial masters.
Indeed some kind of chart might be drawn up to indicate the close
connection between length of British rule and progressive growth of poverty.
That rule began with outright plunder and a land revenue system which
65. Meghasthenes-Indica

113

extracted the uttermost farthing not only from the living but also from the
dead cultivators. It was pure loot.66 The rate of growth of per capita income
during the hundred years period before independence, from whatever scanty
information is available, was just 0.5 percent per annum. It has further been
noted that there were long spells when the economy actually stagnated or
declined.
Colonialism had deep impact on the slow growth of the Indian
economy. The destruction of the Indian handicrafts increased unemployment
in the rural areas. Whereas in England, surplus labour from rural areas was
quickly absorbed in new industries created in the process in industrialization,
nothing of this kind happened in India. The industrialization of Indian
economy would have deprived England of a ready market for its goods and
so the colonial interests were opposed to the development of industries in
India. Thus, labour thrown out of employment in traditional industries
imposed additional burden on subsistence agriculture. The burden of
colonialism was to be borne by agriculture. The cost of extravagant and
lavish British administration, the depreciation of Indian currency etc.
obstructed the economic development of India. In fact the colonial policy has
caused untold misery and sufferings for the economic development of India.
The British rule was a long story of the systematic exploitation by an
imperialistic government of people whom they had enslaved by their policy
of divide and rule. The benefits of British rule were only incidental, if any.
The main motive of all British policies was to serve the interests of England.
Thus, in 1947 when the British transferred power to India, we inherited a
crippled economy with stagnant agriculture and peasantry steeped in
poverty.67 As Jawaharlal Nehru puts it. India was under an industrial
capitalist regime, but here economy was largely that of the pro capitalist
66. Jawaharlal Nehru- Discovery of India
67. Ruddar Datt & K.P.M. Sundharam Indian Economy S.Chand and Company, New Delhi.

114

period, minus many of the wealth producing elements of that pre capitalist
economy. She became a passive agent of modern industrial capitalism
suffering all ills and with hardly any of its advantages.68 At the dawn of
independence the policy makers faced many problems to bring up the
stagnant economy. The Government of India adopted a policy of rapid
economic development through extensive and intensive exploitation of
natural resources. Through the process of economic planning the government
has taken various strategies to gear up the speed of economic development of
India. In that process they realized the need for infrastructure development in
the economic development of India. Accordingly infrastructure development
has become the pulse of economic development. So they gave high priority
to the rapid expansion of these facilities right from the first plan itself. The
plans have generally devoted over 50 percent of the total plan outlay to
infrastructure development.
As a result of the heavy investment on infrastructure there has been
phenomenal increase in infrastructural facilities. For instance, coal
production rose from 32 million tonnes to 323 million tonnes between 1951
and 2002. During the same period power generation rose from 5 billion kwh
to 515 billion kwh; and production of petroleum from 0.4 million tonnes to
32 million tonnes. Likewise, there has been tremendous expansion in other
infrastructural facilities. The heavy investments by the Government on
infrastructural facilities will provide the necessary impetus for rapid
agricultural development and industrial expansion. In fact, without the rapid
development of the infrastructure it would not have been possible to register
the threefold rise in agricultural production and seven fold rise in industrial
production during the last five decades.

68. Jawarlal Nehru- Discovery of India

Table 2.12 : Trends in Performance of Infrastructure Sectors

115

Particulars

Unit

1950-51

2000-01

6.6

526.7

Electricity Generated

Billion KWH

All roads

Kilometers

3,99,942

2500000

Railways Route Length

Kilometers

53,596

63221 (2004 March)

Branches of Commercial Banks

Numbers

8262

67283 (2004 March)

Post Office (Rural and Urban)

Numbers

(1969)

Telephone connections

Numbers

36,234

1,54,551

Primary Schools

Secondary Schools

1.7 Lakh

3.0 Crore

2.1

6.4

0.07

1.17

Lakh
Lakh

Source: Economic Survey 2001-02 & Economic Survey 2004-05

It is legal beyond doubt, that infrastructure development played a

pivotal role in the economic development of India. The following points
elaborate the role of infrastructure development in economic development of
India:

1. Infrastructure Increases Agricultural Production and Productivity:

Infrastructure

enhances

agricultural

production

and

also

the

productivity. Infrastructure increases the comparative advantage of that

region in which infrastructural investment is made. When the region gains
comparative advantage in the agricultural activities, the net result is increase
in the production and productivity of various agricultural goods and services
in general. The increased level of production and productivity result in a
shift in the supply curve upwards, which has its positive implications on the
price factor depending on the nature of the elasticity of demand for the
commodity under consideration. Increased comparative advantage at the
regional level due to increased agricultural infrastructure implicitly reveals
that any less amount of investment in other regions would automatically lead

116

to comparative disadvantage of that region and therefore, this requires a

balanced investment in agricultural infrastructure.

2. Infrastructure Accelerates Industrial Growth:

Industrial production requires not only raw material machinery and
equipment but also a well-knit infrastructure. Private investment will not
come up to industry without proper infrastructure. Infrastructure facilities
like energy transport, banking insurance etc. acts as a boost for industrial
development. Infrastructure increases the productivity of industries. Thus,
adequate infrastructure increases the speed of industrial development. A
sound infrastructure also increases the competitiveness of the industrial
sector.
3. Infrastructure Increases the Flow of Foreign capital:
In the globalised era infrastructure facilities play an important role in
attracting foreign capital. Foreign direct investment as well as portfolio
investment will flow to those countries where adequate infrastructure
facilities are available.

4. Infrastructure Generates Employment Opportunities:

Infrastructure plays a significant role in the generation of employment
opportunities. It improves mobility, productivity and efficiency of labour.
Infrastructure is a base for larger investment, development of industry and
agriculture which in turn creates more employment opportunities.

5. Infrastructure Contributes to Tourism Development:

Tourism has emerged as an industry today. It is one of the major sources
of revenue. For proper development of tourism industry, infrastructure
development is very much required. Thus, infrastructure development plays

117

an important role in tourism development. For instance many tourist spots in

India remain unnoticed due to lack of infrastructure facilities.

6. Infrastructure and National Defence:

Infrastructure development is a must for the defence of the nation.
Proper transport and communication facilities, adequate facilities for
research and development, proper military schools etc. increase the strength
of the nation from defence perspective.

7. Infrastructure and Social Development:

Infrastructure increases the employment opportunities which in turn
increase the income level of the people. Increased income level will enhance
the standard of living of the people. Thus, infrastructure development will
change the total outlook of the society and will lead to social development.

8. Contributes to Domestic Market Development:

Infrastructural development also contributes to domestic market
development. Rural roads in the developing countries have a major effect in
improving marketing opportunities and reducing transaction costs. The
marketing of agricultural commodities can account for 25-60 per cent of
final prices of food stuffs in developing countries. About half of the
marketing costs are attributable to transport. Thus, proper infrastructure can
reduce the cost of marketing which in turn contributes to domestic market
development. Investment in infrastructure plays an important role in
supporting the development of small business and community based
initiatives, leading to direct increase in income of poor communities and
households.

118

9. Assists to Reduce Poverty:

Creation of infrastructure helps to reduce poverty. To a great extent
the poor are identified as those who are unable to consume a minimum
amount of clean water and who live in unhealthy surroundings,
consequently, they have more health problems and fewer employment
opportunities. Different infrastructure sectors have different effects on
improving the quality of life and reducing poverty. Access to clean water
and sanitation has direct consumption benefits in reducing mortality and
morbidity. It increases the productive capacity of the poor. Access to
transport can contribute to higher and more stable incomes enabling the poor
to manage risk. Transport infrastructure has been found to expand
opportunities for non-farm employment in rural areas. Improved rural
transport can also ease the introduction of improved farming practices by
lowering the costs of modern inputs. In this way infrastructure development
contributes to reduce the poverty.

10. Improves the Quality of Growth:

Enhancing the quality of growth and thereby life of the people has
been the main focus of development planning in developing countries like
India. The quality of growth can be measured in terms of improved and
equitable opportunities and choices for education, jobs, better health and
nutrition, cleaner and sustainable natural environment, trustworthy and
transparent peoples institutions, dignity, self-respect, self-esteem, freedom
etc. The infrastructure development is regarded as a means to activate this
end.

11. Contributes to Development of Backward Region:

Development of backward regions and removal of regional imbalances
is another significant contribution of infrastructural facilities. Lack of
119

infrastructural facilities in the backward regions, may act as a severe

constraint on the development of these regions. Adequate infrastructure is
the precondition for the development of these regions.

12. Instrument of Social change:

Infrastructural facilities also act as an instrument of social change.
Development of transport facilities, education, science and technology,
growth of towns and cities etc, may change the very outlook of the people.
Thus, infrastructure plays an important role in the economic
development of India. Infrastructure development is the kingpin of economic
development. The expansion of infrastructure sector boosts several other
sectors of economy. It is undoubtedly a key sector having pivotal position in
the economic development of the country.

2.12 INFRASTRUCTURE DEVELOPMENT UNDER FIVE YEAR

PLANS:
Planning is the key to development for a developing country. For a
mixed economy like India, where both public sector and private sector exist
alongside in the nation building process, the aim of the planning process is to
offer quality of life to its citizens. The national government that took charge
of economic affairs was adequately certain, that building up of a much wider
base of infrastructure was the sine qua non of development in India. The
decision was so unanimous in the intellectual circle that no debate ever
emerged regarding the indispensability or otherwise of infrastructural
development.
The majority of the benefits originating from infrastructural
enterprises accrue to the society in the form of higher output levels, higher
income levels, and higher employment level and also in the form of higher
profits to enterprises outside the infrastructural sector rather than within.
120

Since the profits and incomes are shifted elsewhere, profitability of

infrastructural sector is generally low-not only in India, but also world wide.
This characteristic creates a vexing problem that private entrepreneurs are
reluctant to invest in such projects. Moreover, such projects have not only
long gestation period but sometimes several further years of operational
losses also. Thus, our planners came to the conclusion that development of
this sector could not be left to the private capital and rightly so. Hence, the
responsibility was shouldered by the public sector and development of the
social overhead capital became the domain of the state.
The successive five year plans were formulated on those lines and the
infrastructural sectors claimed the lions share of plan
depicted in the Table No 2.23

121

outlays which is

122

The shares were 80 percent in the First plan, dropped to 64 per cent in
the second and third and to 58 per cent in the Annul plan, and again
increased to 64 percent in the Fourth and Fifth Plans. But thereafter, it again
dropped to 62 percent in the Annual plan and 57 percent in the seventh plan.
The share increased to 58 percent in the seventh plan and 62 percent in the
eighth plan outlay marginally decreased thereafter to 61 per cent in the ninth
plan. The Tenth plan envisaged to spend about 68 percent of total plan outlay
on the infrastructural sectors. If all the plans are considered together, it is
observed that of the total outlay of Rs. 18,85,013 crores till the ninth plan,
the infrastructural sectors claimed Rs. 11,44,434 crores i.e. nearly 61 per
cent of the total. The highest share went to the transport and communication
sector followed by power sector which has really gained in importance over
the years. It has been because of such paramount importance being attached
to the development of the infrastructure in our economic planning that long
strides have been made in the physical availability of such facilities in India.
There has been a remarkable growth in the absolute level of such facilities,
as well as in the level relative to the size of the nation and population. The
table 2.24 shows some of the indicators of infrastructure in India from 19712001.

123

Table 2.24 Indicators of Infrastructure in India, 1971-2001

Indicator

Unit

1971

1976

1971

1986

1991

1996

2001

Irrigation intersity

NIA as % of NSA

22.7

24.5

27.7

30.2

33.4

37.6

38.6

Argicultural credit

Rs per primary lab

No. of PACs per lakh
population

4.3

738.3

187.1

277.4

369.2

362.5

419.2

35.9

28.1

18.3

16.2

13.9

9.8

9.4

PACs
Power consumption by
Agricultural sector

27.3

50.7

83.5

132.1

267.1

438.5

514.9

Road length
Surfaced road length

KWH per hectare

GCA
km per thousand sq
km area
as % of total roads

299.5
43.4

383.1
43.9

469.6
45.5

550.4
46.7

647.3
51.2

717.8
55.3

804.5
57.9

Length of national
and state highways

as % of total roads

7.8

7.9

7.9

7.8

8.0

8.1

8.2

STC bus km run

per capita

3.9

4.3

7.1

45.3

45.4

42.1

46.2

Railway length

per thousand sq km

19.1

19.7

20.0

20.2

20.3

20.5

20.8

Post offices

per lakh pop

14.2

19.7

20.7

19.2

17.8

16.8

15.1

Post offices

per thousand sq km

25.5

38.7

45.4

47.1

48.0

49.6

50.7

Letter boxes

per thousand sq km

59.3

81.5

160.0

161.5

166.4

179.5

198.9

Postal articles carried

per capita

1.2

1.2

1.5

1.6

3.0

12.4

20.4

Villages electrified

17.7

32.6

47.3

67.7

82.2

86.6

87.3

Power generation

kwh per capita

101.3

133.9

164.8

226.9

318.7

412.8

482.2

Power sold

kwh per capita

79.3

113.9

122.5

163.8

229.4

301.1

313.4

Commercial bank branches

per thousand sq km

4.2

6.5

11.3

15.9

20.5

21.2

22.0

Commercial bank branches

per lakh pop

2.3

3.3

5.1

6.5

7.6

7.2

6.8

Total bank credit advances

Bank credit advanced to
SSIs
Credit advanced by SFCs
Primary Schools

Rs per capita
Rs. Per secondary
worker
per capita
per ten thousand pop
teacher per hundred
pupil

206.8

258.6

434.0

481.2

584.1

978.2

901.2

428.0
6.3
7.6

498.0
9.2
6.5

827.5
16.7
7.4

872.2
23.1
7.0

1014.1
33.4
6.5

2006.6
36.1
7.0

1725.1
36.0
6.2

132.1

129.0

162.3

177.2

183.5

219.7

200.9

per ten thousand pop

per thousand sq km

1.6
2.4

1.6
2.1

1.6
2.5

1.5
2.6

1.4
2.8

1.4
2.9

1.6
3.4

Secondary School

Rs per capita

43.0

42.4

55.3

64.1

75.6

85.2

109.3

Expenditure on primary
education

as % of total
expenditure on
education

10.5

11.5

14.2

15.3

16.0

16.7

22.1

Colleges
Colleges

per lakh pop

per thousand sq km

20.8
0.1

21.2
1.4

22.5
1.4

8.4
1.7

29.3
1.3

21.9
1.2

38.0
1.1

Hospitals and dispensaries

per lakh pop

2.4

2.7

3.0

4.2

3.4

3.4

3.7

Hospitals and dispensaries

per thousand sq km

2.3

2.6

3.4

4.6

3.9

4.8

3.8

Beds in hospitals
and dispensaries

per lakh pop

4.2

5.1

7.4

11.2

10.4

14.1

15.2

62.3

72.6

83.4

87.5

97.5

96.2

96.0

Primary Schools
Teacher and pupil
ratio in Primary School
Secondary School

Source: Infrastructure and Development in India Rajarshi Majunder PP 48, 49

124

125

Table 2.23 Expenditure of Infrastructural Sectors in Indian Plans-First to Tenth Plan (1951-2007)
First
Plan

Second
Plan

Third
Plan

Annual
plan

Fourth
Plan

Fifth
Plan

Annual
Plan

Sixth
Plan

Seventh
Plan

Annual
Plans

Eighth
Plan

Ninth
Plan

Tenth
Plan

Total
All Plans

Heads of
Development

195156

195661

196166

196669

196974

197479

197980

198085

198590

199092

199297

19972002

200207

19512002

Irrigation and flood

control

434
(22.1)

430
(9.2)

665
(7.8)

471
(7.1)

1,354
(8.6)

3,877
(9.8)

1,288
(10.6)

10,930
(10)

16,590
(7.6)

8,206
(6.7)

27,398
(5.6)

63,047
(7.5)

1,03,315
(6.8)

2,38,005
(7.0)

Power

149
(7.6)

452
(9.7)

1,252
(14.6)

1,213
(18.3)

2,932
(18.6)

7,399
(18.8)

2,240
(18.4)

18,299
(16.7)

37,895
(17.3)

25,906
(21)

76,724
(15.8)

1,15,869
(13.7)

2,52,055a
(16.5)

5,42,385
(16.0)

Transport and
Communication

518
(26.4)

1,261
(27)

2,112
(24.6)

1,222
(18.4)

3,080
(19.5)

6870
(17.4)

2045
(16.8)

17669
(16.2)

37974
(17.4)

23951
(19.5)

101542
(20.9)

215685
(25.6)

324945
(21.3)

738874
(21.8)

Social Services

473
(24.1)

855
(18.3)

1493
(17.4)

976
(14.7)

2688
(17)

6834
(17.3)

1968
(16.2)

15917
(14.6)

34960
(16)

19906
(16.2)

88804
(18.3)

199766
(23.7)

347391
(22.8)

722031
(21.3)

149
(7.6)

273
(5.8)

661
(7.7)

354
(5.3)

905
(5.7)

1710
(4.3)

354
(2.9)

2977
(2.7)

7686
(3.5)

4916
(4)

21597
(4.4)

52173
(6.2)

737550
(5)

98
(98)

228
(4.9)

251
(2.9)

140
(2.1)

336
(2.1)

761
(1.9)

223
(1.8)

3412
(3.1)

6809
(3.1)

3771
(3.1)

14105
(2.9)

34387
(4.1)

645210
(3.5)

Other Social
services

226
(11.5)

354
(7.6)

581
(6.8)

482
(7.3)

1447
(9.2)

4363
(11.1)

1390
(11.4)

9528
(8.7)

20465
(9.4)

11219
(9.1)

53091
(10.9)

113206
(13.4)

216352c
(11.6)

Infrastructure
(1+2+3+4)

1574

2998

5522

3882

10054

24980

7541

62814

127418

77967

298468

594367

1027706a

2245291

Total Plan Outlay

1960

4672

8577

6625

15779

39426

12177

109292

218730

123120

485455

844031

1525639

3395483

Infrastructure as %
of total

80.3

64.2

64.4

58.6

63.7

63.4

61.9

57.5

58.3

63.3

61.5

70.4

67.4

66.1

Education
Medical Public
Health
& family welfare

Source: Economic Survey Government of India Various Years

122

Table 2.26 Indicators of Infrastructure Global Comparisons

GNP
Per
Capita

Area

US
$

1,000
sq km

million

Installe
d
Power
Capacit
y
kw per
million
populat
ion

Bangaladesh

220

144

114.4

22.03

22.03

2,113

19

94

India

310

3,288

883.6

86.01

84.54

5,743

18

Kenya

310

580

25.7

28.13

28.13

6,811

Pakistan

420

796

119.3

78.35

76.59

China

470

9,561

1,162.20

118.7

Low Income

390

38,929

3,191.30

Indonesia

670

1,905

Philippines

770

Middle income

Telephon
e Main
lines
Per
thousand
populatio
n

Rai
lwa
y

Total
Road
Lengt
h

Surface
d Road
Length

Surfaced
Road
Length

NIA as %
of total
cropped
area

Access
to safe
drinkin
g water

% of total
road
length

Density
on Roads
km per
million
populatio
n

55

58.5

118.3

20.4

78

NA

16

599

291

48.6

2229

13.8

73

406

17

105

21

20

2,396.60

0.1

49

98

32

7,069

11

212

64

30.2

1414.5

21.3

55

340

24

118.7

5,894

107

21

19.6

880.3

4.9

72

NA

45

NA

53

NA

NA

NA

NA

396

NA

62

89

26

184.3

70.1

62.29

5,785

149

62

43.6

1540.1

4.3

34

142

43

300

64.3

109.2

106.8

9,487

535

77

14.4

2496.1

5.2

81

123

30

2490

62,470

1418.7

NA

373

81

NA

NA

NA

NA

1335

NA

74

495

40

Australia

17260

7,713

17.5

2058

2102

444,965

105

37

35.2

46278

0.2

100

NA

59

UK

17790

245

57.8

1263

1264

438,893

67

1455

1455

100

6167.4

0.7

100

NA

50

Canada

20710

9,976

27.4

3801

3801

558,241

82

28

34.1

29855.2

0.1

100

2222

67

USA

23240

9,373

255.4

2871

3036

533,817

22

666

387

58.1

24441.7

100

2381

NA

Japan

28190

378

124.5

1564

1564

437,975

53

2962

2040

68.9

8993.1

7.5

96

1639

48

High Income

22160

31,709

828.1

NA

2100

442

NA

NA

NA

NA

10106

NA

96

2381

59

Country

Populatio
n

Power
Generate
d
KWH per
milliom
popuatio
n

km per 1000 sq km
area

Source: World Development Report 2002 and Economic Survey of India Various Years

125

% of
populat
ion

physici
ans
Per
million
populat
ion

Primary
Teachers
per 1000
populatio
n