Infrastructure

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Infrastructure

  1. 1. Infrastructure <br />SID, KSRM 09-11<br />
  2. 2. Flow<br />The State of rural infrastructure in India<br />Infrastructure and Rural Growth<br />Issues in Rural Areas<br />Strategies to Improve infrastructure in Rural Areas<br />
  3. 3. Infrastructure Coverage in Rural Areas<br />71% live in rural areas<br />89% have no access to telephones<br />50% have no access to power<br />10% have no access to drinking water<br />91% have no access to toilet facilities<br />People travel an average of 2km to access all weather roads<br />244 million people are poor compared to 80 million urban poor<br />
  4. 4. Can infrastructure help rural poor?<br />Several studies( Songco, Diechman et al, Roller et al) show that infrastructure is correlated to economic growth in rural areas also<br />Studies ( Berry et al) also show that low per capita income correlates with lack of infrastructure<br />Infrastructure is therefore a key driver of rural growth, but often is not available<br />
  5. 5. Does infrastructure support growth?<br />Increase employment, income, savings<br />Save time, which can be used in other activities<br />Improve efficiency and productivity<br />Increase access to resources<br />Improve health and therefore productivity<br />Empirical evidence from Bangladesh, India, Thailand, Vietnam, Ghana, Morocco<br />
  6. 6. Issues in Rural Areas<br />Low rural population density , 15.75 times lower than urban areas<br />Economies of scale do not work *<br />High fixed costs and low variable costs*<br />Low population size, low number of users<br />Low purchasing power<br />Willingness to pay limited to income capacity<br />infrastucture.xlsx<br />
  7. 7. Implications of Findings<br />Look for “Local Solutions” not large “ Network Based Solutions”<br />eg. Septic Tank vs Sanitation Treatment Plant, Mobile phone vs landline, DDG vs grid power<br />Subsidies are necessary<br />Micro- finance can play a role?<br />
  8. 8. What can be done to improve rural infrastructure?<br />Government Efforts<br />Increase government spending on rural infrastructure<br />Bharat Nirman Program, Rs 186,900 crores outlay in 2006 Bharat Nirman.xls<br />PradhanMantri Gram SadakYojana; 4000cr Accelerated Rural Water Supply Program<br />Rajiv Gandhi GrameenVidyutikaranYojana<br />73 Constitutional Amendment to empower Panchayats<br />
  9. 9. Government Efforts<br />Universal Service Obligations( USO) in telecom sector to raise funds for rural phones, target tele-density is 15%, 8000cr<br />NREGS- 100 days employment<br />PURA- Provide urban amenities in rural areas<br />Rural Infrastructure Development Fund ( RIDF) of 60,000 cr from NABARD<br />
  10. 10. 11th 5 Year Plan Targets (2007-2012)<br />Irrigation- To create 10 million additional irrigation capacity<br />Rural Roads-To connect all habitations(66802) with population above 1000(500 in hilly and tribal areas) with all weather roads<br />Rural Housing- To construct 60 lakh houses for rural poor<br />Rural water supply- To provide potable water to all uncovered habitations (550678) and also address slipped back and water quality affected villages<br />Rural Electrification- To provide electricity to all electrified villages ( 1,25,000) and to connect 23 million BPL households <br />Rural Telephony- To connect all remaining villages ( 66822) with a public telephone<br />
  11. 11. Issue: How to Finance Rural Infrastructure?<br />Central Govt Grants<br />Microfinance institutions<br />Multilateral Bank Loans<br />Community pooling of resources<br />Commercial Bank Loans<br />Private partnerships, where , to what extent,how??<br />
  12. 12. Role of Government in Promoting Private Participation<br />Changed Role of Government<br />Attract private participation<br />Assure rate of return<br />Ensure customer satisfaction<br />New Roles of Government <br />Set Pricing<br />Encourage competition<br />Resolve Conflicts<br />PROVIDE SUBSIDIES -?<br />

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