For the moment, Indian economy is shining and everything seems to be going on India's way. Not everything however is rosy. Yes, Indian economy is growing at a rate of 8% but keeping this high growth rate intact is a big challenge for any country. For India, it is even a bigger challenge as the country does not have good infrastructures. The Confederation of Indian Industry thinks that infrastructure development can become a major concern for India in the coming days. I am quoting from a report published in Houston Chronicle:
"The Confederation of Indian Industry said a study carried out by the group showed India needs to increase its spending on infrastructure projects to 8 percent of its gross domestic product from 4.6 percent now.
That means investments in infrastructure must total $331 billion over the next five years, it said in a statement.
India currently spends much less on infrastructure than China and other developing countries in the Asian region, and experts have often warned that its booming economy could falter because of inadequate ports, roads and power supplies."
Well, if you go to India then you will understand the problem better. Yes, some of the Indian cities are developed just like other modern cities. However, except the few big cities, the rest of India is still far behind in terms of infrastructure development. Hopefully, Indian government will take notice of this reality and do something substantial.
What do you think?
I would beware of the Chronicle's conventional thinking. Although India unquestionably has an infrastructure gap that threatens its progress, I believe that this will actually end up helping India in the long run. Due to its poor infrastructure, India will be forced into building a "bytes" economy because it can't handle "bits" very well. The world is in the midst of a tectonic shift, away from a bits-dominated Industrial Economy to a bytes-driven Knowledge Economy, and India's limitations are forcing it to build the economy of the future while forsaking the economy of the past. This is a mirror image of China's current development investments. For a longer discussion, please see The Silver Lining in India's "Infrastructure Gap
Posted by: Chris Rollyson | August 12, 2006 7:38 PM | Permalink to Comment