Infrastructure is the basic requirement of economic development.
It does not directly produce goods and services but facilitates production in primary, secondary and tertiary economic activities by creating external economies.
It is an admitted fact that the level of economic development in any country directly depends on the development of infrastructure.
The developed countries have made a lot of progress due to tremendous growth of social and economic infrastructure. There has been revolutionary progress in transport and communication in these countries.
Large financial facilities are available due to the existence of well organised banking and insurance. There is revolutionary progress in science and technology. These countries follow advanced technique of production. But in a less developed countries like India, there is lack of qualitative infrastructure. Due to this, the level of economic development is low.
According to the World Development Report 2003, the position of India in infrastructure development among 47 industrialized countries of the world is the lowest. The inflow of foreign capital to our country has been affected to a great extent by the deficiency of sufficient and quality infrastructure.
Meaning of Infrastructure:
Simply speaking, “Infrastructure means those basic facilities and services which facilitates different economic activities and thereby help in economic development of the country, Education, Health, Transport and Communication, banking and insurance, irrigation and power and science and technology etc. are the examples of infrastructure. These are also called social over head capital. These do not directly produce goods and services but induce production in agriculture, industry and trade by generating external economies. For example, an industry situated on or near the railway line or national highway will produce commodities at less cost.
Here railway line or national highway are the examples of economic infrastructure. They generate external economies and thus induce investment.
Types of Infrastructure:
Broadly speaking infrastructure can be divided in two categories:
(a) Economic Infrastructure
(b) Social Infrastructure
(а) Economic Infrastructure:
Economic infrastructure means those basic facilities and services which directly benefit the process of production and distribution of an economy. Irrigation, power, transport and communication are the examples of economic infrastructure.
(b) Social Infrastructure:
Social infrastructure means those basic activities and services which, in addition to achieving certain social objectives, indirectly help various economic activities. For example, education does not directly affect economic activities like production and distribution but indirectly helps in the economic development of the country by producing scientists, technologists and engineers. So education, health service, sanitation and water supply etc. are the examples of social infrastructure.
Development of Economic Infrastructure in India
Development of sufficient and quality infrastructure helps in economic development by facilitating production and investment in any economy. Bigger the infrastructure facilities, greater the opportunity for the producers to invest more. The shortage of these facilities in underdeveloped countries is the main cause of less economic development.
On the eve of Independence, Indian economy is totally backward. Economic planners gave top priority to infrastructure development. In the first plan 50% of the total plan expenditure was devoted to infrastructure. In the First Plan 27% of the Plan outlay was given to transport and communication. 13% of outlay was spent in power and 10% in irrigation and flood control.
All five year plans have generally spent around 50% of the total plan outlay on economic infrastructure. Due to heavy investment in infrastructure, Indian economy has become the most promising developing economies of the world. Now we will discuss three main components of economic infrastructure such as energy, transport and communication.