Manufacturing And Infrastructure

Chinese miracles in manufacturing sector are credited to its superb world-class infrastructure. How can manufacturing have a competitive transaction and transportation costs without fast lane roads, fast handling ports and airports, and power without outages? Can India match its infrastructure construction for bringing in manufacturing sector to a respectable percentage?

Now almost for sometime, India is averaging an annual growth in excess of 8%. The growth rate must touch 9-10% ‘to make a decisive impact on poverty and to provide productive employment for millions of unemployed young population’. Many experts believe that to be achievable for India. But India will have to improve upon its agricultural and manufacturing growth. While there is limitation for the growth of agriculture, manufacturing can grow faster easily.

Manufacturing today constitutes barely 17 per cent of the gross domestic product (GDP). Indian manufacturing must grow at the rate higher than 12%. Manufacturing in India must become competitive to attract investment. The job creation for over 40 million registered unemployed will languish without the investments for many green-field projects as well as expansions from both, the domestic manufacturers as well as foreign ones. Manufacturing can be the only bridge to draw away at least some of the 56 per cent of the populace dependent on agriculture that are highly unproductively employed.

Manufacturing very lately is doing fine touching a figure of 10-12%, but the growth is to be sustained and further improved. Better infrastructure is a necessity for the growth of manufacturing. It means some effective implementation drive to the infrastructure projects that are in pipeline. The country must think of some out-of-the box solution to sort out the problem of power availability and rural electrification. Manufacturing can neither accelerate nor add in its contribution share without power. Rural India can’t participate in manufacturing without rural electrification.

On both the fronts, the work is already in progress. Plans for building huge generation capacities with gas or coal based mega power projects, hydroelectric projects, and nuclear ones, are in hands. Rural electrification is moving fast under Bharat Nirman initiatives. However, as even the Prime Minister of the country confessed if India could control the losses. A ruthless even though unpopular initiative can reduce drastically the high transmission and distribution losses that account for almost 40% of the electricity produced.

Recently, the Prime Minister talked about the investment in infrastructure:

Infrastructure – defined broadly to include road, rail, air and water transport, electric power, telecommunications, water supply and irrigation – will need about Rs. 14,50,000 crore or US$ 320 billion in the next five years.

In the roads sector, the four-laning of the Golden Quadrilateral though delayed is getting nearly completed by the year-end. And a program for six-laning the entire Golden Quadrilateral on a BOT basis has already been approved along with another program for developing 1,000 km of expressways.

Railways with strong bottom line are preparing an ambitious investment program- private container trains, dedicated freight corridors, development and modernization of stations, setting up logistics parks and warehousing.

In addition to upgrading and modernizing Delhi and Mumbai airports and setting up airports at Bangalore and Hyderabad through private developers, a plan for the development of 35 non-metro airports by AAI has been approved.

The government is planning to develop 76 new berths by 2012 of which 53 are to be undertaken through PPPs.

Mukesh Ambani recently promised to build a port in Navi Mumbai. Car manufacturer Maruti Suzuki is planning to team up with multinational automobile major Nissan Motor Company for developing a dedicated port to ship out vehicles. Infrastructure sector is becoming attractive enough to draw many similar proposals.

The growth story of the telecom sector is inspirational to believe all these to happen fast. ‘The target of 15% teledensity set for the year 2010 will be realised this year itself and that also with another big achievement of its cost of service today being lower than that in any other country in the world.’

All these will facilitate manufacturing sector to be attractive too.

As the Prime minister tells, “A fascinating story is unfolding and the entire world is watching with wonder the emergence of India as a major economic force.”

Read: Power theft short-circuiting growth

How are things in China?

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