Introduction
In economics, infrastructure is often called “Overhead Capital” or “Social Overhead Capital.” Sustainable Development Goal 9 (SDG 9) aims to create good-quality, dependable, long-lasting infrastructure, including projects that connect different regions and countries. The goal is to support economic growth and the well-being of people, with a focus on making these services affordable and accessible to everyone. This unit explores both physical and social infrastructure, emphasizing their role in economic growth, recent trends, government policies, and the challenges they face.
Meaning & significance
Infrastructure refers to essential services and systems that support a country’s economic development. This includes transport, communication, energy, and activities related to enhancing the productivity of natural resources, like irrigation and afforestation. It also encompasses science, technology, information systems, finance, civic amenities (water supply, sanitation, waste disposal), and human resource services (education and health).
Core Infrastructure includes critical elements such as roads, highways, railways, public transportation, water, and gas supply, which provide essential services and often have monopolistic traits.
Infrastructure services and part of physical infrastructure are typically not tradable, meaning they can’t be easily imported, so they must be produced domestically. Investors interested in core infrastructure typically look for five characteristics: income, low risk, diversification, protection against inflation, and alignment with long-term liabilities.
Nature of Infrastructure
The infrastructure sector has unique characteristics that distinguish it from other sectors of the economy. These distinguishing features include:
- Public Goods: Most physical infrastructure services have elements of public goods, meaning they are available to the public, and consumers may be charged or receive them for free. It’s challenging to exclude non-paying consumers.
- Externalities: The social benefits of infrastructure services often exceed the costs, making it difficult to price them adequately for cost recovery.
Monopolies: Infrastructure services tend to allow for only one supplier in a location, leading to potential monopolies that require regulation. - Public Sector Dominance: The presence of externalities, especially in social welfare, has led to a dominant role for the public sector in producing and supplying infrastructure services.
- Lumpy Investment: Infrastructure projects often require substantial upfront investments, with partial completion being ineffective. Investment in infrastructure like energy is only useful when the entire system is operational.
- Indivisibilities: Infrastructure projects typically cannot be divided into smaller parts for activation due to their indivisible nature.
Overall, infrastructure facilities are essential for the smooth functioning of the economy. Dr. V. K. R. V. Rao emphasizes that progress in development must be accompanied by progress in infrastructure for a self-accelerating process of economic development to occur.
Types of Infrastructure
Infrastructure can be categorized into various types:
- Soft Infrastructure: These are institutions crucial for maintaining the economy and typically require human capital. Examples include healthcare systems, financial institutions, government structures, law enforcement agencies, and education systems. Soft infrastructure plays a role in upholding a country’s economic, health, social, and cultural standards.
- Hard Infrastructure: This encompasses the physical systems necessary for a modern industrialized nation to function. It includes things like roads, highways, bridges, and the assets needed to make them operational, such as transit buses, vehicles, and oil rigs/refineries. Hard infrastructure supports various services vital for the production process.
- Critical Infrastructure: These are assets identified by a government as essential for the functioning of society and the economy. They include facilities related to shelter, heating, telecommunication, public health, agriculture, civic amenities, and more.
In summary, infrastructure can be classified into soft (institutional), hard (physical), and critical (essential for society and the economy) categories, each playing a significant role in a country’s development and functionality.
Infrastructure and Economic Growth
Infrastructure plays a pivotal role in economic development and society, with several critical impacts:
- Productivity and Growth: Improved infrastructure directly enhances the productivity of both human and physical capital, leading to economic growth. For instance, better roads reduce costs, stimulate education, and encourage private investment.
- Domestic Market Development: Infrastructure development, especially in rural areas, enhances marketing opportunities and reduces transaction costs. This reduction in marketing expenses contributes significantly to domestic market development.
- Savings Mobilization: Infrastructure projects require substantial upfront investments, making savings mobilization crucial. In the era of globalization, adequate infrastructure facilities attract both domestic and foreign investment.
- Employment Generation: Infrastructure serves as a foundation for larger investments, fostering industrial and agricultural development and creating more job opportunities. It improves labor mobility, productivity, and efficiency.
- Social Development: Infrastructure development increases employment opportunities and income levels, thereby enhancing the overall standard of living and contributing to social development.
- Poverty Reduction: Creating infrastructure directly improves the quality of life by providing clean water, sanitation, and transport, which reduces mortality, enhances productivity, and helps manage risks, especially for the poor.
- Promotion of Social Change: Infrastructural facilities act as instruments of social change by fostering the development of industries, transportation, and education. This leads to a transformed economic outlook and societal changes.
- National Defence: Infrastructure development, including proper transport and communication, research and development facilities, and military schools, strengthens a nation’s defence capabilities.
In summary, infrastructure plays a multifaceted role in economic growth, social development, and national defence, making it a vital component of a country’s progress.
What is physical infrastructure?
Physical infrastructure is a cornerstone of a country’s economic development, ensuring the smooth operation of its economy. Unlike social infrastructure, it directly impacts a nation’s productivity. Major examples include irrigation, transportation, marketing, and power, which are vital for a country’s economic progress.
Physical infrastructure is a terminology used for those structures that directly drive the economy of any country. Some basic structures classified under the term are the power grid, transportation networks, banks, highways, and mobile towers, among others. These structures are the major instruments that drive social as well as economic change in any society. These facilities assist the operations of the social infrastructure as well, and both of them go hand in hand.
What is included in physical infrastructure?
Physical infrastructure can be thought of as a vital support system for production, distribution, and satisfying consumer needs. It’s like the engine that drives a country’s economy and creates job and growth opportunities for everyone. Here are some key elements of physical infrastructure:
- Communication
- Transportation
- Distribution networks
- Financial institutions and markets
- Energy supply systems
- Roads, highways, bridges, and airports
- Cycling paths
- Water distribution networks
- Sewer systems
- Irrigation plants
What is not included in physical infrastructure?
Physical infrastructure encompasses all essential elements crucial for a country’s economic advancement. The following items are therefore not considered part of physical infrastructure:
- Schools
- Parks and playgrounds
- Public safety structures
- Waste disposal plants
- Hospitals
- Sports areas
Importance of physical infrastructure
The contributions of physical infrastructure are vital for supporting a country’s and state’s economic development, transforming the nation’s and state’s economy by facilitating production and distribution. Here are the key aspects highlighting the significance of physical infrastructure:
- It provides essential amenities like fuel, skilled labor, and management expertise, which are crucial for the smooth operation of production units.
- Physical infrastructure generates employment, particularly in the industrial sector.
- It acts as a catalyst for easy access to credit, irrigation facilities, and training, vital for the growth of agrarian countries like India. Physical infrastructure provides resources for research and development in this sector.
- It helps uplift underdeveloped regions by extending development opportunities to the doorstep of disadvantaged sections of society.
- Physical infrastructure has a substantial impact on the stock market, with studies showing positive growth in the stocks of infrastructure companies.
- Infrastructures like banks, public transport, and telecommunications serve as significant sources of government revenue.
Physical infrastructure forms the backbone of both a country’s and a state’s economy, prompting governments to prioritize its rapid development. It not only facilitates daily domestic operations but also attracts foreign investment.
Importance of Physical Resources
Physical resources are essential components of an economy and play a crucial role in various aspects of society and economic development. Here are some key points highlighting the importance of physical resources:
- Production and Economic Growth: Physical resources, such as land, minerals, and energy sources, are fundamental for the production of goods and services. They serve as the raw materials and energy inputs required for manufacturing, construction, and various industries. The availability and efficient utilization of these resources contribute to economic growth.
- Infrastructure Development: Physical resources are integral to the development of infrastructure, including roads, bridges, railways, and energy supply systems. These infrastructures are essential for transportation, communication, and the overall functioning of an economy.
- Job Creation: The utilization of physical resources often leads to the creation of employment opportunities. Industries like mining, agriculture, and manufacturing heavily rely on physical resources and provide jobs for a significant portion of the population.
- Energy Production: Natural resources like fossil fuels, renewable energy sources, and nuclear materials are critical for energy production. Reliable and diverse energy sources are essential for powering industries, homes, and transportation systems.
- Environmental Impact: Proper management and sustainable use of physical resources are crucial for minimizing the environmental impact. Sustainable practices ensure that resources are available for future generations and reduce pollution and habitat destruction.
- National Security: Some physical resources, such as rare minerals and strategic metals, are essential for national security and defence technologies. Ensuring a stable supply of these resources is vital for a nation’s security.
- Trade and Global Competitiveness: Access to physical resources can significantly influence a country’s competitiveness in the global market. Countries with abundant and diversified resources often have an advantage in international trade.
- Quality of Life: Adequate access to physical resources like clean water, arable land, and housing contributes to an improved quality of life for the population. These resources are essential for meeting basic human needs.
- Innovation and Technological Advancement: Physical resources often drive innovation and technological advancement. Discoveries and advancements in resource exploration and extraction technologies have far-reaching impacts on various industries.
In conclusion, physical resources are the foundation of economic development, infrastructure, and the overall well-being of a society. Their sustainable management and efficient utilization are essential for the long-term prosperity and stability of nations.
Infrastructure & UP Budget, 2023-24
Infrastructure
In the financial year 2023-24, Rs. 235 crore has been proposed for the first phase of the new schemes of Jhansi Link Expressway and Chitrakoot Link Expressway.
The International Film City is being established by the Yamuna Expressway Industrial Development Authority.
The Ganga Expressway, spanning 594 km from Meerut to Prayagraj, is under construction with a cost outlay of Rs. 36,230 crore.
The Purvanchal Expressway is operational, and 56 percent of the work (as of December 2022) on the Gorakhpur Purvanchal Link Expressway is complete.
Health & Medicine
Rs. 12,631 crore has been proposed for various schemes under the National Rural Health Mission.
Rs. 1,655 crore is proposed for the Pradhan Mantri Atmanirbhar Swasthya Bharat Scheme.
As per the recommendation of the 15th Finance Commission, Rs. 407 crore will be spent in the financial year 2023-24 for the conversion of rural sub-health centers and Primary Health Centers (PHCs) into Health and Wellness centers.
Rs. 320 crore is allocated for the Prime Minister Matru Vandana Yojna, and Rs. 250 crore is proposed for the Aayushman Bharat Mukhyamantri Jan Arogya Abhiyan.
Under the “One District, One Medical College” Scheme, 45 districts have been covered with a medical college. Fourteen new medical colleges are under construction, and in 16 unserved districts, medical colleges are being established on the basis of a PPP (Public-Private Partnership) model.
Infrastructure and Industrial Development
By improving its rank by 12 places, Uttar Pradesh ranks 2nd in the Ease of Doing Business in India. It is placed in the “Achievers” category.
In order to attract investment in various sectors like IT/ITES, data centers, ESDM, defence and aerospace, electric vehicles, warehousing and logistics, tourism, textiles, MSME, etc., almost 25 policies have been formulated.
A decision has been taken to develop industrial corridors along the expressways to create 5 lakh employment opportunities.
Rs. 25 crore has been proposed for the establishment of Pharma Parks.
Under the new MSME Policy 2022 declared by the State Government, a 15 percent annual growth rate in employment has been proposed.
For the promotion of ODOP (One District One Product) and handicraft product marketing, Rs. 200 crore has been proposed for the establishment of a Unity Mall.
Rs. 21,159.62 crore has been proposed for the construction of roads and bridges.
Under the Mukhyamantri Samagra Gram Vikas Scheme, roads were built in 181 revenue villages.
Irrigation and Water Resource
The total geographic area of the state is 240.93 lakh hectares. Out of this, 188.40 lakh hectares are arable land, and agricultural activities are carried out on 165.42 lakh hectares of land.
Irrigation facilities are made available in approximately 99 lakh hectares through a 75090 km long canal system, 34316 government tube wells, 29 pump canals, and other means.
In the financial year 2023-24, Rs. 2803 crore has been proposed for flood control and water drainage.
Under the Jal Jeevan Mission, Rs. 25,350 crore has been provisioned for 2023-24.
Under the Rajya Grameen Payjal Programme, the target has been set to complete 188 projects with a total cost of Rs. 455.15 crore.
Civil Aviation
Presently, 9 airports, including 3 international ones, are operational.
International airports are under construction in Jewar and Ayodhya.
In the coming years, 5 international and 16 domestic airports will be operational.
Energy
The Revamped Distribution Sector Scheme has been initiated to enhance efficiency and capability, with a proposed budget of Rs 6,500 crore.
The average daily production availability was 3,766 MW in 2019-20, 3,816 MW in 2020-21, and 3,998 MW in 2021-22.
Furthermore, a budget of Rs 317 crore has been allocated for the Uttar Pradesh Solar Energy Policy 2022, and Rs 45 crore for the Uttar Pradesh State Bio Energy Policy 2022.
Housing & Urban Planning
Rs. 3,000 crore has been proposed for the Mukhyamantri City Expansion/New City Incentive Scheme.
A budget of Rs 585 crore for the Kanpur metro and Rs 465 crore for the Agra metro has been proposed for the financial year 2023-24.
Additionally, Rs 100 crore has been earmarked for Metro Rail Projects in Varanasi, Gorakhpur, and other cities.
For the grand organization of the Maha Kumbha in 2025, Rs 621.55 crore was proposed in 2022-23. However, the upcoming budget allocates Rs 2,500 crore for this purpose.
Education
A budget of Rs 20,255 crore has been proposed for the Samagra Shiksha Abhiyan (SSA).
Under Operation Kayakalp, primary and higher primary schools operated by the Basic Education Council are being developed into smart schools through infrastructure development, with Rs 1,000 crore proposed in the budget for 2023-24.
Additionally, Rs 510 crore has been allocated for the implementation of the new scheme, PM Shree (Prime Minister School for Rising India), aided by the central government.
For higher education in the state, there are currently 19 State Universities, 1 open university, 1 Deemed university, and 30 private universities in operation.
Both Lucknow University and Gorakhpur University have achieved A-Double plus NAAC ranking.
Furthermore, new State Universities are being established, including Maa Vindhyavasini State University (Rs. 50 crore) in Vindhyachal Dhaam Zone, Maa Paateshwari Devi State University (Rs 50 crore) in Devipatan Zone, and a State University (Rs. 50 crore) in Muradabad Zone.
Sports
A budget of Rs. 300 crore has been proposed for the Major Dhyan Chanda Sports University in Meerut district.
Additionally, Rs. 20.50 crore is proposed for Sports Colleges in Saharanpur, Fatehpur, and Balia.
Infrastructure Facilities : Industrial Development Authority
To accelerate the industrial development of the state, Noida was established in 1976 as the first industrial town, i.e., the Industrial Development Authority.
After Noida, many other industrial development authorities were established in the state, such as:
- SIDA in Jaunpur
- GIDA in Gorakhpur
- BIDA in Bhadohi
- Greater Noida near Noida, etc.
New Okhla Industrial Development Authority (Noida)
- Noida was established in 1976 in an area of 20,316 acres to accelerate industrialisation in the state and attract entrepreneurs.
- It aimed to offer competitive rates compared to the national capital, Delhi.
- Noida provides all the necessary infrastructure facilities for industrial development.
- The entire Noida is currently connected with a fiber optic network.
- This region, located in the Gautam Buddh Nagar district, is the most developed area in the state from an industrial perspective.
- Noida offers comprehensive development, a pollution-free environment, a high standard of living, and highly supportive industrial conditions.
- It provides world-class basic facilities for businesses and residents.
- On November 12, 2009, it was connected to the Delhi Metro.
- In Noida’s Industrial Phase-1, 2, and 3, there are a total of 1989 industrial units, including large, medium, and small enterprises.
- The Software Technology Park of India, located in Sector-29, is the country’s second-largest software exporting hub.
- A special economic zone has been established in the second phase.
- Dr. Ambedkar Multi-Specialty Hospital has been established here.
- Sector 18 has a multi-level parking facility.
Gorakhpur Industrial Development Authority ( GIDA )
- In the Gorakhpur development area, GIDA (Gorakhpur Industrial Development Authority) was established in 1989 to promote rapid industrial development. There are a total of 23 sectors in this authority.
- Under this authority, apart from industries, initiatives like ‘New Gorakhpur Residential Plan,’ ‘Apparel Park,’ ‘Textile Park’, and ‘Transport Nagar’ are being established.
- To ensure the conservation of agricultural products and provide farmers with fair prices, a ‘Food Park’ is being set up on 105 acres of land.
- The prominent industries in this area include alcohol production, textile weaving, textile processing, power looms, disposable series, bakeries, toffee manufacturing, food processing, footwear manufacturing, PVC pipes, mineral water, carry bags, disposable glass, and packaging units, among others.
Satharia Industrial Development Authority (SIDA)
- SIDA was established in 1989.
- It is situated in a 508-acre area encompassing the village of Satharia in the Machhlishahr Tehsil of Jaunpur, along with 37 surrounding villages.
- Several industrial units are operational in this region.
Greater Noida Industrial Development Authority (GNIDA)
- After the successful experiment of Noida by the state government, Greater Noida Phase-1 was established in 1991 by amalgamating 117 villages. Subsequently, on June 14, 2006, Phase-2 was established by including 167 villages.
- The objective of Greater Noida is to create an excellent urban settlement near the National Capital Region, which can also be referred to as the ‘Art of Living’.
- According to the plan of this authority, a Master Plan up to 2021 has been prepared, which includes 25% green area, 19% industrial area, 12% institutional area, 6% commercial area, and 25% residential area.
- In an area of approximately 570 hectares, the establishment of a ‘Knowledge Park‘ is underway, which will be India’s largest knowledge-based campus. It will house prominent institutions, including 5 engineering, 3 management, one marine, one architecture, and one other subject-based institution.
- To promote the art and culture of the region, the establishment of the ‘Patel Folk Cultural Institute‘ is underway, which includes a decision to build a studio and an auditorium.
- The construction of the Yamuna Expressway from here to Agra and the Expressway between Noida and Greater Noida has been completed.
- In this region, construction is underway for a Technology Park on 300 acres, a Warehouse House on 100 acres, a Biotech Park on 100 acres, a Toy City and Toy Design Institute on 125 acres, a the Mall Street, a Container Depot, and a 400 kV Electrical Substation on 400 acres.
- Here, the first Women Entrepreneurs Park in North India has been established, dedicated to women entrepreneurs.
- With the aim of developing the exhibition ground into a ‘Trade Mart‘ in view of the increasing crowd at Pragati Maidan in Delhi, which will serve as a major centre for the sale of traditional products of the state.
- The state government established a university (Gautam Buddha University) here in 2002. Its construction was carried out by the Greater Noida Authority through joint contributions from Noida and Greater Noida.
- A multi-specialty hospital with 500 beds is being constructed in a 15-acre area near the Yamuna Expressway in Greater Noida.
- In Greater Noida, considering the future population pressure, a project for drinking water using Ganga water is being undertaken.
- Following Singapore’s model for environmental balance, entertainment, and conservation of endangered species, a night safari park is being developed on the Yamuna Expressway in Greater Noida.
- Here, a highly functional transportation corridor is being established parallel to the Bodaki railway line.
- A sports complex is being constructed on approximately 39 acres of land near the City Park. It will provide facilities for various sports, including cricket.
- A Formula-1 motor racing circuit called the ‘Buddh International Circuit‘ has been built here by the J.P. Group.
Lucknow Industrial Development Authority (LIDA)
- Established in 2005
- Located between Lucknow and Unnao
- Includes Amausi Airport within its jurisdiction
- Comprises 49 villages from Lucknow and 43 villages from Unnao
- Headquarters in Lucknow
- Aims to provide world-class infrastructure facilities, following the Noida / Greater Noida model
Yamuna Expressway Industrial Development Authority (YEIDA)
The Yamuna Expressway Industrial Development Authority (YEIDA) was established on April 24, 2001. It encompasses a total of 1187 villages in the notified area, including Gautam Buddh Nagar, Bulandshahr, Aligarh, Hathras, Mathura, and Agra. Affected farmers have been provided with resettlement and rehabilitation facilities.
Under this authority, a 6-lane expressway, spanning from Greater Noida to Agra (165.53 km), was constructed by JP Infratech Ltd. This expressway was inaugurated and opened for use on August 9, 2012.
Interchanges have been constructed at three locations on this expressway, namely Gautam Buddh Nagar, Mathura, and Agra. These locations provide facilities such as petrol stations, vehicle repair services, restaurants, roadside eateries, and entertainment options.
Under this authority, planned development is underway for the designated areas. Within this region, the construction of India’s first Formula-1 racing track was carried out by the JP Group.
Additionally, residential townships and other developments are also being established within this authority.
U.P. Expressway Industrial Development Authority (UPEIDA)
The UPEIDA was established in December 2007, primarily for the purpose of expressway projects.
Infrastructure Facilities: Industrial Area/Park
Under the Industrial Directorate, the establishment of small and large industrial units has been initiated in more than fifty districts of the state. Infrastructure facilities are available in industrial areas and estates.
The State Industrial Development Corporation has also developed several industrial parks for specialised production with the permission and cooperation of the Indian government. These include Textile Park, Hosiery Park, Apparel Park, Leather Park, EMRO Park, Plastic Park, Toy Park, Artisan Park, and more.
Infrastructure Facilities : Major Exporting Zone
There is immense potential for the export of various goods in the state. Therefore, the Export Promotion Bureau was established in 1999 to promote exports.
Export Promotion Industrial Parks have been set up in Greater Noida and Agra.
A special economic zone has been created in Noida to promote the export of gems and jewellery. Similarly, to promote the export of electronic software, a Special Economic Zone has been established in Moradabad. The major exporting zones of the state declared by the state government are as follows :-
- Noida : Precious stones and jewellery, electronics, textiles, computers, hardware, software, leather.
- Agra : Silk carpets, handicrafts, marble products, artistic goods, bags, etc.
- Moradabad : Art metalware, artistic jewellery, bone jewellery, etc.
- Lucknow :Miniature painting, floriculture, Ayurvedic/herbal medicines, camel bone carving, etc.
- Kanpur : Leather products, software, chemicals, handloom, pharmaceuticals, spices, oils, and perfumes, etc.
- Varanasi : Silk, handmade handicrafts, wooden toys, etc.
- Jhansi and Lalitpur : Brassware and similar products, etc.
Infrastructure Facilities : SEZ
In order to promote exports, the Government of India declared a policy in 2000-01, known as the Import-Export Policy, which included the establishment of Special Economic Zones (SEZs) in various parts of the country. According to this policy, SEZs can be set up in public, private, joint, and state government sectors. In this context, the state government initiated the establishment of such zones in Uttar Pradesh in 2002 through the Uttar Pradesh Special Economic Zones Development Act. In 2007, the policy for Special Economic Zones (Amended) in Uttar Pradesh was also issued.
Until the year 2021-22, approval has been granted for 31 Special Economic Zones (SEZs) in the state. Among these, 74% are in the IT/ITES sector, followed by 20% in multiple products, 3% in textiles/handicrafts, and 3% in non-conventional energy.
Currently, 9 SEZs are operational, while others are in various stages of development and construction. One of the active SEZs, known as the Noida Special Economic Zone, is of a multi-product nature established by the central government, and it is one of the 8 Export Processing Zones in the country.
Active SEZs are as follows —
- Noida Special Economic Zone (SEZ) – This is not only an SEZ for the country and the state but also one of the 8 Export Processing Zones in the country.
- Moser Baer India Ltd., Greater Noida
- U. Developers Ltd., Noida
- HCL Technologies, Noida
- NIIT Technologies, Noida
- Aachvis Softech Private Limited, Greater Noida
- SEZ for Handicrafts, Moradabad
- Arshiya Northern FTWZ Limited, Khurja; Bulandshahr