Infrastructure, Still a Challenge for India
Posted on April 27, 2008 in Business and Finance by Shewli
India is rapidly building its roads and airports which it should have done earlier. The mobile telephony has reached far and wide and within 10 years has become cheaper than what could have been imagined.
The grand plan of selling the cheapest and the smallest car by the Tatas is yet to be materialized on a large scale. Critics said it is impossible to sell at 1 lakh and that Tata has to find market elsewhere. Give the rise in fuel, small car seems to be a reality here and everywhere. Americans are heard selling their SUVs for smaller and fuel efficient cars.
The public-private communication fell apart on the issue of converting arable lands into industrial units in Bengal. It was a gory battle between people and police.
Now there is global food crisis and some nations have experienced riots over the crisis. The ripples of oil and food price rise is already visible in the Indian market. Inflations has reached a point beyond the tolerance level of the central bank. The government has adopted a slew of measures and the impact will only be visible after few months.
The agriculture sector, which supports 70% of the population, is not doing well and our productivity is much below other nations. China produces 400 million tones of grain with 100 million hectare of agricultural land, while India produces 108 million tones of food with its 146 million hectares.
“If we take the production per hectare of individual, the average production of rice per hectare in India is around 1,756 kgs compared to 5,475 kgs of North Korea; we are harvesting only 2117 kgs of wheat per hectare compared to 7,716 kgs by the Netherlands. Similarly, India produces only 1606 kgs of corn per hectare compared to 9091 kgs of corn per hectare by Greece. The production of soyabean per hectare in India is 804 kgs compared to 3,453 kgs in Zimbabwe. As for groundnut, the country harvests only 929 kgs per hectare compared to 4,600 kgs per hectare harvested by Israel. Similarly, India produces 15,817 kgs of potatoes per hectare compared to 45,349 kgs produced by Belgium. As for sugarcane we produce 65,382 kgs per hectare as against 135,448 kgs per hectare produced by Peru.”1
With such low levels of productivity, foodgrain production is slowing at a pace which is quite alarming. Worse it is that every year more than 10 per cent of our foodgrain production gets wasted. Now that there is a rise in fuel prices food prices are also rising. Before oil prices shot up, food prices already registered a surge because of fall in productivity.
We are anyways doing well in other sectors. However, oil price seems to be a boon for the Japanese auto industry, which has the reputation for making small cars. All the metropolitan cities in India are now gearing up for world class facilities. GMR Group, GVK, Reliance, Unitech, DLF Group, Punj Lloyd and others that have world-class scale, access to capital and financial markets, are working with government. The two big public-private partnerships are Bharat Nirman and Jawaharlal Urban Renewal Mission. All these show government’s pragmatism in utilizing public-private partnership in expediting infrastructure development to attract investment from foreign countries.
However, several important challenges remain and may call for further privatization of public sector enterprises like power.
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