Advance Infrastructure In Rural Areas (2)



Advance Infrastructure in Rural Areas

• Good quality infrastructure is critical to sustainable growth, especially for rural areas.
• As over 60 per cent of the population lives in rural areas, with low levels of per capital income, there is need to impart greater attention in improving rural infrastructure.
• Currently the rural infrastructure is inadequate to support over 600,000 villages. Investment in rural transport infrastructure stimulates the rural economy and hence acts as a tool for poverty reduction.
• The services in the rural sector, like market access, education, health, and communication depend on the availability of infrastructure.
• A common observation has been that the rural areas with better connectivity also lead on the development scale. Inadequate transport infrastructures in rural areas cause lack of mobility and constraint to rural development.
• However, providing infrastructure entails huge dose of capital investment. Rural infrastructure growth is thus dependent on financial resources.
• Improved transportation infrastructure and services undoubtedly contribute to reduced costs of transport, market expansion, improved productivity and competitiveness. Still, within the economic function of transport, the sector contributes to pro-poor growth patterns by targeting transport interventions to support the development of markets and businesses that serve and employ the poor.
• To address the issue of rural infrastructure the government launched the Bharat Nirman programme and there are independent schemes to boost Road building, Irrigation, Housing, Water Supply, Electrification, and Telecommunication Connectivity. In this issue we focus on the relevance of rural infrastructure in raising economic development in rural areas.
• There has been a virtual telecom revolution in the last ten years connecting all villages. In fact the growth of rural teledensity is remarkable and is growing at a much faster rate than urban teledensity.
• Information Communication Technology, (ICTs) is known to be a facilitator of socio-economic development. Rural areas which lag behind facilities by way of health, education, financial services and employment avenues are using the benefits of ICT.
• Certainly, the growth of rural telephony, especially mobile telephony has brought improved connectivity and this has contributed significantly to socio-political and economic mainstreaming of rural India in the past decade.

The importance of infrastructure to economic development: an example from China

• The fact that infrastructure provides critical support to the growth of an economy can be clearly seen when bottlenecks arise. One of the most striking examples is that of China’s intercity transport system, with its links to the supply of raw materials, coal, and electricity.
• The coverage of China’s intercity transport networks is one of the thinnest in the world: the total route length per capita or per unit of arable landfor highways or railwaysis similar to, or lower than, that in Brazil, India, and Russia. This has resulted mainly from chronic underinvestment in China’s transport infrastructure. China’s transport investments amounted to only 1.3 percent of GNP annually during 1981-90, a period of rapid growth in transport demand.
• Since the onset of China’s open door policy in 1979, economic growth averaging 9 percent a year has resulted in an unprecedented expansion in intercity trafficwith growth averaging 8 percent a year for freight and 12 percent a year for passengers.
• This traffic growth has imposed tremendous strains on the transport infrastructure, as manifested by the growth of bottlenecks in the railway network, the severe rationing of transport capacity on railway lines, and the poor quality of service experienced by shippers and passengers.
• Transport shortages have adversely affected the supply of coal in particular. Coal is the source of some 73 percent of China’s commercial energy and represents about 43 percent of the total tonnage of freight handled by the railways.
• The shortage of coal has in turn adversely affected supplies of electricity, about 76 percent of which is generated by thermal plants. In 1989, China was experiencing a shortfall in available power of about 20 percent of industrial electricity requirements. Central and local authorities established quotas for allocating electricity and rationed new connections, but power cuts have nevertheless been frequent.
• A conservative estimate is that the annual economic costs of not having adequate transport infrastructure in China during the past several years amount to about 1 percent of China’s GNP.

RURAL INFRASTRUCTURE DEVELOPMENT-A TOOL FOR RURAL POVERTY

• Rural infrastructure is not only a key component of rural development but also an important ingredient in ensuring any sustainable poverty reduction programme.
• The proper development of infrastructure in rural areas improves rural economy and quality of life. It promotes better productivity, increased agricultural incomes, adequate employment; etc. Development of rural areas is slow due to improper and inadequate provision of infrastructure with compare to urban areas. That’s why rural share in GDP is always less.
• Infrastructure is important for the services it provides. It is an important input to the production process and raises the productivity of other sectors.
• Infrastructure connects goods to the markets, workers to industry, people to services and the poor in rural areas to urban growth centers. Infrastructure lowers costs, enlarges markets and facilitates trade.
• Thus, infrastructure provides services that support economic growth by increasing the productivity of labor and capital thereby reducing the costs of production and raising profitability, production, income and employment.

Areas of Rural Infrastructure  

• A set of basic facts define the constraints within which the economic growth and development of India’s rural population must be addressed. Fundamentally, they relate to resource constraints, the nature of infrastructure, and the future trajectory of the geographical distribution of the population.
• These services include, at a minimum market access, educational, health, financial, entertainment, transportation, and communications. Further, services depend on the availability of infrastructure.
• Infrastructure investment is irregular and inadequate to support 600,000 villages and the average cost of providing infrastructure is inversely related to the scale of the operation.
• Limitations on the financial and other resources available for providing infrastructure made it impossible to provide infrastructure at every village in India. Even if they were provided at every village, it will not be commercially sustainable.
• The basic geographical structure of population distribution will change once India shifts from being agriculture based country to industry based nation. The Government has launched “Bharat Nirman” for the development of rural infrastructure. Plans proposed for the development of India Rural Infrastructure are –

1. Irrigation,
2. Roads,
3. Housing,
4. Water Supply,
5. Electrification,
6. Telecommunication Connectivity.

Growth of financial infrastructure in rural India

• Financial Infrastructure: It comprises the underlying foundation for a country’s financial system, including all institutions, information, technologies, rules and standards that enable financial intermediation.
• Poor financial infrastructure in many developing countries poses a considerable constraint upon financial institutions in expanding their financial services to the underserved segments of the society. It also creates risks to financial institutions and resultant lack of adequate credit facilities leads to financial crises.

Interventions for Achievement of Financial Inclusion

Goal of Financial Inclusion (F.I.) is difficult, but not unattainable:

1. State Driven Interventions by Central, State and Local Governments.
2. Voluntary Interventions by Banks, Micro-finance Institutions (MFI), Cooperatives, Self Help Groups (SHGs) and other social organizations.

Measures

1. Harnessing advances in the Information & Computer Technology (I.C.T.), like Smart Cards, Internet Kiosks and Cell Phone Messaging.
2. Developing, testing and implementing appropriate products and suitable delivery channels for financial services to be extended.
3. Attention to the 5 Ps of marketing-Product, Price, Place, Process and Promotion.

Boosting Rural Development through Agri-infrastructure

• Most of the perishable items are produced in the villages which remain confined to these due to the absence of road networks. The existing road and rail facilities are inadequate. Most of the areas which produce good quality fruits are still inaccessible. This coupled with the rough terrain of the area and lack of regulatory markets make the farming community to suffer a lot at the hands of the local traders.
• Farmers have no information about the market price. There is an urgent need to establish suitable infrastructure like the use of information communication technology (ICT) for benefit of farming community.
• The technology like e-kiosks and e-choupals of Indian Tobacco Company in Madhya Pradesh and other states of the country are doing a great job. Each electronic kiosk is connected to a number of villages.
• The villagers can obtain any information easily from these kiosks regarding various aspects of crop production. Communication with different markets and among different stakeholders is also possible through the use of ICT.
• Irrigation is another area which requires infrastructure upgradation. With suitable infrastructure the irrigation potential can be increased. The utilization of available water for agriculture too is far from efficient. Wastage of water is huge in surface irrigation systems.
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