01

Economic boost through huge investments in infrastructure has been a common policy of many governments. Quite a large number of countries have been able to achieve high rates of growth by following this policy. The Modi government since its inception in 2014, also took a similar policy. Policies like Sagarmala, Dedicated Freight Corridors, Industrial Corridor, UDAN-RCS and Digital India were announced in Narendra Modi’s first term. It is known that out of all the programmes, the Sagarmala programme looks at unlocking the potential of waterways and the Indian coastline. The objectives of the programme are reduction of logistic cost of domestic industries and EXIM, doubling the share of usage of domestic waterways from 6% now to 12% by 2025, lowering logistic cost of bulk commodities so as to help domestic industries, to optimise time and cost of EXIM container movement and creation of jobs. It is known that the average logistic expenditure is high in India and this is one of the main reasons behind the loss of competitiveness of Indian products.

In the Sagarmala programme, development of coastal areas is included. Therefore, the government planned for developing Coastal Employment Zones. Abhishek Chandra, IAS, Director (Sagarmala), Ministry of Shipping, Government of India, told BE, “These are similar to the earlier Special Economic Zones (SEZ).”

Chandra was explaining the aspects of the Sagarmala programme recently at the Infrastructure Conclave 2020 conducted by the Bengal Chamber Commerce and Industry in Kolkata. But on the nature of these zones, Chandra told BE that these programmes are shared by both the state and central governments. The Indian government has already talked with all the state governments with coastal areas and demarcated land for the projects. Talks with Gujarat, Maharashtra and Andhra Pradesh governments have been in advanced stages. For West Bengal, the site is yet to be determined. A zone requires a vast area of land - several hundred acres - depending on the nature of the project. 

The construction of SEZ was in the news during the Manmohan Singh government. However, it practically stopped by 2010, after the global economic crisis. At that time, global economic growth began to weaken. In India, political unrest emerged in many cases in acquiring land. West Bengal was one of the most important cases in that regard. 

Can the huge investment prone development strategy be successful?

The Indian economy has been slowing down. The problem of lack of effective demand in the economy leading to low spending of the common people is the main reason. In this situation, targeted governmental spending can rescue the economy. Almost any policy boosting private investment may not work. Because, as investors are not seeing business prospects, new private investment will difficult to come by. Excess capacity in production is also high. Economists think that the government has to increase spending in increasing the purchasing power of the rural masses. This can be done by increasing allocation of funds to the MNREGA programme and to its proper implementation, by disbursement of money to the PM Kishan programme and by immediate and substantial spending on rural infrastructure. All these programmes are likely to increase rural employment. Studies show that the growth of wage rate in rural India is either negative or stagnant. The above mentioned programmes are all short run measures and will give immediate results if they are implemented correctly. 

No one can deny that a large number of countries have been successful through this policy. Even the World Bank prescribes investing 7% or more on infrastructure to achieve exceptional economic development for India.