Infrastructure
Infrastructure
KOMAL ARORA
BUILDING SERVICES
1509007
SEMESTER 9
DR.DY PATIL COLLEGE OF ARCHITECTURE
5TH YEAR, BARCH
INFRASTRUCTURE
Infrastructure refers to the basic systems and services that a country or organization
needs in order to function properly. For a whole nation, it includes all the physical
systems such as the road and railway networks, utilities, sewage, water, telephone
lines and cell towers, air control towers, bridges, etc., plus services including law
enforcement, emergency services, healthcare, education, etc.
These infrastructure systems, which require large initial investments, are essential
for enabling productivity in an economy. Most projects are either completely funded
by the government or heavily subsidized.
According to Finances Rule, is a term that engineers, urban and country planners,
and policy makers use to describe the essential facilities, services, and organization
structures for all cities and communities.
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Without infrastructure – all those things our economy requires to function and that
we take for granted – society as we know it would not exist.
The prefix infra- means ‘below’, and often these elements are, in fact, underground,
like natural gas and water supply systems.
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Choate’s and Walter’s publication triggered crisis discussions and the increase in
infrastructure asset management and maintenance planning in the United States.
However, public-policy discussions had one glaring obstacle – there was not a
precise definition for the term.
“… both specific functional modes – highways, streets, roads, and bridges; mass
transit; airports and airways; water supply and water resources; wastewater
management; solid waste treatment and disposal; electric power generation and
transmission; telecommunications; and hazardous waste management – and the
combined system these modal elements comprise.”
Infrastructure is the term for the basic physical systems of a business or nation—
transportation, communication, sewage, water, and electric systems are all examples
of infrastructure. These systems tend to be high-cost investments and are vital to a
country's economic development and prosperity. Projects related to infrastructure
improvements may be funded publicly, privately, or through public-private
partnerships. In economic terms infrastructure often involves the production
of public goods or production processes that support natural monopolies.
Public infrastructure refers to infrastructure facilities, systems, and structures that are owned
and operated by the “public,” i.e., the government. It includes all infrastructural facilities
that are open to the general public to use. Infrastructure includes all essential systems and
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facilities that facilitate the smooth flow of an economy’s day-to-day activities and enhance
the people’s standard of living. It includes basic facilities such as roads, water supply,
electricity, telecommunications, and many more.
Understanding Infrastructure
The term infrastructure was first used in the English language in the late 1880s. The
work comes from Latin roots "infra-" meaning "below" and "struere" meaning "to
build". Infrastructure is the foundation upon which the structure of the economy is
built, often times quite literally. In 1987, a panel of the U.S. National Research
Council adopted the term “public works infrastructure” to refer to functional modes
including highways, airports, telecommunications, and water supplies, as well as the
combined systems that these elements comprise.
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data network of a company operating within a specific location are also the
infrastructure for the business in question, as they are necessary to support business
operations.
Because infrastructure very often involves the production of either public goods or
goods that lend themselves to production by natural monopolies, it is very typical to
see public financing, control, supervision, or regulation of infrastructure. This
usually takes the form of direct government production or production by a closely
regulated, legally sanctioned, and often subsidized monopoly. At smaller scales,
infrastructure can also often take on the characteristics of club goods or goods most
readily produced by localized monopolies, and can be provided within the context
of a private firm producing infrastructure for use within the firm or provided by
localized arrangements of formal or informal collective action.
IT Infrastructure
Many technical systems
are often referred to as
infrastructures, such as
networking equipment
and servers, due to the
critical function they
provide within
Types of Infrastructure
Infrastructure can be put into several different types including:
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1. Taxation
Public Infrastructure may be financed through taxes, tolls, or metered user fees.
Since public infrastructure is open for use by the general public, the general public
pays for the infrastructure facilities through taxes.
2. Investments
Public infrastructure tends to be high-cost investment projects; the returns on which
are extremely high and prosperous. Hence, such projects attract several investment
opportunities. Sometimes, private companies choose to invest in a country’s
infrastructure projects as part of their expansion initiatives. For example, a power
and energy company opts to build railways and pipelines in a country where it wants
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to refine petroleum. The investment benefits both the company and the domestic
economy.
The infrastructure is important for faster economic growth and alleviation of poverty
in the country. The adequate infrastructure in the form of road and railway transport
system, ports, power, airports and their efficient working is also needed for
integration of the Indian economy with other economies of the world
to output, after a long time that is their gestation period is quite long. Second, due
to large overhead capital and lumpy investment, the significant economies of scale
are found in most of them. Due to the significant economies of scale found in
many infrastructure services, they have the characteristics of natural money. The
third important feature of infrastructure facilities is they create externalities.
For example, building of rural roads will benefit agriculture as the farmers
are able to sell their products in towns where they can get remunerative
prices.
Besides, they can get some inputs such as fertilizers, pesticides and other
industrial products at relatively cheaper prices as their transport costs
decline due to improved transportation. Power plants generate both positive
and negative externalities.
The construction of power plants produces electricity which is used for
industrial helps production and commercial use and thereby helps in
acceleration of economic growth.
A power plant also produces negative externalities in the form of emission
of pollutants, especially CO2.
The above feature of infrastructure means that competitive market system
will not be able to achieve a socially optimal level of infrastructural
services in most of the cases. Besides, in many of infrastructural facilities,
there are significant economies of scale and therefore they have the features
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Therefore, these infrastructural facilities are either built or run by the government
and public sector enterprises or if private sector is permitted to make investment in
them and run them, they need to be regulated by the government, so that they
should not exploit the consumers. For example, the distribution of electricity which
is an infrastructural service is being provided by two power Companies of Tata and
Reliance in different regions of Delhi, the electricity rates and other charges are
being regulated by an authority appointed by the government. Similarly, in
telecommunication, which is another infrastructural service, various companies
such as Airtel, Vodaphone, Idea, MTNL are providing this service of wireless
telephony (i.e., mobile service) are being regulated by TRAI.
It needs to be emphasized that good quality infrastructure is important not only for
faster economic growth but also to ensure inclusive growth. By inclusive growth
we mean that benefits of growth are shared by the majority of the people of a
country. Thus the inclusive growth will lead to the alleviation of poverty and
reduction in income inequality in the country.
For example, micro, small and medium enterprises (MSME) are dispersed
throughout the economy and production by them and their growth require access to
quality and reliable infrastructure services to compete efficiently with large-scale
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enterprises which can often build some of their own infrastructure such as
installing their own small power plants or generators. Besides, large-scale firms
can even locate themselves near ports and near transport hubs where required
infrastructure is available.
Small enterprises, on the other hand, are dispersed widely in the economy and have
to rely on the availability of the general infrastructure facilities. Thus, by building
up general infrastructure facilities helps the small enterprises to compete
successfully with large-scale industries and being labour-intensive generate large
employment opportunities for the workers. This will help to alleviate the poverty in
developing countries.
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It follows from above that the expansion of infrastructure facilities will ensure
sustained growth of employment in agriculture and small-scale rural industries and
bring prosperity in the rural areas and in this way ensure inclusive growth. Besides,
this will also help to prevent the mass exodus of the rural people to urban areas
where they cause problems of urban congestion, growth of slums and acute
housing shortage
Lack of adequate infrastructure not only holds lack economic development, it also
causes additional costs in terms of time, effort and money of the people for
accessing essential social services such as healthcare and education. Emphasizing
the importance of adequate infrastructure, authors of Economic Survey of India for
the Year 2013 -14 quite rightly write, “Rural economic growth in recent years has
put enormous pressure on existing infrastructure particularly on transport, energy
and communication. Unless it is significantly improved infrastructure will continue
to be a bottleneck for growth and obstacle to poverty reduction”. In other words, it
is the challenge to ensure strong, sustainable and balanced development through
integration of the economy with environmentally sustainable development of
infrastructure.
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It may be noted that with large investment in infrastructure during the last decade
(2003-04 to 2013-14) India has become the second fastest growing economy of the
world but in the two years (2012- March 2014) economic growth slowed down and
this has been mainly due to the stalled infrastructure projects which held back
economic development. It is therefore urgently needed that infrastructure projects
be given environment clearance quickly and investment in them be speeded up if
the Indian economy is to be brought back on the fast growth trajectory.
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According to World Bank estimates, in the year 2008 developing countries made
investment of around $ 500 billion a year in new infrastructure—transport, power,
water, sanitation, telecommunication, irrigation and so on equal to 20 per cent of
GDP but the need for infrastructure investment is still large. In developing
countries one billion people still lack access to clean water, two billion people lack
access to sanitation and electric power and adequate transport facilities are still
lacking in developing countries
Airports:
Airport development is a basic infrastructure requirement for international
connectivity, especially because the demand for air travel is projected to grow
rapidly in India. There had been a significant progress of airport development in
the Eleventh Plan period with the development of four new airports at Bangalore,
Hyderabad, Delhi and Mumbai under public-private participation (PPP) mode. To
expand airport infrastructure in India, modernisation of airport infrastructure in
metro and non-metro cities and construction of Greenfield airports are under
consideration of the government.
Ports:
Ports are another important infrastructure for international trade connectivity. It is
mainly through these that the goods are exported to other countries and the goods
and raw materials are imported. Without efficient ports it is not possible to expand
foreign trade. In the Eleventh Plan period (2007- 12) some problems were faced
for expansion of the Indian ports because several issues had to be resolved for the
proposed public-private participation (PPP) in this connection. These have now
been resolved and it is expected that in the next five years there will be significant
progress in this area. As regards minor ports which come under State governments,
there has been good progress in the Eleventh Plan period.
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During 2013-14 major and non-major ports in India handled a total cargo of 980
million tonnes reflecting increase of 5.0 per cent over 2012-13. This can mainly be
attributed to an increase of 1.8 per cent in the cargo handled at major ports. In
contrast, traffic at non-major ports increased at around 9.6 per cent during 2013-14
as compared to 9.8 per cent in 2012-13.
Telecommunications:
Telecommunications occupy an important place in the modern economy. E-
commerce and E-governance require the efficiency of telecommunication services.
The companies like Amazon, Flipkart, Snapdeal are engaged in E-commerce for
sale of goods. They work through mobiles and internet network. Besides, many
BPO companies are providing outsourcing services through telecommunication.
Without the efficient telecommunication system, the business through E-commerce
and BPO is not possible. Telecommunications and the associated increase in
Internet connectivity is a productivity enhancing development and India is well
based to benefit from this.
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regarding their business. Banks are also providing their customers, through SMS or
E-mail, the status of their deposits and withdrawal. Besides, the banks are
providing through E-mail the information regarding investment avenues open to
them.
In the case of electricity, the quality of service has been quite poor. There have
been quite often fluctuations in voltages and often supply-cuts even in capital
city of Delhi. In UP, Haryana and other states there are interruptions of supply
for many hours compelling big companies to install their own big generators.
Besides, State Electricity Boards which are usually responsible for distribution of
electricity are running heavy losses. Prices charged by them even do not cover
variable costs of supply, let alone contributing to overhead costs.
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the outlook of people. Apart from these, even science, technology and growth of
towns and cities will lead to a changed economic outlook.
The growth of GDP. There exists a very close relationship between spending for
infrastructure and GDP growth. Studies reveal that 1% growth in the stock of
infrastructure often associates with 1% growth in per capita GDP.
i. They help in the development of the market and all the elements within.
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ii. It also facilitates large-scale production for the purpose of smooth functioning of the
economy.
ix. Infrastructures in the economy directly result in the unity of various economic
components.
x. The economy and the nation will be able to meet any emergencies that arise.
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xiv. They are a great and rich source of revenue to the Government.
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xx. Indian Real estate sector in India is expected to reach a market size of US$
180 billion by 2020 and US$ 1 trillion by 2030. It is expected to contribute
13% of the country’s GDP by 2025.
xxi. Services sectors such as IT and ITeS, retail, consulting and e-commerce
have registered high demand for office space driving growth of real estate
services in the country.
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BIBLOGRAPHY
https://corporatefinanceinstitute.com/resources/knowledge/economics/public-
infrastructure
https://www.investopedia.com/terms/i/infrastructure.asp
https://mpra.ub.uni-muenchen.de/12990/1/MPRA_paper_12990
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