Infrastructure sector is the backbone of Indian economy. It will pave the way for development.

Construction
is the second largest economic activity in India after agriculture and has been growing rapidly. The
production of industrial machinery has also been on the rise – and the increasing flow of goods has spurred
increases in rail, road and port traffic, necessitating further infrastructure improvements. This ongoing
growth is due to rapidly developing services and manufacturing sectors, increasing consumer demand
(largely driven by increased spending by India’s middle class) and government commitments to rejuvenate
the agricultural sector and improve the economic conditions of India’s rural population.

Economic Importance
Good quality infrastructure will not only spur economic growth but ensure inclusive growth as well. This
will lead to a reduction in poverty and promote equal distribution of income.
Micro, Small and Medium Enterprises (MSME) contribute largely to manufacturing sector. They are
responsible for intensive job creation. Improving infrastructure will enable MSMEs to be more competitive
in the global market.
Small enterprises, on the other hand, are dispersed widely in the economy and must 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 labor-intensive generate large
employment opportunities for the workers. This will help to alleviate the poverty in developing countries.
The Indian economy is agrarian and expansion of facilities like rural electrification, irrigation and roads
will make the farming more viable while increasing the yield. These general infrastructure facilities will
help farmers and owners of processing industries to get their requirements of raw materials, fertilizers and
other inputs at cheap rate and help them to bring their products to the markets which are in big towns and
cities.

Investment
As per the Economic Survey 2017-18, India will need about USD 4.5 trillion in the next 25 years for
infrastructure development, of which it will be able to garner about USD 3.9 trillion. The Survey stressed
the need to fill the infrastructure investment gap by financing from private investment, institutions
dedicated for infrastructure financing like National Infrastructure Investment Bank (NIIB) and global
institutions like Asian Infrastructure Investment Bank (AIIB) and New Development Bank (erstwhile
BRICS Bank). Following this the government increased budgetary allocation for the sector by Rs 1 lakh
crore to Rs 5.97 lakh crore for the 2018-19 fiscal.

Growth Drivers
The primary growth drivers of Infrastructure sector are :

 Government Initiatives
 Public Private Partnerships
 International Investment
 Housing Development
 Infrastructure Needs
Sub Sectors
 Railways
 Roads and Airports
 Construction
 Telecom and Energy
 Power
 Oil and Gas

Challenges
India is the largest democracy in the world and yet on an average, one person is killed every four minutes
on Indian roads due to accidents. The average speed of 54 kmph requires modernization in Indian railways
and airports. Most airports in cities are struggling with problems such as congestion and shortage of capacity
as first time fliers increase.
Though there have been commendable leaps in infrastructure like Delhi Metro, there are a lot of challenges
ahead. For instance, the country faces a shortage of around 1.8 crore housing units, according to the
government data. The government must complete at least 30 lakh houses per year to deliver on the promise
of “Housing for all by 2022”. And now that the affordable housing sector has been granted infrastructure
status, there may be an increase in the number of participants here.
Public transport is another major challenge for the government. Rapid urbanization, the existing
transportation infrastructure in cities is nowhere close to global standards. Despite being in existence for
more than 150 years, the Indian transport system scores poorly in terms of quality, speed or safety.
Thus, even though Infrastructure sector is the backbone of Indian economy, it has a long way to go before
it can actually support the economy.