India’s laggard states need a bigger infrastructure push
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From expressways in Uttar Pradesh to road tunnels in Jammu and Kashmir, large infrastructure projects are showcased by state governments as examples of development politics. Have these efforts been successful in bridging the infrastructure gap between Indian states?
A look at the changes in the Mint state infrastructure index between 2005-06 and 2014-15 shows that poor infrastructure continues to be a characteristic feature of India’s laggard states.
The Mint state infrastructure index—a proprietary index of the newspaper—is based on the availability of road, rail and air transport; telecom facilities; and electricity for households. The parameters taken to measure these are length of railway lines per thousand square kilometres, length of roads per hundred square kilometres, air passengers per million people, number of telephone connections (landline and mobile) per hundred people and percentage of electrified households. Data for electrified households has been taken from various rounds of the National Family and Health Survey, while other statistics have been taken for Centre for Monitoring Indian Economy’s (CMIE) database, the Ministry of Statistics and Program Implementation (MOSPI) and the Economic Surveys of states.
The Mint state infrastructure index is based on a simple average of five sub-indices (for each of these indicators). These sub-indices have been normalised on a scale of 0 to 1, with 1 signifying best infrastructure facilities. The index has combined Andhra Pradesh and Telangana by making suitable adjustments for population and infrastructure figures. Similar adjustments have been made for other states which were bifurcated earlier: Bihar, Uttar Pradesh and Madhya Pradesh.
A comparison of the Mint state infrastructure index values for 2005-06 and 2014-15 shows that little has changed in terms of rankings in this decade. Delhi continues to be the highest ranked state, while Bihar, Assam, Uttar Pradesh and Odisha continue to remain in the bottom five. West Bengal shows the biggest improvement during this period.
Telecom infrastructure has improved for most states over the years in keeping with the rapid increase in mobile phone penetration in the country. However, even within telecom, state-wise performances are in keeping with overall infrastructural development levels, with four states which were near the bottom of the infrastructure list also at the bottom of the telecom sub-index pile.
An earlier Plainfacts column, which had first developed the Mint state infra structure index, had highlighted the relationship between a state’s per capita income and its rank on the index. The relationship remains intact for the updated index.
To be sure, infrastructure and income levels have a two-way relationship rather than a simple cause-effect one. A poor state won’t have enough rich people to fly in aeroplanes, and unless a state has good roads, industry would be hesitant to set shop which would prevent growth in income.
Is there a link between how much a state government spends on infrastructure, and how much private infrastructure investment it is able to attract?
An analysis of CMIE numbers shows that most states with higher budgetary allocation for electricity, road and aviation in the last three years (FY15-17) also attracted higher private investment in infrastructure during this period. In many cases, private investment exceeded the amount of public investment.
While some of these trends could be on account of Public Private Partnership infrastructure projects, the complementary nature between public and private infrastructure projects is difficult to ignore. This also means that a state which ignores public sector spending on infrastructure will risk a bigger infrastructure deficit and, hence, income deficit, compared to other states.
Clearly, infrastructure is one case where good politics of showcasing big-ticket projects as tangible development coincides with good economics.