New Delhi: Improving the country’s infrastructure can lead to better connectivity, which in turn can create more jobs, according to a report 'Infrastructure Priorities for Job Creation in India' by think-tank IDFC Institute released on Wednesday.
“By prioritising infrastructure investment, governments can provide direct employment in large numbers. And they can enable the private sector which is impeded by absent or poor infrastructure," the report said.
The report seeks to bridge the gap between two crucial policy debates—the infrastructure deficit and the need for more jobs. The survey conducted used data from a primary survey of 2,500 agro-allied, manufacturing and services enterprises in 18 districts to estimate how that deficit can be plugged in a way that reduces costs for firms most effectively. This will result in higher business growth and boost job creation.
Issues such as congestion and inferior quality of roads are major concerns for companies. Investing towards its upgradation and maintenance can result in higher cost savings. “Furthermore, the induced employment effects of building roads are quite high and have the potential to unlock growth among firms across regions," the report said.
Investing in infrastructure is currently one of the top priorities of the National Democratic Alliance (NDA) led government, along with creating more jobs, at a time when India witnessed Gross Domestic Product (GDP) growth of 5%—a six-year low—during April-June quarter.
The government will also spend ₹100 trillion towards infrastructure creation in the country, which is will help India achieve the target of $5 trillion economy by 2024-25. Connectivity, both physical and digital, which has a multiplier effect on the economy, is a key development goal for the NDA government in its second term as it seeks to steer the economy away from unfavourable headwinds to become the fifth largest in the world.
The report pointed out that firms across services, industrial, and agro-allied regions identified roads as a major impediment to their operations. “Since all firms are located in peri-urban districts, congestion and narrow roads seem to be the major issues," the think .
Resolving infrastructure-related constraints will enable agro-allied companies save around 110% of the total input costs. “These savings will potentially come out of costs currently incurred by firms as a result of infrastructure problems such as power shortage, water shortage, and additional fuel costs due to poor roads, among others," the report said.
As a result, over the short and medium run, the potential costs saved will be ploughed back to into the business, in terms of investment in capital, which will result in increase in number of workers hired.