[Following editorial has been published in The Hindu on 7th January 2016. Read through it and try to answer the questions that follow. Please do not copy and paste answers. The objective of this exercise is to get you in the groove of answer -writing. Try to write in your own words. Don't hesitate to write in a bulleted-format, if you are uncomfortable in writing in paragraph form.]
When the going gets tough, public investment must be stepped up to pump-prime a slow-moving economy facing uncertain headwinds of low commodity prices and faltering international trade. When the going is good, the private sector would also have a role to play, Finance Minister Arun Jaitley has said, vowing to ramp up infrastructure investments in 2016-17. Ten months ago, in his first Budget for a full financial year, Mr. Jaitley had scaled up such investment to Rs 1.25 lakh crore, two-thirds of which was earmarked for road and railway projects. In the coming year, he has indicated that the priority will be rural infrastructure as the stress in India’s villages after two bad monsoons has hit demand. This is deterring fresh private investment, with many firms still struggling with past investment plans that are stuck or have become unviable. While economists debate whether the government should stick to its fiscal consolidation road map or scale up public expenditure to spur the economy, nobody will mind if a slightly higher fiscal deficit leads to more jobs while creating useful public assets. Low oil and commodity prices offer the chance to build more infrastructure at a far lower cost, but as Mr. Jaitley said, “We must have the intellectual honesty to analyse our shortcomings and improve them.”
So have higher allocations to infrastructure spending this year helped? Anecdotally, a few signs are positive. Demand for bitumen, a key ingredient for building roads, has risen, as have enquiries for construction and earth-moving equipment. Paying private contractors to build highways has boosted cash flows and enabled a few to re-enter the fray for new projects. But all is not well yet. Core sector performance hit a decade’s low in November 2015. “Though public investments have started to gain traction, this is yet to reflect in the performance of investment-linked sectors,” rating agency Crisil said, as demand remains weak in end-user sectors such as real estate, with overcapacity in others. Of course, this is partly the lag effect — infrastructure projects take time to show results. Yet, an honest introspection should reveal the need to utilise public infrastructure budgets more effectively without the cost- and time-overruns associated with the government’s ‘business as usual’ approach. Take India’s largest industrial infrastructure project, the Delhi-Mumbai Industrial Corridor, set up as a special purpose vehicle to shed the legacy burdens of departmental decision-making. It’s crawling, though all the States along the corridor except Delhi are run by the BJP. Or the Project Monitoring Group under the Cabinet Secretariat tasked with resolving stalled projects, on which not much has been heard in months. Could the fact that these bodies were left without a head through most of 2015 have affected performance? Tapping the Consolidated Fund of India as well as innovative vehicles such as the National Investment and Infrastructure Fund is laudable. Perhaps, it is also time to find a few good men who can get the job done on the ground, grant them autonomy and fix accountability for outcomes.
1. Explain the following terms/phrases: (50 words each)
• Public Investment
• Fiscal Consolidation
• Public Expenditure
• Public Assets
• Core Sector
• Lag Effect
• Consolidated Fund of India
2. What is meant by 'infrastructure'? How is infrastructural development linked to well being of a common man?
3. What bottlenecks are impeding the path of infrastructural development in India?
4. What steps are required to boost infrastructural development in India?
5. What is CRISIL? Where is it headquartered? What is its role?
6. What is Delhi-Mumbai Industrial Corridor? Why was this project mooted? Trace the corridor on the map of India.
7. What is National Investment and Infrastructure Fund? Why was it constituted?
8. What is Bitumen? How is it produced? What are its applications?
9. What is a Special Purpose Vehicle? Why and how is it conceived? Explain with examples.
10. Programs like Make in India, Skill India and Digital India can't be successful without a higher infrastructural growth rate. Comment on the above statement throwing light on the steps the government has taken to achieve the same. (200 words)