Case Study on India China Infrastructure

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A Case Study,

Overcoming Infrastructure Roadblocks: Are Chinese Lessons Relevant?

This paper aims to document and analyse the different approaches in overall infrastructure sector performance for these two very different countries from the policy and institutional dimensions. It identifies factors that have worked in China and India. It also identifies some important lessons which could be relevant for future infrastructure development.

For the last two decades, both India and China have grown at twice the global rate and If this trend continues for next few decades, with their vast labor supply, favorable demographics, and aspirations for reaching the developed world per
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Employment generation through construction of rural roads, and ground water and minor irrigation to support food security received much higher priority compared to need to enhance logistics to support industrial growth and improving overall economic efficiency.

In five year plans a major goal was to connect all villages (with population of more than 1,500 inhabitants) with rural road network; however, this was done through “minimum needs program” supporting employment creation and leading to waste and inefficiency. Most of the roads thus created did not meet quality standards because fiscal space was not adequate to accommodate both the demand for resources for rural roads and also the national highway network which was getting congested. Even in the case of power sector, village electrification was a priority so as to provide power for the farms, but not necessarily to households. Emphasis on connectivity, without improvements in overall economic efficiency meant unsustainable financial burden on the government budgets. In the time of slower economic growth or external shocks such as wars and high oil prices, infrastructure investments were major casualty. China with its high economic growth rates and higher savings rates was able to allocate much larger resources for investments in general. In the 1980, China saved 35% of GDP whereas India’s savings rate was less than half at 15.5%. This combined, with higher fiscal deficits in
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