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1. Infrastructure SID, KSRM 09-11

2. Flow The State of rural infrastructure in India Infrastructure and Rural Growth Issues in Rural Areas Strategies to Improve infrastructure in Rural Areas

3. Infrastructure Coverage in Rural Areas 71% live in rural areas 89% have no access to telephones 50% have no access to power 10% have no access to drinking water 91% have no access to toilet facilities People travel an average of 2km to access all weather roads 244 million people are poor compared to 80 million urban poor

4. Can infrastructure help rural poor? Several studies( Songco, Diechman et al, Roller et al) show that infrastructure is correlated to economic growth in rural areas also Studies ( Berry et al) also show that low per capita income correlates with lack of infrastructure Infrastructure is therefore a key driver of rural growth, but often is not available

5. Does infrastructure support growth? Increase employment, income, savings Save time, which can be used in other activities Improve efficiency and productivity Increase access to resources Improve health and therefore productivity Empirical evidence from Bangladesh, India, Thailand, Vietnam, Ghana, Morocco

6. Issues in Rural Areas Low rural population density , 15.75 times lower than urban areas Economies of scale do not work * High fixed costs and low variable costs* Low population size, low number of users Low purchasing power Willingness to pay limited to income capacity infrastucture.xlsx

7. Implications of Findings Look for “Local Solutions” not large “ Network Based Solutions” eg. Septic Tank vs Sanitation Treatment Plant, Mobile phone vs landline, DDG vs grid power Subsidies are necessary Micro- finance can play a role?

8. What can be done to improve rural infrastructure? Government Efforts Increase government spending on rural infrastructure Bharat Nirman Program, Rs 186,900 crores outlay in 2006 Bharat Nirman.xls PradhanMantri Gram SadakYojana; 4000cr Accelerated Rural Water Supply Program Rajiv Gandhi GrameenVidyutikaranYojana 73 Constitutional Amendment to empower Panchayats

9. Government Efforts Universal Service Obligations( USO) in telecom sector to raise funds for rural phones, target tele-density is 15%, 8000cr NREGS- 100 days employment PURA- Provide urban amenities in rural areas Rural Infrastructure Development Fund ( RIDF) of 60,000 cr from NABARD

10. 11th 5 Year Plan Targets (2007-2012) Irrigation- To create 10 million additional irrigation capacity Rural Roads-To connect all habitations(66802) with population above 1000(500 in hilly and tribal areas) with all weather roads Rural Housing- To construct 60 lakh houses for rural poor Rural water supply- To provide potable water to all uncovered habitations (550678) and also address slipped back and water quality affected villages Rural Electrification- To provide electricity to all electrified villages ( 1,25,000) and to connect 23 million BPL households Rural Telephony- To connect all remaining villages ( 66822) with a public telephone

11. Issue: How to Finance Rural Infrastructure? Central Govt Grants Microfinance institutions Multilateral Bank Loans Community pooling of resources Commercial Bank Loans Private partnerships, where , to what extent,how??

12. Role of Government in Promoting Private Participation Changed Role of Government Attract private participation Assure rate of return Ensure customer satisfaction New Roles of Government Set Pricing Encourage competition Resolve Conflicts PROVIDE SUBSIDIES -?