Rural Infrastructure and Growth: An OverviewP. Satish*

Rural infrastructure is crucial for agriculture, agro-industries and overall economic

development of rural areas. It also, incidentally, provides basic amenities that

improve the quality of life. However, infrastructure projects, including those in rural

sector, involve huge initial investments, long gestation periods, high incremental

capital output ratio, high risk and low rate of returns on investment. All these factors

are not conducive for private sector entry into infrastructure. As a result of this,

infrastructure services, the world over, are largely provided by the public sector.

Rural infrastructure development is a complex phenomena, due to the many attributes

of infrastructure that make it difficult for individuals to design, construct, operate and

maintain these services effectively and efficiently. Some problems stem simply from

the fact that infrastructure facilities by nature have potentially long, useful lives

during which the circumstances of users may change. Thus, decisions concerning

their initial design and subsequent maintenance are extremely difficult to perfect.

Even greater problems arise as sustainability of the bulk of the rural infrastructure in

the developing world is influenced greatly by public sector decision-making. There

are often good reasons for public sector involvement in the provision of rural

infrastructure services, however in the production of such services there exists a role

for other than public sector entities also (Ostrom, Schroeder and Wynne, 1993)

Infrastructure is an umbrella term for many activities referred to as social overhead

capital by development economists as Arthur Lewis, Rosenstein-Rodan, Ragner

_____________________________________________________________________

* Chief General Manager, National Bank for Agriculture and Rural Development

(NABARD), Head Office, Mumbai-400 051

Keynote paper on Subject III “Rural Infrastructure and Growth” to be presented during the 66

th Annual Conference of the Indian Society of Agricultural Economics, to be held at ICAR Research

Complex for the NEH Region, Umiam (Barapani), Meghalaya on November 8-10, 2006

The views expressed are those of the author and not of the institution in which he is employed

1

Nurkse and Albert Hirschman. Lewis included public utilities, ports, water supply and

electricity as infrastructure (Lewis, 1955) whereas Hirschman outlined four

conditions that characterise infrastructure or social overhead capital: the services

provided to facilitate or are basic to economic activity; the services are usually public

goods because of economic externalities; these services cannot be imported; these

investments tend to be indivisible or ‘lumpy’ (Hirschman, 1958). Later, in the sixties,

besides the above, emphasis was laid on agricultural research, extension and rural

financial institutions as important elements of infrastructure, due to increasing

recognition of the role of agriculture in economic development and the vital role that

infrastructure plays in generating agricultural growth (de Vries, 1960) (Ishikawa,

1967)

The World Development Report of 1994 included the following in its definition of

infrastructure

Public utilities-power, telecommunications, piped water supply, sanitation

and sewerage, solid waste collection and disposal and piped gas.

Public works-roads, major dam and canal works for irrigation and

drainage.

Other transport sectors-urban and inter-urban railways, urban transport,

ports and waterways, and airports. (World Bank, 1994)

Other authors, like Ahmed and Donovan (Ahmed and Donovan, 1992) disagree with

this type of infrastructure definition, indicating that the concept has evolved since the

early work of Arthur Lewis and Albert Hirschman towards a more comprehensive

definition that includes a wider range of public services that facilitate production and

trade. In the case of agricultural infrastructure, Ahmed and Donovan recognize the

growing importance of its role in economic development: the related literature

includes agricultural research, extension services, financial institutions and irrigation

as part of a wider concept of infrastructure. Authors such as Fosu et al. (Fosu et al.

1995), reflecting this broader definition, distinguish up to 11 components of

agricultural infrastructure: irrigation and public access to water; means of

2

transportation; storage services; commercial infrastructure; processing infrastructure;

public services; agricultural research and extension services; communication and

information services; land conservation services; credit and financial institutions; and,

finally, health and education services. This listing makes reference to “rural

infrastructure” before “agricultural infrastructure,” thus, as Fosu et al. state, the

conjunction of infrastructure services includes items that not only facilitate the

development of agricultural activities, but also rural activities and sometimes even

urban activities. A similar classification of agricultural infrastructure developed

earlier by Wharton (Wharton, 1967), identifies three categories: one that is capital

intensive (like roads, bridges and dykes); one that is capital extensive (principally

extension services or vegetable and animal sanitation services); and the institutional

infrastructure (that consists of formal and informal institutions). Wharton was one of

the first to emphasize the importance of infrastructure in the generation of positive

externalities at the microeconomic level. This author recognized that agricultural

development is not exclusively determined by the “economic behavior of the

producers,” but also depends on the environment, which according to Wharton

includes physical-climatic, socio-cultural and institutional components that form what

he calls “the agricultural infrastructure”.

Provision of adequate and quality infrastructure in rural areas is necessary for

increasing the productivity and efficiency of agriculture in the form of improving the

credit absorbing capacity, enhancing the productivity of crops and livestock,

generating employment and increasing farmers’ income etc. and in the process, it

makes a direct attack on minimizing the incidence of rural poverty. Integration of

Indian economy with the global economy has put forth enormous opportunities as

well as challenges to agricultural sector to become resilient, cost effective,

competitive and quality conscious in the international market. This challenge can be

met only with a well-conceived perspective plan on rural infrastructure development.

Role of Infrastructure

3

Adequate infrastructure raises productivity and lowers production costs, but it has to

expand fast enough to accommodate growth. While the precise linkages between

infrastructure and development are yet to be firmly established, it is estimated that

infrastructure capacity grows step for step with economic output-a 1 percent increase

in the stock of infrastructure is associated with a 1 percent increase in GDP across all

countries (Summers and Heston, 1991) As countries develop, infrastructure must

adapt to support changing patterns of demand, as the shares of power, roads, and

telecommunications in the total stock of infrastructure increase relative to those of

such basic services as water and irrigation (Ingram and Fay, 1993)

The role of infrastructure factors in economic development is complex and indirect.

The theories of economic development focus sufficient attention on this discussion.

Hirschman’s point of view was that enlarged availability of electric power and

transportation facilities are essential preconditions for economic development

practically everywhere and investments in essential overhead capital is advocated not

because of its direct effect on final output, but because it permits, and in fact invites,

direct productive activities to come in (Hirschman, 1958). In his theory of ‘Stages of

Growth’, Rostow held similar views and considered social overhead capital,

especially in transport and communication as one of the main pre-conditions for take

off (Rostow, 1960). The role of social overhead capital in accelerating economic

growth and in enhancing public welfare is more pronounced in developing economies

as the indivisibility in the social overhead capital has been identified as one of the

main obstacles of the development of under-developed countries (Rosenstein-Rodan,

1943)

Infrastructure for agriculture and rural development

The models of development which focus on agriculture also bring about the role that

infrastructure plays in agricultural development in particular. The spread of

technology in agriculture depends critically on both physical and institutional

infrastructure. It is also indicated that infrastructure plays a strategic role in producing

large multiplier effects in the economy with agricultural growth (Mellor, 1976) Rural

4

infrastructure leads to agricultural expansion by increasing yields, farmers’ access to

markets and availability of institutional finance. The kind of infrastructure put in

place also determines whether growth does all that it can to reduce poverty. Most of

the poor are in rural areas, and the growth of farm productivity and non-farm rural

employment is linked closely to infrastructure provision (World Bank, 1994)

The importance of infrastructure in agriculture and rural development is well

documented. It is estimated that 15 percent of crop produce is lost between the farm

gate and the consumer because of poor roads and inappropriate storage facilities

alone, adversely influencing the income of farmers (World Bank, 1997)

Strengthening rural infrastructure can help to lower production costs which can

further augment agricultural output and income for rural farming community. Rural

infrastructure has its impact on attitudes and values of rural households as well. The

most profound effect of infrastructure development could be on the values of rural

households. Development of transport and communication infrastructure enhances the

mobility of people and information through reduction in cost and time. The resulting

increase in interaction contributes to changes in attitudes and human capital

development (Ahmad, 1996)

Rural infrastructure plays a key role in reaching the large mass of rural poor. When

rural infrastructure has deteriorated or is nonexistent, the cost of marketing farm

produce can be prohibitive for poor farmers. Poor rural infrastructure also limits the

ability of traders to travel to and communicate with remote farming areas, limiting

market access from these areas and eliminating competition for their produce.

Construction of rural roads almost inevitably leads to increases in agricultural

production and productivity by bringing in new land into cultivation or by

intensifying existing land use to take advantage of expanded market opportunities. In

addition to facilitating agricultural commercialization and diversification, rural

infrastructure, particularly roads, consolidates the links between agricultural and

nonagricultural activities within rural areas and between rural and urban areas (IFAD,

1995)

5

Binswanger, Deininger and Feder (1993), in a study of 13 states in India, found that

investments in rural infrastructure lowered transportation costs, increased farmers’

access to markets, and led to substantial agricultural expansion. Better roads also

lowered the transaction costs of credit services, resulting in increased lending to

farmers, higher demands for agricultural inputs, and higher crop yields. Fan, Hazell

and Haque (1998) extend these results to show that rural infrastructure is not only an

important driver for total productivity growth (TFP), but also directly contributes to a

substantial reduction in rural poverty. Based on an econometric model and state level

data for 1970-93, they find that the productivity enhancing investments offer a win-

win strategy for reducing poverty while at the same time increasing agricultural

productivity. There appear to be no tradeoffs between these two goals. According to

the analysis, government expenditure on roads has by far the largest impact on

poverty alleviation in rural areas, because it leads to new (non) agricultural

employment opportunities, higher wages, and increases in productivity. If the

government were to increase its investment in roads by Rs 100 billion (at 1993

constant prices), the incidence of rural poverty would be reduced by 0.87 percent and

TFP would increase by 3.03 percent. Similar investment in agricultural research

extension would contribute to 6.08 percent growth in TFP and 0.48 percent reduction

in rural poverty (Fan, Hazell and Haque, 1998)

For specific infrastructure impact cases (like the role of rural roads, telephones or

access to electricity on poverty alleviation) the literature has a broad spectrum of

work. (Howe, 1984), (Binswanger, Khandker and Rosenzweig, 1993), (Jacoby,

1998), (Lebo and Schelling 2001). A recent study estimated the fixed transaction

costs (those not dependent on commercialized volume) that impede access to product

markets by subsistence farmers in Kenya. These authors estimate that high transaction

costs are equivalent to a value added tax of approximately 15 percent illustrating the

opportunities to raise producer welfare with effective infrastructure investments

(Renkow, Hallstrom and Karanja, 2003) Based on an infrastructure index that

includes road, rail and telecommunications density, a study found that infrastructure

6

is a significant and quantitatively important determinant of bilateral trade flows.

Improving destination infrastructure by one standard deviation reduces transport costs

by an amount equivalent to a reduction of 6,500 sea km or 1,000km of overland

travel. According to their findings, most of Africa’s poor trade performance can be

accounted for by poor infrastructure (Limão and Venables 1999)

Improved infrastructure also leads to expansion of markets, economies of scale and

improvement in factor market operations. The development of rural infrastructure

helps to enlarge markets with greater access to factors of production. The female

labour participation rate increases as traditional taboos against it are overcome

(Rahman, 1993). Easier access to market allows an expansion of perishable and

transport-cost intensive products. It can also lead to a conversion of latent demand

into effective commercial demand. These effects of infrastructure accentuate the

process of commercialisation in agriculture and rural sector (Jaffee and Morton,

1995) There is increased scale of trade too and helps in reduction of trading costs per

unit owing to the economies of scale.

Further, dominance of poor is more in rural areas as compared to urban areas.

Therefore, any investment that helps to increase rural production, income and

employment is expected to reduce poverty. There has been evidence linking poverty

alleviation with infrastructure development. Infrastructure leads to an increase in crop

income among small farmers (Ahmad and Hossain, 1990) It has been observed that

there was a direct relationship between increase in acreage of export crop cultivation

and the standard of roads and distance from main commercial centers. There is

enhanced entrepreneurial activity, sharp decline in freight and passenger charges and

improved services as a result of investment in rural roads (Bonney, 1964) While

analysing the socio-economic impact of new roads on small and isolated village

communities in Mexico, it was found that the roads created inflow and outflow

generation of transportation, communication and modernisation as well as migration,

both into and out of the community. In this sense, rural roads act not only as the

7

bridge between the urban/developed and poor/rural/underdeveloped areas but also as

agencies of diffusion, contact and unification (Elmondorf and Merrill, 1977)

Impact of Investments in Rural Infrastructure

In order to further analyse the effects of public infrastructure on rural development

and rural poverty, it is necessary to distinguish between direct and indirect effects.

The former occur when an increase in public infrastructure is accompanied by an

increase in production, shifting the production frontier and marginal cost curve, and

also increasing the rate of return for private investment in rural activities. The latter

takes place as the access to public infrastructure permits a reduction in the transaction

costs that small producers face when they integrate into the supply and factor

markets. These lower transaction costs change the structure of relative prices

significantly for the producer, stimulating changes in the methods of cultivation and

breeding, possibly inducing such changes as transition in the allocation of the labour

force between agriculture and non-agricultural uses. Adequate access to public

infrastructure will also have a positive effect on whether or not technical changes that

elevate productivity are achieved, for both agricultural and non-agricultural rural

activities.

A number of microeconomic-level studies have investigated how a greater investment

in infrastructure raises agricultural productivity. But infrastructure investments have

many effects. As long as the majority of rural households are dedicated to more than

one income activity, whether salaried or non-salaried, agricultural or non-agricultural,

it is not abnormal that the access to public infrastructure will also affect household

labor assignments (diversifying livelihoods). One study, for example found for

Tanzania a significant increase is non-agricultural activities as a consequence of a

better infrastructure in roads (Lanjouw, Quizon and Sparrow, 2001) This

diversification could be the product of the necessity to hedge against unanticipated

risks in a context where credit and insurance markets malfunction or are not existent

(Zimmerman and Carter, 2003) (Ellis, Kutengule and Nyasulu, 2003). Alternately the

result could be due to the existence of entry barriers that prevent access to more

8

profitable labour markets due to insufficient public or private assets (Reardon,

Berdegue and Escobar, 2001). In either of the two cases, the access to public

infrastructure could have a direct or indirect role increasing the income generating

opportunities for the poorest rural populations.

Improved infrastructure also facilitates the most economical location for different

types of non-farm activity. While many manufacturing and wholesale trading

activities tend to concentrate in rural towns, many small–scale manufacturing

activities (e.g. cottage industry and milling) and service activities (e.g. retail shops,

coffee and tea shops and personal services) expand in villages and rural market

centers as infrastructure and agricultural development proceeds (Wanmali, 1983).

Infrastructure development also opens up the rural economy to greater competition

from outside. This may take the form of cheaper products from lower-cost sources of

supply or new or improved products that may displace some locally produced items.

Improved infrastructure increases the exposure of rural people to urban tastes and

products and this leads to changes in consumption behaviour. The availability of

electricity in a village for example, creates demand for electrical goods that are

imported or produced in urban areas. Better roads and transport also lead rural people

to travel to town more often and, once there, to purchase goods and services that they

could not easily obtain before or that cost more at home. Some traditional rural and

cottage industries lose their markets, but other types of activities expand and prosper

(Jayaraman and Lanjouw, 1998)

In summary, the majority of studies recognize that infrastructure investment has a

strong impact on rural incomes and especially on smallholders. However, this

literature has not been completely successful in assessing the benefits and costs of

alternative infrastructure investment options or the causality of relations that generate

higher rural incomes due to a better endowment of infrastructure services. The work

carried out by Fan and associates, (Fan and Hazell, 1999) (Zhang and Fan, 2000)

(Fan, Hazell and Haque, 2000), (Fan, Hazell and Thorat, 2000) and (Fan, Zhang and

Zhang, 2002) in India and China are some of the few studies that look into the

9

relationships between investment in infrastructure, rural growth, poverty alleviation

and the role of complementarities of investments. The problem with the lack of causal

relationship knowledge between the investment in infrastructure services and the

increase of income generating opportunities and welfare benefits of rural populations

is that the possibility of developing specific policy recommendations is very limited.

This problem normally results in policy recommendations that are directed towards a

general increase in public infrastructure investment but lacks opinions about

appropriate intervention strategies for each specific context. In light of this, and with

the scarce public fiscal resources available in developing countries, knowing the

relative profitability of each type of public infrastructure is critical. Likewise, it is

essential to understand the principal mechanisms that stimulate changes in the

livelihoods of rural inhabitants as a result of a determined increment in rural

infrastructure services.

The ex-poste study of the effects of rural roads improvement in the Philippines

revealed improved economic social and human services indicators, as a result of

improvement in rural roads. The gross household income increased by 28 percent

primarily due to cheaper and more reliable transport, cheaper farm inputs, higher farm

gate prices and large share of major crops sold directly in markets. There was

increased non-farm employment, better access to education, health and farm

management services, improved recreation facilities and information flows (USAID,

1978)

Improvement in rural roads effect agricultural development followed by the

development of social services. It is observed that roads tend to have a greater initial

impact on the production where cash crops are grown, because food crops, grown by

small farmers have a lower price elasticity of supply than cash crops (USAID, 1972)

Therefore, more developed the existing agricultural system, more significant and

more faster is the response to road provision or road improvements within an area.

Access to better health and education usually improves more rapidly along roads than

elsewhere. A study in Thailand revealed that impact of roads was more on isolated

10

areas that were brought into the mainstream. The area under cultivation and the

intensity of land use increased significantly wherever access to market is improved

(Moore, 1980)

A study of the socio economic improvement, with roads, on the village development,

based on a survey of 1662 villages in India, found that effect of accessibility was

greater for unimproved than for improved roads suggesting that in bringing about

socio economic change, existence of some kind of trafficable route is of major

importance. Its quality is a second-order consideration (Bansal and Patil, 1979) In

another study macro data was used from eighty five random selected districts of India

to examine the role of rural roads, among other factors in agriculture investment and

output. The study found that the road investment contributed directly to the growth of

agriculture output, increased use of fertiliser, expansion of commercial bank

operations etc (Binswanger, Khandker and Rosenzweig, 1993) The study by IFPRI on

a survey of 129 villages in various parts of Bangladesh categorised the villages into

two groups based on an aggregate index developed to reflect the ease and access of a

village to various services such as markets, schools, banks and local administrative

offices. Villages with better access were found to be significantly better off in a

number of areas including agricultural production, household income, wage income

of landless labour, health and participation of women in the economy (Ahmad and

Hossain, 1990)

There was also an observation regarding the positive impact of social development

and irrigation intensity factors on the composite index of economic development at

the district level (Gulati, 1997) Within the social development factors, the surfaced

road length and electricity turned out to be the crucial infrastructure. In a state level

analysis for two periods of time, viz., 1970-71 and 1980-81, the inadequacy of

infrastructure facilities has been seen as a major obstacle in the path of progress of

developing states. It was observed that infrastructure had a positive impact on

development, atleast in six states while in another five, low development levels were

associated with poor infrastructure development (Tewari, 1984) Another study for a

11

recent period found positive and significant relationship between the level of

infrastructure and per capital net straight domestic product between 1971-72 and

1994-95 (Ghosh and De, 1998) A positive correlation was also observed between

infrastructure and agricultural development. Among the various infrastructure

facilities, agricultural development was strongly correlated with agricultural

infrastructure index followed by index of transport and communication (Singh, 1983)

On the basis of a regression analysis and state level cross-section data for each of the

years from 1971-1995 a study indicated that among various physical infrastructures, it

was transport infrastructure that significantly affected the agricultural output level and

the agricultural development index. However, besides physical infrastructure, social

infrastructure also had significant positive impact on the dependent variables. At the

district level, from the regression analysis, at three points of time, viz., 1971, 1981

and 1991, the study observed that agricultural and transport infrastructure are import

determinants of agricultural output and agricultural development index (Majumdar,

2002)

A recent study attempted to analyse the impact of infrastructure on agriculture

development using larger data, both in terms of time period and coverage of

infrastructure variables to include ten explanatory variables viz., transport, power,

irrigation, tractorisation, research, extension, access to primary agricultural credit

societies, regulated and wholesale marketing infrastructure, access to fertiliser sale

points and commercial banks covering physical financial and research infrastructure.

The results indicate that transport, power, irrigation and research infrastructure are

four critical components that affect the agricultural productivity in a significant

manner. However, between transport and power, the former emerged as a more

dominant variable. There were complementarities between transport and power in the

sense that accessibility to roads is normally followed by accessibility to power. With

improvement in access to power, irrigation infrastructure also improved particularly

through energisation of pumpsets. In turn, improved irrigation facilities, coupled with

research input enhanced agricultural productivity. The other infrastructure facilities

12

like access to fertiliser sale points, markets, credit infrastructure, extension services

etc was also developed with development of transport infrastructure (Thorat and

Sirohi, 2002)

Growth of Rural Infrastructure in India since Independence

The investment pressure from infrastructure being the major source of investment

demand in the Indian context, at the stage of development the country is in, a

productive or input type infrastructure, i.e. power, irrigation, transport,

telecommunication, banking etc will have to expand at the rate of atleast

corresponding growth rate of the economy.

Government has traditionally been well aware of the fact that the availability of

adequate infrastructure facilities is vital for the acceleration of economic development

of a country. At the time of independence, the government has accepted the crucial

role played by infrastructure in the development process of the country and also

realised that given the long gestation of infrastructure projects and their generally low

profitability, private capital is unlikely to flow into the infrastructure sectors and

hence the responsibility was shouldered by the public sector and infrastructure

development became the domain of the state. Consequently, in the Five Year Plans,

priority was accorded to investments in sectors such as power, transport,

communication etc.

The First Five Year Plan recognised that large areas of the country have remained

underdeveloped due to the lack of basic services like transport, communication,

irrigation and power and this plan attached priority to agriculture including irrigation

and power. The Plan sought that agricultural development receives the highest

precedence that necessitates an extensive programme of investment covering minor as

well as major irrigation projects. Generation of electricity and power that is linked in

most places to the major investment projects was also a high priority in its own right.

In regard to transport also, public authority has a special responsibility. The State has

to take further initiative in linking up the whole country through the system of roads

13

reaching down to the village and in promoting the development of modern means of

transport like shipping and aviation (Thorat and Sirohi, 2002)

But in the sixties, India entered into deep structural retrogression and some of the

major sectors of infrastructure, like railways and irrigation were among worst hit.

While the Plans continued to emphasise on the infrastructure development, there were

no matching financial outlays for these sectors. The long period of stagnation in the

Indian economy and the worldwide disenchantment with the trickle-down strategy

essentially changed the focus of the policy of the State from growth to re-distribution.

However, infrastructure development continued to be an important element from the

Indian policy perspective and the Sixth Five Year Plan, reiterated the need for

massive public investment in rural infrastructure and ensuring that the fruits of

economic progress are more equitably distributed in rural areas. The Plan clearly

recognised that altering the new projects in favour of quick maturing and directly

productive projects, may improve the short term prospects, but would adversely affect

the long term growth rate, as such a choice leads to less investment in long gestation

infrastructure projects (GoI, 1981)

The Eighth Five Year Plan re-emphasised rural infrastructure development and

considered it to be one of the basic elements of an employment-oriented growth

strategy. Also, the creation of communication, transport, health and educational

infrastructure in large numbers of small towns and in rural areas was considered to

make the process of urbanisation more compatible with the overall economic

development pattern and environmentally less damaging. Thus, strengthening the

infrastructure (energy, transport, communication, irrigation) in order to support the

growth process on a sustainable basis was one of the explicit objectives that was to be

accorded priority in the Plan. Besides, the development of physical infrastructure, the

Plan also recognised that social infrastructure is to be attended to with a degree of

urgency in the next phase of development (GoI, 1992)

14

With the large-scale plan expenditure of the government, the availability of

infrastructure has significantly expanded in the country over the years. The growth in

the stock of major infrastructure items in India has been shown in Table 1. Table 1

shows that the stock of infrastructure has expanded manifold in the country in the 46

years of planned development. The electric power generation has increased almost 75

times from 5.1 billion kWh in 1950-51 to about 380 billion kWh in 1995-96.

Fertiliser production in the country has increased from 0.50 lakh tonnes to over 117

lakh tonnes, whereas irrigational facilities have increased from 22.50 million hectare

to 70.25 million hectare during the same period of 1950-51 to 1995-96. These are

three important physical items of infrastructure significantly influencing production

and growth in agriculture. Equally important is the marketing infrastructure including

roads and transport, storage and market facilities which provide impetus to

agricultural production growth through orderly disposal. While road lengths have

increased to seven times, the commercial vehicles in the country have increased to

over 19 times from 1.16 lakhs to 22.21 lakhs during 1950-51 to 1995-96. Similarly

the number of regulated markets in the country has increased from 206 to 6,836

during the same period (Bhatia, 1999)

Table 1

All India Expanded Stock of Infrastructure

Year Power Generation (bln kwh)

Irrigated Area (mln ha)

Fertiliser Production (lakh tonnes)

Road Length (‘000 kms)

No of Commercial Vehicles (lakh)

No of Regulated Wholesale Markets

No of Registered Medical Practitioners (‘000)

1950-51

5.1 22.56 0.5 400 1.16 206 61.39

1960-61

16.9 27.98 1.5 524 2.25 715 83.46

1970-71

55.8 38.19 10.50 918 4.37 1777 153.5

1980-81

110.8 49.73 30.08 1491 7.01 4158 266.49

1990-91

264.3 62.47 90.45 2037 17.44 6250 397.76

15

1995-96

380 70.25 117.03 2884 22.21 6836 491.4

Source: Bhatia (1999)

The development of infrastructure state-wise can be gauged from the Composite

Rural Infrastructure Development Index presented in Table 2 that has been worked

out by the Centre for Monitoring Indian Economy (CMIE).

Table 2

State-wise Infrastructure Development Index

Sl No State CDI Value Rank

1 Andhra Pradesh 104.01 12

2 Arunachal Pradesh 71.89 25

3 Assam 104.39 11

4 Bihar 91.31 17

5 Goa 171.57 2

6 Gujarat 105.33 10

7 Haryana 133.12 5

8 Himachal Pradesh 113.12 6

9 Jammu and Kashmir 92.03 16

10 Karnataka 106.12 9

11 Kerala 162.42 3

12 Madhya Pradesh 86.66 20

13 Maharashtra 106.77 8

14 Manipur 83.50 22

15 Meghalaya 77.60 24

16 Mizoram 84.49 21

17 Nagaland 89.89 18

18 Orissa 101.45 14

19 Punjab 171.92 1

20 Rajasthan 87.27 19

16

21 Sikkim 83.01 23

22 Tamil Nadu 145.62 4

23 Tripura 92.85 15

24 Uttar Pradesh 112.04 7

25 West Bengal 102.09 13

All India 100

Source: Centre for Monitoring Indian Economy (CMIE), 2000.

The Table shows that nine states have an index that is less than the national average

while index value was highest for Punjab, followed by Goa, Kerala and Tamil Nadu.

It was lowest for Arunachal Pradesh followed by Meghalaya and Sikkim. Although

the status of infrastructure development in certain states was on par with the national

average, economic backwardness is considerably more than that of most of the states.

It is also pertinent to mention here that the composite index based on quantitative

information does not reflect the qualitative aspects of social and economic

infrastructure.

The inverse relationship between poverty and backwardness on one hand and

Infrastructure Development Index (IDI) on the other is well established as seen from

Tables 3 and 4

Table 3

Relationship Between Poverty Indices and Levels of IDI

Poverty Level No. of Regions IDI level

High Medium Low

High 19(100.0)

- 4(21.1)

15(78.9)

Medium 19(100.0)

5(25.3)

6(31.6)

8(42.1)

Low 19(100.0)

9(47.4)

7(36.8)

3(15.8)

Total 57(100.0)

14(24.6)

17(29.8)

26(45.6)

Figures in brackets are percentagesSource: India Rural Development Report 1999, NIRD.

17

Table 4

States where more than 40 percent regions fall in bottom 30 percent for

infrastructure ranking

State No. of Regions

Electricity Post & Telegraph

Roads Gross Irrigated Area

Backwardness Index (%)

Uttar

Pradesh

5 4 4 5 - 65.0

Rajasthan 4 3 3 4 - 62.5

Madhya

Pradesh

7 1 3 7 4 53.6

Meghalaya 1 1 1 - - 50.0

Bihar 3 3 2 - 1 50.0

Assam 3 3 1 1 1 50.0

Orissa 3 3 1 - 2 50.0

Source: India Rural Development Report 1999, NIRD.

The status of IDI varies within the states between various regions as is observed in

Table 5. States with predominant deficiency in infrastructure in four prominent

sectors are indicated in Table 6

Table 5

Region-wise IDI Status within States

State No. of Regions

IDI

High Medium Low

Andhra Pradesh 4 2 2 -

Assam 3 - - 3

Bihar 3 - - 3

Gujarat 3 2 1 -

Haryana 2 2 - -

18

Himachal Pradesh 1 1 - -

Karnataka 4 - 4 -

Kerala 2 1 1 -

Madhya Pradesh 7 - - 7

Maharashtra 6 - 3 3

Orissa 3 - - 3

Punjab 2 2 - -

Rajasthan 4 - 1 3

Tamilnadu 4 4 - -

Uttar Pradesh 5 - 2 3

West Bengal 4 - 3 1

Total 57

(100.0)

14

(24.6)

17

(24.8)

26

(45.6)

Figures in brackets are percentagesSource: India Rural Development Report 1999, NIRD

Table 6

States with predominant deficiency in infrastructure

Sl. No.

Sector States

1 Electricity Assam, Bihar, Orissa, Rajasthan, UP, West Bengal,

Meghalaya

2 Posts &

Telegraph

Arunachal Pradesh, Bihar, Rajasthan, UP, Meghalaya

3 Road Density MP, Rajasthan, UP

4 Gross Irrigated

Area

Maharashtra, MP, Kerala, Orissa, Assam

Source: India Rural Development Report 1999, NIRD

The effect of diminished public investments in infrastructure like irrigation since mid-

1990s has had an effect on the capital formation in agriculture. The decline in the

share of the agricultural sector’s capital formation in GDP from 2.2 percent in the late

1990s to 1.7 percent in 2004-05 is a matter of concern. However, there is an

19

indication of reversal of this trend with public investment in agriculture reaching its

highest level of Rs 12,591 crore in 2004-05 since the early nineties. The share of

public investment in gross investment increased by over 11 percentage points to reach

29.2 percent in 2004-05 relative to 1999-2000 (Economic Survey, 2006)

The study by Bhatia also examines the relationship between infrastructure and

agricultural output. The state wise index of infrastructure, per hectare yield of

foodgrains and value of agricultural production for 1994-95 are indicated in Table 7.

It can be observed from the Table that Punjab which has the highest index of

infrastructure also has the highest yield of foodgrains and value of agricultural

production per hectare. Tamil Nadu and Haryana which have second and third highest

index of infrastructure, have third and second highest yield per hectare of foodgrains.

Rajasthan and Madhya Pradesh which have a very low index of infrastructure also

have a low yield of foodgrains and total value of agricultural production per hectare

(Bhatia, 1999)

Table 7

Statewise Index of Rural Infrastructure, Yield of Foodgrains and Value of

Productivity per Hectare

Sl. No.

State Index of Infrastructure

Yield of Foodgrains per Hectare (Kg)

Value of Output per Hectare (Rs)

1 Andhra Pradesh 53.6 (X) 1713 (VII) 4089 (XI)

2 Assam 50.8 (XI) 1308 (XI) 5402 (VIII)

3 Bihar 42.0 (XV) 1446 (X) 4091 (X)

4 Gujarat 55.6 (VII) 1249 (XII) 2062 (XVII)

5 Haryana 65.9 (IV) 2730 (II) 7288 (IV)

6 Himachal Pradesh 56.6 (VI) 1643 (VIII) 6797 (V)

7 Jammu and Kashmir 53.9 (IX) 1632 (IX) 6696 (VI)

8 Karnataka 56.8 (V) 1152 (XIV) 3368 (XII)

9 Kerala 70.0 (II) 1873 (VI) 8088 (II)

20

10 Madhya Pradesh 42.0 (XV) 1088 (XV) 2180 (XV)

11 Maharashtra 54.4 (VIII) 852 (XVII) 2275 (XIV)

12 Orissa 47.9 (XIV) 1231 (XIII) 2765 (XIII)

13 Punjab 85.3 (I) 3684 (I) 9133 (I)

14 Rajasthan 38.3 (XVI) 906 (XVI) 2109 (XVI)

15 Tamil Nadu 68.4 (III) 2358 (III) 5204 (IX)

16 Uttar Pradesh 50.1 (XIII) 1932 (V) 5744 (VII)

17 West Bengal 50.4 (XII) 2077 (IV) 7798 (III)

Source: Bhatia (1999)Figures in brackets are rankings

Despite the creeping commercialisation of infrastructure provision services, there has

been a realization that the State has to continue playing a major role in strengthening

the physical infrastructure. There is also an increasing understanding on the part of

the State about the social dimension of infrastructure and the State continues to bear

the responsibility of providing the poor with adequate access to basic services such as

health, education, water supply, sanitation and sewerage. With these objectives in

view the Government of India continued to implement specific infrastructure

strengthening programmes in sectors like irrigation, rural electrification, rural

connectivity and rural drinking water supply.

The Accelerated Irrigation Benefit Programme (AIBP) was launched by the Central

Government in 1996-97 for accelerating implementation of ongoing irrigation/multi-

purpose projects on which substantial progress has been made and which are beyond

the resource capability of the State Governments or at advanced stages of

construction and could yield irrigation benefits in the next four agricultural seasons.

The ‘reforming states’, characterized as the ones, which agree to revise their water

rates to cover operation and maintenance costs get a higher proportion of central loan

assistance (CLA). So far Rs 18,103 crores has been released under this programme

for 189 major/medium irrigation projects and 4,472 minor irrigation schemes. Of

these, 45 major/medium irrigation projects have been completed creating an

additional irrigation potential of 3.25 million hectares. 3,179 minor irrigation schemes

21

have been completed creating an irrigation potential of 1.21 lakh hectares. Under the

scheme for repair, renovation and restoration of water bodies directly linked to

agriculture pilot projects have been launched in 23 districts of 13 States with an

estimated cost of Rs 262.91 crores. Irrigation is one of the six components for

development of rural infrastructure under ‘Bharat Nirman’. The irrigation component

of Bharat Nirman aims at creation of irrigation potential of 10 million hectares in the

four period of 2005-06 to 2008-09 (Economic Survey, 2006)

The Rajiv Gandhi Grameen Vidyutikaran Yojna (RGGVY), a scheme for rural

electricity infrastructure and household electrification was launched in 2005-06 to

achieve the objective of providing access to electricity to all rural households over a

period of four years. At present only 44 percent of rural households have access to

electricity. Rural Electrification Corporation (REC) is the nodal agency for the

programme. The scheme envisages 90 percent capital subsidy for setting up of rural

electrification infrastructure which will cater to the requirements of agriculture and

other activities, including irrigation pumpsets, small and medium industries, khadi

and village industries, cold storage chains, healthcare, education and rural IT.

Unelectrified BPL households will get electricity connection free of charge in all rural

habitations. So far 187 projects for 191 districts have been sanctioned covering 22

states at the cost of Rs 6,241.86 crores covering 51,284 un electrified villages and

69.29 lakh rural households, of which 45.15 lakh are BPL households. Till December

2005, 1,941 villages have been electrified. As far as rural telephony is concerned, by

December 2005, 5,39,572 villages were connected using a Village Public Telephone

(VPT). Under Bharat Nirman a total of 66,822 villages are to be provided by VPTs by

end 2007. In rural areas more than 2 lakh public call offices (PCOs) and 14.18 million

phones have been provided (Economic Survey, 2006)

The Pradhan Mantri Gram Sadak Yojana (PMGSY) was launched in 2000 as a 100

percent central subsidy scheme to provide all-weather connectivity to all eligible

unconnected rural habitations. Bharat Nirman envisages connectivity by 2009 to all

habitations with a population of 1000 or more in the plains and of 500 or more in the

22

hilly, desert and tribal areas. The systematic upgradation of the existing rural road

network also is an integral part component of the scheme, funded mainly from the

accruals of diesel cess in the Central Road Fund, with the support of multilateral

funding agencies and the domestic financial institutions. Upto December 2005, with

an expenditure of Rs 12,049 crore a total road length of 82,718 km of road works

have been completed. The Accelerated Rural Water Supply Programme (ARWSP), in

operation since 1972-73, is now being implemented as a part of Rajiv Gandhi

National Drinking Water Mission. It aims at coverage of all rural habitations with

population of 100 and above, specially the unreached areas, ensure sustainability of

systems and sources and tackle the problem of water quality. As of end 2004-05, 96.1

percent of rural habitations were fully covered and 3.6 percent were partially covered,

leaving 03 percent not covered with drinking water facilities. More than 3.7 million

hand pumps and 1.73 lakh piped water schemes have been installed under this

programme. Drinking Water Supply is one of the six components of Bharat Nirman

under which it has been envisaged to cover 55,067 uncovered habitations and also to

address the problems of slippages and water quality (Economic Survey, 2006)

Creation of Rural Infrastructure Development Fund (RIDF)

In the context of the need for stepping up agricultural growth rate to 4.5 percent in the

Ninth Five Year Plan, emphasis was considered necessary for developing rural

infrastructure in sectors like irrigation, roads, bridges etc as an essential requirement

for better productivity of capital and labour. Such an emphasis would also help check

migration of rural population to urban areas. However one of the basic limitations to

create adequate infrastructure was lack of resources. Difficult financial position of the

state governments, who are mainly responsible for development and maintenance of

rural infrastructure, was a cause for concern. Many well-intentioned infrastructure

projects were found languishing for want of resources. This apart it was found that

the commercial banks who were expected to channelise 18 percent of their total

lending to agriculture were not able to fulfill their commitment. It was therefore

considered desirable to create a fund out of the shortfall in commercial banks’ lending

for agriculture in the name of Rural Infrastructure Development Fund (RIDF) to be

23

operationalised by NABARD. Government of India announced this fund in the

Budget of 1995-96 aimed at financing on-going rural projects in the area of basic

infrastructure like agriculture, production, transport, marketing and other allied

activities. The then Finance Minister, in his budget speech, declared "Inadequacy of

public investments in agriculture is today a matter of general concern. This is an area

which is the responsibility of the states and many states have neglected investments in

infrastructure for agriculture. There are may rural projects which have been started

but are lying incomplete for want of resources. They represent a major loss of

potential income and employment to rural population”(GoI, 1995)

RIDF was set up within NABARD as a lending facility for State Governments. Set up

with an initial amount of Rs. 2000 cr primarily to provide financial assistance to State

Governments in ensuring speedy completion of projects which could not be

completed due to paucity of funds with concerned agencies, the coverage of the

scheme is being extended in successive budgets. A significant number of projects

covered in the rural areas are, major, medium and minor irrigation, rural roads,

bridges, watershed management, rural market yards, Command Area Development,

drainage, cold storages, primary health centres, primary schools, rural drinking water

supply projects etc. With an allocation of Rs. 2000 cr under RIDF I, in 1995-96, the

Fund has reached the level of Rs 10,000 cr under RIDF XII taking the cumulative

corpus to Rs. 60,000 cr during 2006-07. In addition, Rs 4,000 crores has been

separately allocated for rural roads under Bharat Nirman. Bulk of the investments

made in case of rural infrastructure has been shared between irrigation (38.78%) and

rural roads (40.1%)followed by rural bridges (13.2%) leaving only 8 percent for other

infrastructure activities such as watershed development, flood protection, market yard

development, cold storages, fisheries, forest development soil conservation, rural

drinking water supply etc.

The Fund has been lending every year in tranches and each tranche targeted a specific

corpus. Project proposals are invited from State Governments and sanctions are made

within a specified corpus for incoming or outgoing projects in minor, medium and

24

major irrigation along with flood protection, watershed management and soil

conservation etc. In addition to these activities, the following were added

subsequently: Rural roads and bridges; Harvesting of rain water; Construction of

terminal market yards; Fishing jetties and cold storages; Primary school buildings;

Primary health centres; Village haats; Forest management; Mini-hydel and system

improvement projects; Rural drinking water supply projects and Citizen information

centres under IT. In the first four tranches of RIDF loans were sanctioned exclusively

to the State Governments, while from the Vth tranche onwards, the coverage has been

extended to include and execution of projects of Panchayati Raj institutions, SHGs

and NGOs.

The loans from the fund are project based. The project proposals received from the

State Governments are appraised for technical feasibility, financial viability and

economic and social benefits. While ongoing incomplete projects were accorded

priority under RIDF I, new projects have also been made eligible for loans under the

subsequent tranches of the fund. Projects with shorter gestation period are given

priority for availing loans out of RIDF. State Governments are required to complete

the execution of the projects within a maximum period of three years. In RIDF V and

subsequent tranches the period of repayment and period of loan has also been

increased from five to seven years. Loans under RIDF are sanctioned upto 90 percent

of the project cost. Depending upon the requirement of State Government, upto 20

percent of the sanctioned loan, on acceptance of the terms and conditions of sanction

by the State Government, is given as advance. Further 10 percent can be given if the

State Government commences the execution of the projects. Subsequently releases

are made on reimbursement basis. The Project Sanctioning Committee which is the

sub-committee of the Board of Directors of NABARD sanctions the projects.

The rate of interest on lendings to state government is at 0.5 percent above the

prevailing bank rate and is at present at 6.5 percent. Under each tranche normative

allocation is made to the states on the basis of rural population, geographical area,

infrastructural development index and implementation of past projects. The sector-

25

wise projects and amounts sanctioned are indicated in Table 8 and the cumulative

sanctions and disbursements are indicated in Table 9

Table 8

Sector-wise Projects and Amounts Sanctioned(As on 31 March 2006)

(Rs crores)Sector RIDF I to X

(Total)Share(%)

RIDF XI(2005-06)

Share(%)

Irrigation

No. 78,442 36.7 14,017 46.0

Amount 14,684.15 34.3 2,786.79 32.7

Rural Bridges

No. 9,285 4.3 706 2.3

Amount 4,760.84 11.1 827.19 9.7

Rural Roads

No. 43,857 20.5 5,454 17.9

Amount 14,493.57 33.9 3,083.66 36.2

Social Sector*

No. 67,995 31.7 6,527 21.5

Amount 3,871.84 9.1 1,147.98 13.5

Power Sector#

No. 717 0.3 11 0.1

Amount 1,294.37 3.0 125.24 1.5

Others@

No. 13,915 6.5 3,725 12.2

Amount 3,663.91 8.6 540.47 6.4

Total

No. 2,14,211 100.0 30,440 100.0

Amount 42,768.68 100.0 8,514.33 100.0

*Includes projects relating to Rural Drinking Water, Primary/Secondary Schools and Public Health Institutions

26

#Includes projects relating to System Improvement in Power Sector and Mini/Small Hydel projects@Include Soil Conservation, Watershed Development, Rain Water Harvesting, Flood Protection, CADA, Drainage, Cold Storage, Fisheries, Riverine Fisheries, Animal Husbandry, Forest Development, Inland Waterways, Rubber Plantations, Seed/ Agri/Horti Farms, Citizen Information Centres, Food Parks, Rural Libraries, Market Yards/ Godowns, Meat Processing, Rural Knowledge Centres etc.Source: NABARD

Table 9Cumulative Sanctions and Disbursements under various tranches

(As on 31 March 2006)(Rs crore)

RIDF Tranche

Corpus No of Projects

Amount % of Disbursement**

Sanctioned Phased Disbursed

I 2,000 4,168 1.906.21 1,906.21 1,760.87 92.4

II 2,500 8,334 2,666.87 2,666.87 2,397.95 89.9

III 2,500 14,346 2,733.82 2,733.82 2,453.50 88.9

IV 3,000 6,172 2,903.32 2,903.32 2,482.00 85.5

V 3,500 12,254* 3,477.16 3,477.16 3,032.66 87.2

VI 4,500 43,354 4,525.36 4,525.36 3,850.83 85.1

VII 5,000 24,987 4,657.65 4,657.65 3,756.82 80.7

VIII 5,500 21,012 6,009.36 6,009.36 4,440.34 73.9

IX 5,500 19,605 5,599.18 5,599.18 3,387.48 60.5

X 8,000 59,979 8,289.75 6,878.48 2,967.81 43.1

XI 8,000 30,440 8,514.33 3,033.30 807.08 26.6

Total 50,000 2,44,651 51,283.01 44,390.71 31,337.34 70.6

*One lakh STWs sanctioned to Government of Assam treated as single project**With phased amountSource: NABARD

The implementation of the sanctioned projects is subject to close monitoring. For this

process, a high power committee at the state level chaired by the Chief Secretary or

Agricultural Production Commissioner is constituted. The Committee ensures proper

coordination between the implementing agencies and departments of the State

27

Government so that projects are expeditiously implemented. The progress of

implementation is also assessed by NABARD through regular field visits and desk

monitoring through a specifically designed MIS. Periodic discussions are held with

officials at various levels to sort out the operational issues. On the conclusion of the

project a Project Completion Report (PCR) is obtained. The objective of this report is

to make overall assessment of the potential created for generation of income and

employment in rural areas, and to chalk out a strategy for funding identical projects in

future.

Impact Evaluation of RIDF Projects

NABARD conducts evaluation studies on a continuous basis to assess the socio

economic impact of investments under RIDF. These findings though limited by

methodological variations, locational differences, price differentials etc, throw-up

valuable insights into the levels of benefits derived by the farmers. It has been

estimated that projects funded under RIDF would facilitate the expansion of the

production base in rural areas and create additional employment opportunities as

indicated in Table 10.

Table 10

Accretion to Rural Infrastructure and Employment(lakh)

Rural Infrastructure

Additional irrigation potential 107.92 ha

Rural road network 2.02 km

Rural bridges 3.69 mt.

Generation of Employment

Due to increased irrigation

-Recurring (jobs) 50.62

-Non-recurring (person days) 15,417

From non-irrigation projects-

Non-recurring (person days) 28,348

Source: NABARD

28

Five studies sponsored by NABARD conducted on irrigation projects under RIDF in

various states have shown various positive impacts of RIDF such as on small farmers

coverage, contribution to capital costs, expansion of irrigable and irrigated

commercial area, enhanced cropping intensity, incremental income, higher financial

rate of return and employment generation. It has been estimated that irrigation

projects financed under RIDF I to VIII have created irrigation potential of 75.06 lakhs

ha and generated recurring employment of 39.84 lakh jobs per annum (NABARD,

2004)

As far as road projects are concerned, the studies conducted by NABARD observed

that RIDF investments have led to improvement in access to modern agri economic

practices, improved accessibility in case of participation, increased frequency of

extension staff etc. Net benefit from investments under rural roads per month was in

the range of Rs. 2.08 lakh un Gujarat to Rs. 2.87 lakh in Tamilnadu. Employment

availability in terms of mandays per year increased by 35 percent in case of Punjab

and 8 percent in case of Rajasthan. Economic rate of return of the investments

calculated in DCF technique ranged between 20.2 percent in case of Tamilnadu to

36.2 percent in case of Gujarat. The study also observed positive changes in

intangible benefits due to development of rural roads. There were changes in asset

holding patters, increase in job availability, increased credit absorption, improvement

in access to education and health, improved quality of life etc. Credit absorption in

the project area increased by 163 percent in Tamilnadu and by 30 percent in Punjab.

Significant change in enrolment to primary schools was observed in states covered in

the study. Improved connectivity on account of construction of bridges has resulted

in reduction of transportation costs of farm inputs and outputs, vehicle operating

costs, travel time etc. It was also observed that commercialisation and diversification

of crops, non farm activities, access to urban centres, education/ health centres, asset

holdings etc showed improvement in the post-project situation (NABARD, 2004)

29

A monitoring study on Kharkhara Mohdipat Irrigation Project in Chhattisgarh

revealed that efforts were made to link the available water resources including the

existing old tanks under the project command area by remodeling the canal system

and extending their tails so as to cover maximum area thereby reducing cost of land

acquisition. The study on Primary School Building projects in Karnataka observed

that the average time taken for completion of the work was more than two years

against one year envisaged, owing primarily to the delay in handing over of the

project site to Karnataka Land Army Corporation, award of works and release of

funds by Zilla Panchayat. The additional rooms built eased the pressure on the

existing infrastructure and provided congenial and conducive atmosphere for learning

by the school children. The study on Bisalpur Multi-purpose project in Rajasthan

revealed that there were time and cost overruns in both phases(I and II) of the project.

The irrigation facilities extended have brought about positive changes in the cropping

intensity and productivity. There has also been an improvement in farm

mechanization, especially in the use of tractors and threshers. The project paved way

for establishment of ITC’s e-choupal network for the sale of farm inputs and purchase

of outputs and also allied activities such as dairy and bee-keeping units.(NABARD,

2006)

NABARD assigns the monitoring/evaluation of projects to select independent

consulting firms of repute. Twenty-six projects were thus assigned to outside

consultants. These studies revealed that financing under RIDF has unlocked the

sunken investments already made by various State Governments. Apart from benefits

like increased agriculture activity, improved access to markets, schools, health

centers, enhanced social interaction, provision of safe drinking water to the local

populace, there has been considerable employment generation and spurt in economic

growth in rural areas (NABARD, 2006)

Financing Rural Infrastructure: Beyond RIDF

Financing of the creation of rural infrastructure through the medium of RIDF has

entered its twelfth year in 2006-07. However it has to be realized that RIDF is

30

basically dependent on a negative incentive system- the non achievement of priority

sector and agriculture lending norms by commercial banks. This implies that if the

performance of the commercial banking sector measures up to the demands placed

upon them and they are able to fulfill the priority sector and agriculture lending norms

no resources would be available for RIDF. But irrespective of the source of funds, the

RIDF mechanism would have to continue in view of the comfort levels it has afforded

to the State Governments in creating rural infrastructure. In such a scenario

Government of India, RBI and NABARD have to explore alternative sources of

finances for RIDF.

If this trend towards raising non-budgetary resources for infrastructure is to continue,

financial markets will have to respond by providing the necessary long-term

resources. Both foreign and domestic sources of capital will need to be tapped.

Reliance on foreign savings remains a necessity due to the lack of depth in local debt

markets. Worldwide, capital markets contribute to the major share of funding for

infrastructure development. But with lack of markets for long-term funds India is

starved of long-term capital, which is a necessary condition for infrastructure

development. Deepening of capital markets will go a long way in addressing this

issue. Insurance companies, provident funds and pension funds should be enabled to

commit more of their funds which are basically of a long term nature to financing

infrastructure, especially rural infrastructure. It stands to reason that NABARD

should have greater access to these resources and its debt instruments should be given

the requisite infrastructure tag. The zero coupon bonds announced in this year’s

budget, having an income tax concessionality built in could be another source of

long-term funds. However this is a virgin market whose extent is not yet known.

Public-Private Partnership in Infrastructure Provision

The recent years have also shown a perceptible shift in government approach to

infrastructure development. Concerns were raised about escalating costs and

inefficiencies in infrastructure projects. It was recognised that due to lack of cost

consciousness and subsidising of infrastructure facilities to the consumers, projects

31

and services were unable to generate the resources required for their own

maintenance and expansion, let alone producing a surplus for the others. Hence,

private initiative was sought to be encouraged in creating infrastructure and the area

that was hitherto considered to be solely in public domain. Consequently, during the

nineties, infrastructure services which had been previously provided by the public

sector so far, were swept by the new wave of privatisation and deregulation. Several

factors led the State to consider enhancement in commercialisation of infrastructure

provisions.

The precarious economic situation in the nineties made it imperative for the

government to tighten the budget of public enterprises. As a result of fiscal

conditions, the total public investment slipped quite sharply from the VIII Five Year

Plan targets of 10.4 percent of GDP to 8.3 percent of the GDP. This slippage of 2

percentage points fell disproportionately on infrastructure, both economic and social.

Thus, additional sources of financing infrastructure in the form of private investments

were resorted to. Apart from the tight fiscal situation, the increasing need to provide

an efficient infrastructure in a globally competitive set up, rethinking on the ability of

the government owned entities to supply quality infrastructure have also been

instrumental in privatisation of infrastructure services. Thus, in the current context,

while the government continues to remain the service provider in the infrastructure

sector, it needs to facilitate private investment in infrastructure as much as possible.

Taking cognizance of the advantages that Public Private Partnership (PPP) offers in

terms of cost saving, access to specialized expertise and proprietary technology,

sharing of risks with private sector and the ability to take up a larger shelf of

infrastructure investments, Government of India is actively encouraging them. The

shift towards PPPs is primarily driven by the inadequacy of budgetary resources.

However, an enlarged role of PPPs also provides an opportunity to introduce

competitive suppliers of infrastructure services leading to improvement in the quality

and services and reduction in costs. PPPs also ensure the sparing of sparse public

resources for other sectors where private sector would be reluctant to go. To

32

accelerate and increase PPPs in infrastructure two major initiatives have been taken

by the Government: provision of viability gap funding and the setting up of a SPV-

India Infrastructure Finance Company Limited (IIFCL) to meet the long term

financing needs requirements of potential investors.

With private sector making inroads into infrastructure investment, the State holds the

responsibility of providing an appropriate regulatory framework that will assist

investors of infrastructure entities on the one hand and protect the consumers from

monopolistic exploitation on the other. To create an enabling milieu to improve

predictability and mitigate risks for PPPs and prune transaction costs and time, the

Government has to foster an institutional mechanism, besides modernizing the policy

and regulatory framework.

Small-scale Community based Infrastructure

In the context of overall infrastructure-poverty reduction-governance nexus, small-

scale community based infrastructure assumes a special place as it may present more

insights into the issues involved. Because of the nature, location, design and

implementation process, small-scale infrastructure may bring more direct impacts on

the lives of poor people. Small irrigation projects contribute immediately to

agricultural productivity bringing tangible benefits to small farmers. A rural feeder

road improves mobility of local communities and reduces transportation costs which

have impacts on economic activities. Further local communities can take part directly

in decisions regarding the nature of the infrastructure, location of facilities and

designs. They can also take part in the implementation process and be involved in

operation and maintenance of facilities. Small-scale infrastructure helps to reinforce

social capital and consolidate community organizations.

The small-scale community based infrastructure efforts are complementary to large-

scale infrastructure initiatives in many ways. First, small-scale infrastructure fills in

the gaps left by large scale projects mostly designed from the top down. Second there

are complementarities between large scale and small-scale infrastructure. For

33

instance, improvement of access to a high quality main road and a transportation

system enables improvement of agricultural technology, a stable supply of input

goods and improvement in productivity. Third, some of the governance lessons from

small scale community based projects may be replicated and scaled up in large scale

infrastructure (Jahan and McCleery, 2005)

Issues for policy debate

There is an increasing consensus that providing adequate infrastructure is an

important step in the process of poverty alleviation and in providing a more equitable

set of opportunities for rural citizens by linking smallholders to the markets, and by

reducing the market risk and transaction costs they face. However in this endeavour

there are several policy issues that require further attention and debate. These issues

could be discussed under the following broad heads:

Governance related Issues: In view of the huge extent of resources involved in

infrastructure projects, governments the world over have to prioritise. An overarching

policy issue is to apply benefit-cost analysis to rank alternative infrastructure

investment strategies and projects. With limited public resources, several countries in

the developing regions are undertaking important reform processes in order to

promote private investment in the provision of infrastructure. But along with these

reforms governments have to develop robust mechanisms for ranking alternatives in

infrastructure investments.

Intended benefits from investments in infrastructure cannot be reaped unless

infrastructure is managed properly-from the design and location decision to

implementation to operation and maintenance All these issues interact with each other

in a mutually reinforcing way and in this linkage governance plays a major part.

There is strong link between infrastructure and governance: good governance is

necessary for the successful implementation of infrastructure programmes, and

infrastructure programmes can be important vehicles in the improvement of

governance. When good infrastructure such as roads and transportation, electricity is

34

put in place, the efficiency and effectiveness of local government and administration

are greatly enhanced. The converse is also true: without broad participation in

decision making in terms location, design and nature of infrastructure, without the

local community’s involvement in the implementation and operations and

maintenance, infrastructure can neither provide maximum benefits nor even be

sustainable. Governance of infrastructure requires institutional reforms and capacity

development. In sum, governance plays a major role in providing better and improved

infrastructure services. First, with improved governance, there is an increased

efficiency in resource use, with less waste in form of leakages and corruption.

Second, with better governance, efficiency in service delivery also improves. This

maximizes the effects of infrastructure. Third, better governance also ensures

transparency and accountability. Furthermore, governance plays a major role in the

scaling up process of the infrastructure.

In order for public goods to be provided, the amount and type of infrastructure to be

supplied must be decided, investments must be made and infrastructure provided, and

the infrastructure facilities must be maintained. The market would clearly fail in these

functions, but centralized public infrastructure bureaucracies have not proved adept at

performing them either. In most situations, infrastructure provides public goods of a

localized nature. Decentralised responsibility offers an opportunity to improve the

provision of such goods. Provision of local, and to some extent even national, public

goods can be more effective when participation provides a voice for infrastructure

users and stakeholders. Decentralisation is not inherently good or bad. As with all

arrangements, its success depends on the incentives it creates, the capabilities it can

draw on, and the costs it imposes. To improve incentives, public accountability is

essential and can be enhanced by local choice of leaders, local control of finances and

other forms of local responsibility. However unlocking local effort through

decentralization requires creating new technical and institutional capacity wherever it

does not exist.

35

The poor use fewer infrastructure services than the non-poor, not only because of low

incomes but also because of low access. Failure to reach the poor has often been

associated with flawed infrastructure pricing policies, little emphasis on the services

of most value to them, for which they are willing to pay. Many countries have been

subsidising infrastructure services for the poor by low tariffs. But these subsidies are

usually captured by middle and high-income groups. Appropriate services for the

poor are often lacking when decision on investment and service are driven by a

‘needs gap’ rather than by assessment of effective demand.

The importance of participation in effective delivery of local public goods is well

recognized, and it is central to community provision of services. Without local

participation, projects often either flounder at implementation stage or are not

maintained and fail to produce sustained benefits. Participation in project formulation

is particularly important for maintenance of facilities. There are three keys: to using

participation to improve project performance: involve the beneficiaries directly; seek

their early consensus on the project and moblise cash or in-kind contributions from

them. It is particularly important to ensure that participatory processes involve all

groups of beneficiaries, including women and others who may be disenfranchised,

such as the very poor and landless. Reaching consensus on user needs often leads to

infrastructure that is lower in cost, less technologically complex, and more labour

intensive. Another policy issue is whether the reform processes in infrastructure

provision will have the benefits expected. If reform is to be successful, one has to

address the widening disparities between those benefiting from reforms and those

rural areas where the costs, the lack of information, or the risk prevents public

participation.

Structural and Operational Issues: The indicator of inefficient performance by an

infrastructure system is the extent of output lost in delivery. Distribution losses in

water and power supply systems are the prominent examples. Inefficient use of labour

is especially common and costly in infrastructure. Many public utilities in

infrastructure are overstaffed. At the same time, in construction and maintenance of

36

rural infrastructure, often equipment-based methods are used rather than employment

intensive methods that can produce high quality results, while being more consistent

with relative capital and labour costs.

Closely related to operational inefficiencies is lack of maintenance: roads deteriorate,

irrigation canals leak, water pumps break down, sanitation systems overflow,

installed phone lines fail. Capacity is then lost, output declines and substantial

additional investment is needed simply to sustain existing levels of service. In road

sector, inadequate maintenance imposes large recurrent and capital costs. Neglect of

routine maintenance can compound problems to such an extent that the entire surface

of a road has to be replaced. Maintenance expenditures are often not allocated by

economic priorities. In irrigation, too, poor maintenance is costly and results in

distribution channels being filling up with silt and weeds, canal linings cracking at an

increasing rate, and outlets breaking or being bypassed. Drainage also fails, causing

salt build up in the soil. Worldwide, works covering 60 percent of the irrigated area

require upgrading to remain in good working condition. Inadequate maintenance is a

problem in rural water supply and power sector also. Sometimes problems of

operation and maintenance are rooted in the initial design or construction of

infrastructure. Operations and maintenance can be made more difficult by

inappropriate design standards that increase the requirements for skills in short supply

or involve heavy dependence on imported inputs where foreign exchange is scarce.

There are also many examples of investments that were economically nonviable to

begin with and that should never have been made-such as over-designed or ‘gilt

edged’ roads and buildings.

Finance related Issues: Infrastructure must be conceived of as a ‘service industry’

providing goods that meet customers’ demands. Successful providers of infrastructure

services in public or private sector are generally run on business lines and have three

basic characteristics:

1. They have clear and coherent goals focused on delivering services

37

2. Their management is autonomous, and both managers and employees are

accountable for results

3. They enjoy financial independence

Government and public sector remain the dominant players in the provision of

infrastructure services. Therefore improving the effectiveness of public sector

infrastructure providers is critical. It can be done by applying three core instruments

to reinforce commercial operations in the public sector:

Corporatisation, which establishes the quasi-independence of public entities

and insulates infrastructure enterprises from non-commercial pressures and

constraints.

Explicit contracts between governments and managers or entities involved in

infrastructure services, which increase autonomy and accountability by

specifying performance objectives that embody government defined goals

A pricing strategy designed to ensure cost recovery, which creates a desirable

form of financial independence for public utilities and even at times for public

works.

An element in the successful provision of infrastructure on a commercial basis is the

establishment of reliable revenue sources that give providers more financial

autonomy. Reliance on revenues directly related to services delivered will increase

the productivity of infrastructure suppliers and also often benefit users. With fewer

budgetary transfers, the government has less occasion to interfere, a fact key to

managerial autonomy. For public utilities smaller subsidies give managers a greater

incentive to focus on cost reductions and to satisfy users because payments from

users have to cover the cost of service. But an issue in cost recovery is that most

governments fear that fully recovering costs will hurt the poor. Yet increasing prices

to enable cost recovery in the delivery of services may actually help the poor. They

often pay much higher prices per unit for privately provided water and lighting

because they are not connected to public service networks that have lower unit costs,

and because they do not benefit from subsidies to users of the public system-usually

the better off. Expansion of access benefits the poor by allowing them to rely on less

costly sources of water and power.

38

Further Research Agenda

Even though researchers recognize that the externalities resulting from infrastructure

investment play a central role in rural development and poverty alleviation there is a

need for greater empirical research in the area. Existing empirical evidence that

substantiates these arguments at the microeconomic level is too limited. As such

future empirical work to analyze rural households with different levels of access to

public goods and services should allow for the study of the presence and importance

of these externalities.

Research has to identify investment opportunities that generate the largest multiplier

effects and that enhance the attraction of public and private investments for the rural

sector and also identify methodologies to raise the private and social profitability of

the executed investments. There is a need to enhance knowledge levels about the

impact that complementary investments in rural infrastructure (water, sewerage,

roads, electricity and telecommunications) may have in market development and in

reducing poverty.

Social Cost benefit analysis is often advocated as a devise for clarifying, rationalizing

and simplifying societal choices and avoiding social conflict, while taking investment

decisions in infrastructure. But there have been arguments that this technique does not

clarify but rather obscures rational deliberative processes involving plural values,

faces intractable difficulties regarding predictability, discount rates and opportunity

costs and is based on a controversial political theory. There is thus a need to evaluate

social cost benefit analysis as a tool for infrastructure investment decision making.

The absence of reliable databases at the regional level reduces the scope for empirical

testing. Data collection and dissemination at regional level needs to be high on the

research agenda. The availability of public investment and private investment data at

the district level would be useful for examining intra-state as well as inter-state

growth effects. Researchers could include the concepts of theoretical spatial

39

economics and spatial econometrics in their empirical studies. Presently most of

empirical work is in simple uni-directional causal model that does not appear to

capture the multiple impact path-potentials between infrastructure and growth. There

also appears to be an issue of appropriate aggregation levels. In addition to being

sensitive towards scale and spatial issues, model specification and development of

conceptual linkages are central to further work on infrastructure productivity (Lall,

1999)

Future research has also to estimate the existing complementarities between the

different types of public infrastructure and the endowments of private assets (human

capital, financial-physical capital or social capital), which are already possessed by

rural populations, in order to maximize the impact of public infrastructure investment.

Research should also facilitate the design of strategies to provide institutional

arrangements for the adequate access to public infrastructure needed to enhance the

environment in which private sector activities take place. Specifically, there is a need

to address issues concerning how to foster institutional innovations to enhance

infrastructure investments. Concurrently the identification of bottlenecks (physical or

institutional) which impede the attainment of maximum potential for investment in

rural infrastructure services should also form a major part of research agenda.

Notes

1. In the Tables 2 to 7 the data relating to the new States of Uttaranchal, Jharkhand

and Chhattisgarh is included in the data of the composite States of Uttar Pradesh,

Bihar and Madhya Pradesh respectively.

References

Ahmad Raisuddin and Cynthia Donovan, (1992): ‘Issues of Infrastructural

Development: A Synthesis of the Literature’, International Food Policy

Research Institute, Washington DC.

40

Ahmad, Raisuddin (1996): ‘A Critique of the World Development Report,

1994:Infrastructure for Development’ in ‘UNCTAD: International Monetary

and Financial Issues for the 1990s’ Volume 7, New York and Geneva.

Ahmad, Raisuddin and Mahabub Hossain (1990): ‘Developmental Impact of Rural

Infrastructure in Bangladesh’, Research Report 83, International Food Policy

Research Institute, Washington DC.

Bansal, A.N and B.R. Patil (1979): ‘Socio-economic Impact of Roads on Village

Development’, NCAER, New Delhi.

Bhatia, M.S., (1999): ‘Rural Infrastructure and Growth in Agriculture’, Economic and

Political Weekly, March 27-April 2.

Binswanger, Hans P., K. Deininger and G. Feder (1993): ‘Agricultural Land

Relations in Developing World’, American Journal of Agricultural Economics

75: 1242-48

Binswanger, Hans P., Shahidur R. Khandker and Mark R. Rosenzweig (1993): ‘How

Infrastructure and Financial Institutions affect Agricultural Output and

Investment in India’, Journal of Development Economics, 41: 337-66

Bonney, RSP (1964): ‘The Relationship between Road Building and Economic and

Social Development in Sabah, Part II and III’, Road Research Laboratory

Notes, Harmondsworth.

de Vries, E. (1960): ‘Finance for Development’ in ‘Proceedings of the International

Conference of Agricultural Economists’, Oxford University Press, London.

Economic Survey (2006): ‘Economic Survey: 2005-06’, Economic Division, Ministry

of Finance, Government of India, New Delhi.

Ellis, F. M. Kutengule and A. Nyasulu (2003): ‘Livelihoods and Rural Poverty

Reduction in Malawi’, World Development 31(9): 1495-1510

Elmensdorf M. and Merril (1977): Socio-Economic Impact of Development in Chan

Kom-1971-76: Rural Women’s Participation in Change, The World Bank,

Washington DC

Fan, Shenggen, Peter B.R. Hazell and T. Haque (1998): ‘Role of Infrastructure in

Production Growth and Poverty Reduction in Indian Rainfed Agriculture’,

41

Project Report to the Indian Council for Agricultural Research and the World

Bank, International Food Policy Research Institute, Washington DC

Fan, Shenggen and Peter B.R. Hazell (2001): ‘Are Returns to Public Investments

Lower in Less Favoured Rural Areas? An Empirical Analysis of India’ EPTD

Discussion Paper 43 Environment and Production Technology Division,

International Food Policy Research Institute, Washington DC

Fan, Shenggen, Peter B.R. Hazell and T. Haque (2000): ‘Targeting Public

Investments by Agro-Economic Zone to Achieve Growth and Poverty

Alleviation in Rural India’, Food Policy, 25(4), 411-428

Fan, Shenggen, Peter B.R. Hazell and Sukhadeo Thorat (2000): ‘Government

Spending, Growth and Poverty in Rural India’, American Journal of

Agricultural Economics, 82(4), 1038-51

Fan, Shenggen, Linxiu Zhang and Xiaobo Zhang (2002): ‘Growth, Inequality and

Poverty in Rural China: The Role of Public Investments’, Research Report

125, International Food Policy Research Institute, Washington DC.

Fosu, K.Y., N. Heerink, K.E Jhoudo, M. Kuiper and A. Kuyvenhoven (1995): ‘Public

Goods and Services and Food Security: Theory and Modelling Approaches

with special reference to Ghana and Burkina Faso’, Paper presented at

SADACC Seminar, 13-15 March, Accra, Ghana.

Ghosh, B and P. De (1998): ‘Role of Infrastructure in Regional Development: A

Study over the Plan Period’, Economic and Political Weekly, November.

GoI (1981): ‘Sixth Five Year Plan’ Planning Commission, Government of India, New

Delhi.

GoI (1992): ‘Eighth Five Year Plan’ Planning Commission, Government of India,

New Delhi.

GoI (1995): ‘Budget Speech of the Union Finance Minister’, Ministry of Finance,

Government of India, New Delhi.

Gulati, SC (1997): ‘Dimensions of Inter-District Disparities’, Indian Journal of

Regional Science, 9:2

Hirschman, Albert O. (1958): ‘The Strategy of Economic Development’, Yale

University Press, New Haven, CT

42

Howe, J.D. and P.J. Richards (1984): ‘Rural Roads and Poverty Alleviation: A Study

Prepared for ILO within the framework of World Employment Programme’

Intermediate Technology Publications, London.

IFAD (1995): ‘The State of World Rural Poverty: A Profile of Asia’, International

Fund for Agricultural Development, Rome.

Ishikawa, S. (1967): ‘Economic Development in Asian Perspective’, Kinokuniya

Bookstore Co. Tokyo.

Jacoby. H., (1998): ‘Access to Markets and the Benefits of Rural Roads’,

Development Research Group-Rural Development, The World Bank,

Washington DC.

Jaffee, Steven and John Morton (eds) (1995): ‘Marketing Africa’s High Valued

Foods’ Kendall/Hunt Publishing Co., Dubuque, IA.

Jahan, Selim and Robert McCleery (2005): ‘Making Infrastructure Work for the

Poor’, United Nations Development Programme, New York, NY.

Jayaraman, R. and Peter Lanjouw (1998): ‘The Evolution of Poverty and Inequality in

Indian Villages’, Policy Research Working Paper No 1870, Development

Research Group-Rural Development, The World Bank, Washington DC

Lall, Somik V. (1999): ‘The Role of Public Infrastructure Investments in Regional

Development-Experience of Indian States’ Economic and Political Weekly,

March 20-26.

Lanjouw. Peter, Jaime Quizon and Robert Sparrow (2001): ‘Non-agricultural

earnings in peri-urban areas of Tanzania: Evidence from Household Survey

Data’, Food Policy 26(4), 385-403

Lebo, J. and D. Schelling (2001): ‘Design and Appraisal of Rural Transport

Infrastructure: Ensuring Basic Access for Rural Communities’, Technical

Paper No 496, The World Bank, Washington DC

Lewis, W. Arthur (1955): ‘The Theory of Economic Growth’, Allen Unwin, London.

Limão, Nuno, and Anthony Venables (1999): ‘Infrastructure, Geographical

Disadvantage and Transport Costs’, Policy Research Working Paper 2257,

The World Bank, Washington DC.

43

Majumdar, R. (2002): ‘Infrastructure and Economic Development: A Regional

Analysis’, CSRD/SSS, Jawaharlal Nehru University, New Delhi.

Mellor, John.W. (1976): ‘The New Economics of Growth: Strategy for India and the

Developing World’, Cornell University Press, Ithaca, NY.

Moore B. (1980): ‘Rural Roads in Thailand’, Aid Project Impact Evaluation Report,

USAID, Washington DC.

NABARD (2004): ‘Infrastructure for Agriculture and Rural Development-An Impact

Assessment of Investments in Rural Roads and Bridges under RIDF’,

National Bank for Agriculture and Rural Development, Mumbai.

NABARD (2006): ‘Annual Report-2005-06’, National Bank for Agriculture and

Rural Development, Mumbai.

Ostrom, Elinor, Larry Schroeder and Susan Wynne, (1993): ‘Institutional Incentives

and Sustainable Development-Infrastructure Policies in Perspective’,

Westview Press, Boulder, CO

Rahman, Rushdan Islam (1993): ‘A Review of the Findings of Labour Force Surveys

and their analytical basis’, Bangladesh Development Studies 21 (1)

Reardon, T., J. Berdegue and G. Escobar (2001): ‘Rural Non-farm Employment and

Incomes in Latin America: Overview and Policy Implications’ World

Development 29(3), 395-409

Renkow, M., D.G. Hallstrom and D.D. Karanja (2003): ‘Rural Infrastructure,

Transaction Costs and Market Participation in Kenya’, Journal of

Development Studies.

Rosenstein-Rodan, Paul.N. (1943): ‘Problems of Industrialisation of Eastern and

South Eastern Europe’, The Economic Journal, 53 (June): 202-211

Rostow, W.W. (1960): ‘The Stages of Economic Growth: A Non-Communist

Manifesto’, Cambridge University Press, Cambridge.

Singh, VK (1983): ‘Infrastructure and Development in India: A Study of Regional

Variations’, CSRD/SSS, Jawaharlal Nehru University, New Delhi.

Summers, Robert and Alan Heston (1991): ‘The Penn World Table (Mark 5): An

Expanded Set of International Comparisons, 1950-1988’, Quarterly Journal of

Economics, 56(2).

44

Tewari, RT (1984): ‘Economic Infrastructure in Regional Development in India’,

Man and Development, 6:4

Thorat, Sukhadeo and Smita Sirohi (2002): ‘Rural Infrastructure’ ‘State of Indian

Farmer: A Millennium Study’, Ministry of Agriculture, Government of India,

New Delhi.

USAID (1972): ‘Improving Marketing Systems in Developing Countries’, Foreign

Economic Department Service (Department of Agriculture), Washington DC

USAID (1978): ‘Rural Roads Evaluation Report’, Republic of the Philippines,

Department of Local Government and Community Development-Rural Roads

Programme, Washington DC.

Wanmali, S., (1983): ‘Service Centres in Rural India’ B.R. Corporation, Delhi.

Wharton, Clifton R. Jr, (1967): ‘The Infrastructure for Agricultural Growth’, in

Herman J. Southworth and Bruce F. Johnston (eds) ‘Agricultural

Development and Economic Growth’, Cornell University Press, Ithaca, NY.

World Bank (1997): ‘Rural Development: Vision to Action: A Sector Strategy’, The

World Bank, Washington DC

World Bank, (1994): ‘World Development Report: Infrastructure for Development’,

Oxford University Press, New York.

Zhang, Xiaobo, and Shenggen Fan (2000): ‘Public Investment and Regional

Inequality in Rural China’ EPTD Discussion Paper 71 Environment and

Production Technology Division, International Food Policy Research

Institute, Washington DC

Zimmerman, F.J., and M.R. Carter (2003): ‘Asset Smoothing, Consumption

Smoothing and the Reproduction of Inequality under Risk and Subsistence

Constraints’, Journal of Development Economics, 71(2), 233-260

45