March 9, 2014
Abstract: India’s global ranking in infrastructure remains very low. The nation has experimented and invested in infrastructure with some success but, overall, the strategy has not delivered. India compares well with China on indexes related to airports and railways but poorly on road quality, electricity and ports. Three key lessons for India are:
- Productivity of infrastructure is heavily dependent on overall development of the system. In other word, taking “network externalities” into account is critical for success. A state-of-the-art port is not useful if the rail and road linkages to it are not in place.
- Productivity of a given network is determined by the “weakest link” principle. Productivity of the road network, for example, has suffered because of the quality disparity between the four-lane highways and the narrow and potholed access roads that feed them.
- The cost of even a moderate improvement in global ranking would be large and the money needs to be spent consistently across sectors, and over time.
Keywords: infrastructure strategy; global ranking; China; competitiveness; network externalities; weakest link principle; network productivity