Question 1 · 10 marks · 81 words written
Opening · a figure
Effective capital expenditure has doubled in the past 5 years to reach 4.5% of GDP in FY 22-23. This is to increase the investments in infrastructure for economy's capacity enhancement in India.
Body · points and prose
Investment as a precursor
├─ Economic
│ 1. Creates the backbone of an efficient economy
│ * 14-15% of GDP is lost to logistics inefficiencies at present
│ 2. Multiplier effect of 2.5 times
│ 3. Employment generation
│ * Mining, manufacturing, construction
└─ Social
1. Increased earning from employment
2. Ease of living
* SMART cities project
3. Fulfilment of aspirations
- Attracts more investment
- FDI - leading to a virtuous cycle.
- Power and road network to start a business.
But, this shouldn't marginalise: SECURITY
- Environmental
- Without proper Environment Impact Assessment (EIA), future costs may escalate
- e.g. landslides in Joshimath due to unsustainable tourist infrastructure
- Social
- Increase in disparities may lead to unrest
- e.g. Left-wing extremism due to development divide
- Economic
- Fiscal discipline needed to finance infrastructure projects.
- e.g. Too much fiscal deficit can increase inflation.
Close · a way forward
Recent projects like PM Gati Shakti and National infrastructure pipeline (NIP) aim to balance this security concern with the positive effects of growth.