Development of basic infrastructure (physical and social) is a critical necessity to meet the growth requirements of a country. Empirical research validates that the economic advancement of a nation critically hinges on the adequacy of infrastructure availability. According to the Global Competitiveness Report (GCR) 2009-10, India underperforms in some of the basic determinants of competitiveness, namely, health and primary education (rank 101), macroeconomic stability (rank 96) and infrastructure (rank 76). In view of criticality of the issue of infrastructure availability, the Government of India has taken an affirmative stance and has highlighted the relevance of Public Private Partnerships (PPPs) in this context. Infrastructure financing needs cannot be met by the government alone, and hence the case for private sector participation is strong for meeting the challenge. The PPP model of infrastructure building has gained momentum in recent years the world over. In a recent study, the Reserve Bank of India estimated the private sector participation in investment in infrastructure building in India at 30% during the 11th Plan period. Although there is a robust growth in the PPP investments in the road sector, the forthcoming investments in other sectors such as power, irrigation and ports are relatively meager. The flow of private investments into the infrastructure sector depend on a host of factors such as investors’ interest in these sectors, bureaucratic efficiency, evolving market processes, greater availability of information and size of the projects and developers’ returns. The issues creating obstructions for private investment in infrastructure need urgent policy consideration and committed response to achieve the desired results without further delay.

Against this backdrop, the present issue of the journal covers issues ranging from financial, urban and warehouse infrastructure to private participation in airport infrastructure.

The paper, “Financial Infrastructure: Spread of Banking and Market Perception of This Sector”, by Tamal Datta Chaudhuri, examines the spread of banking across states, rural and urban areas, class of borrowers and industries, as a part of the financial infrastructure growth of the Indian economy. While establishing a strong correlation between the Sensex and Bankex, the study observes that the sector has recorded a significant growth in terms of reach and coverage and also in deposit and credit which ultimately leads towards the fulfillment of the goal of financial inclusion.

The paper, “Urbanization and Poverty Reduction: A Case Study of Pakistan”, by Muhammad Shahbaz, Naveed Aamir and Shahbaz Shabir, attempts to study the relationship between urbanization and poverty reduction with reference to Pakistan by using Autoregressive Distributive Lag (ARDL) testing. The study concludes that urbanization has a negligible role in reducing the poverty level, and sometimes the positive effect appears for a short span of time as the poverty level in Pakistan is mostly influenced by increasing macroeconomic shocks.

Commodity markets and warehouse finance are innovative initiatives devised specifically to revive the agricultural sector with the twin objectives of providing price discovery and risk mitigation to the farmers. The warehouse receipts can be traded, sold, swapped and used as collateral to support borrowings and also help in checking distress sales by the farmers at the time of abnormal market conditions. The success of warehouse receipts depends upon a well-developed and efficient warehouse infrastructure. Warehouses provide better and scientific storage facilities at a reasonable cost and facilitate the farmers and traders with a convenient instrument of credit. The different committees set up by the government from time to time also emphasized the strengthening of linkages between production, marketing, credit for marketing and introduction of advances against warehouse receipts. The paper, “Commodity Futures Markets, Warehouse Receipts and the Dynamics of Warehousing Infrastructure: The Indian Scenario”, by Manoj Pillai, explores the various aspects of warehousing finance and infrastructure in India. Keeping in view the multidimensional benefits of warehousing infrastructure for the agriculture sector in particular, and the overall economic development in general, the author suggests the development of an effective warehouse management system.

The paper, “Green Buildings: An Assessment of Life Cycle Cost”, by R Kansal and G Kadambari, throws light on various aspects and benefits of green buildings along with building environment assessment tools and rating systems followed worldwide. The authors used the life cycle cost analysis method of project evaluation to prove the benefits of green buildings vis-à-vis ordinary buildings. Green buildings ensure efficient and judicious utilization of scarce natural resources during construction and later throughout their life. Though it involves higher initial cost, the lower life cycle cost of green buildings assures lesser consumption of energy during use. Green buildings ultimately focus on increasing the efficiency of the use of resources and contribute towards sustainable management of natural resources.

India is one of the fastest growing large markets for airlines. With the emergence of low cost carriers, the airports in India are finding it difficult to cope with the increase in passenger traffic. Inadequate airport infrastructure continues to be a major roadblock stifling the growth in air cargo traffic vis-à-vis the potential available. Investment in the aviation sector is expected to be US$30 bn by 2012 and about US$50 bn by 2015. Private sector participation in airports has given rise to new opportunities for new businesses. The paper, “Airport Privatization in India: Importance and Challenges”, by Manzoor K P, discusses the various challenges that the airports are facing in India and the pros and cons of privatization of the airports.

-- Pradeepta Kumar Samanta
Consulting Editor