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Target Exam

CUET

Subject

Economics

Chapter

Indian Economic Development: Infrastructure

Question:
The Indian economy's main driver is the infrastructure industry. The government places a strong emphasis on this sector because it is crucial for India's overall growth. Power, bridges, dams, highways, and urban infrastructure development are all included in the infrastructure industry. In other words, the infrastructure sector propels the development of related industries including townships, housing, built-up infrastructure, and construction development projects, acting as a catalyst for India's economic growth.
 
Infrastructure development is essential if India is to achieve its goal of having a $5 trillion economy by 2025. In order to boost the growth of the infrastructure industry, the government has introduced the National Infrastructure Pipeline (NIP), along with other programs like "Made in India" and the production-linked incentives (PLI) program. Historically, funding for transportation, energy, water, and irrigation has accounted for more than 80% of the nation's infrastructure spending.
 
Some of the recent government initiatives and investments in the Infrastructure sector are as follows:
 
  • In FY23 (until September 2022), the combined index of 8 crore countries stood at 142.8 majorly driven by the production of coal, refinery products, fertilizers, steel, electricity, and cement industries.
  • To encourage rooftop solar (RTS) throughout the country, notably in rural regions, the Ministry of New and Renewable Energy is undertaking Rooftop Solar Programme Phase II, which aims to install an RTS capacity of 4,000 MW in the residential sector by 2022 with a provision of subsidy.
  • In March 2022, Mr. Nitin Gadkari, Minister of Road Transport and Highway inaugurated 19 National Highway projects in Haryana and Rajasthan totaling Rs. 1,407 crores (US$ 183.9 million).
  • For a redesigned, reform-based, and result-linked new electricity distribution sector strategy for the next five years, the government announced Rs. 305,984 crores (US$ 42 billion).

Which of the following is true when we study GDP and infrastructure altogether?

Options:

GDP and infrastructure are increasingly proportionate to one another

GDP and infrastructure are directly proportionate to one another

GDP and infrastructure are indirectly proportionate to one another

GDP and infrastructure are decreasingly proportionate to one another

Correct Answer:

GDP and infrastructure are directly proportionate to one another

Explanation:

In any country, as income rises, the composition of infrastructure requirements changes significantly. For low-income countries, basic infrastructure services, like irrigation, transport, and power, are more important. As economies mature and most of their basic consumption demands are met, the share of agriculture in the economy shrinks and more service-related infrastructure is required. This is why the share of power and telecommunication infrastructure is greater in high-income countries. Thus, the development of infrastructure and economic development go hand in hand or we can say they are directly proportionate to one another.

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