India's infrastructure needs reforms, not new investments

World Bank Chief Economist for South Asia Shanta Devarajan argued that India’s infrastructure problems have more to do with wasteful pricing systems and inefficient subsidies wrought by political agenda than with the lack of investments in utility and transport systems. “The problem is not that we need to pour billions into new infrastructure, the problem is to fix the existing infrastructure.” He cited, for example, that India can lower its power deficit to one percent of GDP and halve the water deficit – which runs across the country, with not a single Indian city having a 24-hour access to water – just by adjusting pricing systems. At present, government policies underprice water or provide free electricity to farmers. “The trouble is subsidized water has become the tool of political patronage,” Devarajan said, adding that “unless you solve the pricing issue, throwing new money in reduces the incentive to solve the problem.” (Source: Reform can plug India’s infrastructure gap - World Bank/Reuters)

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