Journal of Business Management & Social Sciences Research (JBM&SSR) ISSN No: 2319-5614 Volume 2, No.1, January 2013 _________________________________________________________________________________ www.borjournals.com Blue Ocean Research Journals 81 Infrastructure Development and Economic growth: Prospects and Perspective Dr. B. Srinivasu, Assistant Professor, Dept.of Economics, Jamia Millia Islamia, NewDelhi, India P. Srinivasa Rao, PhD Research Scholar Dept. of Economics, Jamia Millia Islamia, New Delhi, India ABSTRACT Infrastructure is the prerequisite for the development of any economy. Transport, telecommunications, energy, water, health, housing, and educational facilities have become part and parcel of human existence. It is difficult to imagine a modern world without these facilities. These are vital to the household life as well as to the economic activity. Infrastructure plays a crucial role in promoting economic growth and thereby contributes to the reduction of economic disparity, poverty and deprivations in a country. Greater access of the poor to education and health services, water and sanitation, road network and electricity is needed to bring equitable development and social emposwerment. It is an important pre-condition for sustainable economic and social development. Infrastructural investments in transport (roads, railways, ports and civil aviation), power, irrigation, watersheds, hydroelectric works, scientific research and training, markets and warehousing, communications and informatics, education, health and family welfare play a strategic but indirect role in the development process, but makes a significant contribution towards growth by increasing the factor productivity of land, labour and capital in the production process, especially safe drinking water and sanitation, basic educational facilities strongly influence to the quality of life of the people. This study establishes the relationship between infrastructure and economic growth using growth theories by empirical evidences. Finally it concludes infrastructure and poverty reduction in the Indian context. Keywords: Infrastructure, Growth and Development, Infrastructural Investments, Poverty Reduction INTRODUCTION Infrastructure investment is an important driving force to achieve rapid and sustained economic growth. The presence of sufficient infrastructure will require for the modernization and commercialization of agriculture and the achievement of income surpluses for capital accumulation. It can provide a basis for the expansion of local manufacturing industries, as well as enlarging markets for the outputs of these industries. Many studies have found a positive relationship between the level of economic development (measured by per capita income and other indicators), and quality of housing and access to basic amentias like electricity, safe drinking water, toilets (Human Development Report of India 2011). There is a precise link between infrastructure and development. Infrastructure investment directly affects the economic development. Therefore, that the only way to build up a country’s productive potential and raise per capita income is to expand the capacity for producing goods, this need not refer simply to the provision of plant and machinery, but also to roads, railways, power lines, water pipes, schools, hospitals, houses and even “incentive” consumer goods such as consumer durables, all of which can contribute to increased productivity and higher living standards. The prosperity of a country depends directly upon the development of Agriculture and Industry. Agriculture production, however, requires power, credit, transport facilities, etc. Industrial production requires not only machinery and equipment but also skilled manpower, management, energy, credit facilities, marketing facilities, transportation services which include railways, roads, shipping, communication facilities, etc. All these facilities and services constitute collectively the infrastructure of an economy. Regions with inadequate infrastructure usually have lower per capita income, bigger proportion of the primary sector, and smaller population density. Regions with high infrastructure level usually have higher per capita income, a smaller proportion of the primary sector and bigger population density. In which regions having a good basic facilities like health, educational, transport, communication, water, sanitation, energy, housing, etc. it will attract more investments especially the small and marginal entrepreneur starts their production activities. Good transportation, low cost of electricity, availability of skilled lobar facilities always negative effects on the cost of production, positive effects on production as well as profit levels. Inadequate infrastructure and services become the burden for infrastructure suppliers, and led the low efficiency of output. World Development Report(1994) published by the World Bank under the title ‘Infrastructure for Development’ rightly mentions that “the adequacy of infrastructure helps determine one country’s success and another’s failure in diversifying