Most economists agree that infrastructure building has the highest multiplier effect and gives the biggest bang for every buck spent. Not only does it provide direct employment to millions of semi-skilled and unskilled workers – besides, of course, technically qualified personnel – it also guzzles up steel, cement, energy and also generates demand for the logistics sector, capital goods makers, equipment suppliers, etc., and touches almost every other sector of the economy either directly or indirectly.
Sectors such a roads & highways and urban development, for example, can quickly ramp up capacities and, therefore, generate jobs much faster than most other large sectors.
Then, once ready, the infrastructure created supports other activities in every other sector of the economy.
“Because infrastructure has very high multipliers of the economy, infrastructure will boost aggregate demand and hopefully crowd in private investment. It will fill some of the jobs vacuum. Infrastructure also boosts potential growth, so there is a good reason in my mind for the next two years for growth to be driven by infrastructure,” Sajid Chinoy, Chief India Economist at JP Morgan and Part-time Member in PM’s Economic Advisory Council, wrote in Indian Express recently.