Finance Minister Nirmala Sitharaman unveiled Rs 102 lakh crore of infrastructure projects, including Mumbai-Ahmedabad High Speed rail, in the next five years to help achieve the target of $5 trillion (around Rs 356 lakh crore) economy by 2025. 

Addressing a press conference on December 31, she said Prime Minister Narendra Modi had in his Independence Day speech spoken of investing Rs 100 lakh crore in infrastructure. Subsequently, a task force headed by the economic affairs secretary identified Rs 102 lakh crore worth of projects after conducting 70 stakeholder consultations in a short period of four months, she said. 

The minister said another Rs 3 lakh crore of projects will be added to this pipeline that includes Jewar Airport and Jal Jeevan Mission.

Launch of NIP

Of the Rs 102 lakh crore projects, Rs 42.7 lakh crore (43 per cent) projects are under implementation, Rs 32.7 lakh crore (about 33 per cent) worth of projects are at conceptualisation stage and Rs 19.1 lakh crore (about 19 per cent) worth of projects are under development.

The projects are spread across 22 ministries and 18 states and Union Territories. The government also intends to launch National Infrastructure Pipeline (NIP) — a coordination mechanism consisting of the Centre, states and also the private sector — for information dissemination together with monitoring the implementation of this entire framework. 

With regard to investment, Sitharaman said that the new pipeline consists of 39 per cent projects each by the Centre and states and the balance by 22 per cent by private sector which could increase to 30 per cent by 2025.

The finance minister said the projects identified are in the sectors of power, railways, urban development, digital sector, irrigation, mobility, education, health, and others.

These sectors will form the bulk of the infrastructure investment under the National Infrastructure Pipeline.

The finance minister said Rs 102 lakh crore National Infrastructure Projects will help make India a $5 trillion economy by 2025. 

How infrastructure development will boost economy?

Infrastructure investment in India during the fiscal 2008 to 2017 was estimated at Rs 60 lakh crore. 

As per the Global Infrastructure Outlook 2017 published by Oxford Economics, the estimated global infrastructure investment requirement is $94 trillion during the period 2016 and 2040.

It is estimated that India would need to spend $4.5 trillion on infrastructure by 2030 to sustain its growth rate. The endeavour of the National Infrastructure Pipeline (NIP) would be to make this happen in an efficient manner. 

Infrastructure development is a critical factor for boosting the economy, providing improved growth prospects. In order to improve India’s global competitiveness, creating new and upgrading existing infrastructure will be critical along with introducing a slew of supply side reforms. 

Infrastructure development is labour-intensive, leading to an increase in employment opportunities and thus, fuelling domestic demand. All of this together can aid in initiating a virtuous cycle of higher investments, growth and employment generation in the economy.

Overcoming the deficiencies in infrastructure and improving the quality of services provided in both urban and rural areas in India will help in realising full potential of the growing urban economy, thus raising its contribution to India’s GDP.

Quality of infrastructure is among the biggest hurdles facing the Indian government’s ambitious program, called ‘Make in India’, which aims to improve the nation’s manufacturing capabilities and support higher growth for generating employment. 

The corporate growth and investments can also be hampered if the government fails to close the infrastructure deficit, which some experts estimate costs about 4-5 per cent of GDP due to inefficiencies. 

Infrastructure development not only help remove some of these inefficiencies contributing immediately to economic expansion but also support stronger long-term growth. India’s infrastructure bottleneck is a primary constraint to improving its global competitiveness, as measured by the World Economic Forum’s Global Competitiveness Index. 

Benefits of NIP

Economy: Well-planned NIP will enable more infra projects, grow businesses, create jobs, improve ease of living, and provide equitable access to infrastructure for all, making growth more inclusive

Government: Well-developed infrastructure enhances level of economic activity, creates additional fiscal space by improving revenue base of the government, and ensures quality of expenditure focused in productive areas. 

Developers: Provides better view of project supply, provides time to be better prepared for project bidding, reduces aggressive bids/ failure in project delivery, ensures enhanced access to sources of finance as result of increased investor confidence.

Banks/ investors: Builds investor confidence as identified projects are likely to be better prepared, exposures less likely to suffer stress given active project monitoring, thereby less likelihood of NPAs.

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