Introduction:
Monitoring of all infrastructure projects under the ₹111-trillion National Infrastructure Pipeline (NIP) will be allowed on a digital platform to ensure access to updated project information for investments across various sectors, the finance ministry said on Monday. The projects will be mapped and evaluated by the departments concerned and the finance ministry to monitor the implementation and actual progress, compared to the initial estimates of the NIP for each project. The move assumes significance as increased focus on infrastructure projects will help revive the economy following the covid-19 crisis.
- The National Infrastructure Pipeline (NIP) is a group of social and economic infrastructure projects in India over a period of five years with a sanctioned amount of ₹102 lakh crore (US$1.4 trillion).
- The pipeline was first made public by the Prime Minister of India during his 2019 Independence Day speech. The Finance Minister announced that the NIP consists of 78% projects by the centre and states, and the remaining by the private sector.
- The NIP is a pillar of government of India’s aim to become a $5 trillion economy by 2025.
- The online dashboard is envisaged as a one stop solution for all stakeholders looking for information on infrastructure projects in New India. The dashboard is being hosted on the India Investment Grid (IIG).
- In the budget speech of 2019-2020, Finance Minister announced an outlay of Rs 100 lakh Crore for infrastructure projects over the next 5 years.
- NIP is a first-of-its-kind initiative to provide world-class infrastructure across the country and improve the quality of life for all citizens. It will improve project preparation, attract investments (both domestic & foreign) into infrastructure, and will be crucial for attaining the target of becoming a $5 trillion economy by FY 2025. Covers both economic and social infrastructure projects.
Report by Task force:
- The task force headed by Atanu Chakraborty on National Infrastructure Pipeline (NIP), in May 2020, submitted its final report to the Finance Minister.
- Important recommendations and observations made:
- Investment needed: ₹111 lakh crore over the next five years (2020-2025) to build infrastructure projects and drive economic growth. Energy, roads, railways and urban projects are estimated to account for the bulk of projects (around 70%).
- The centre (39 percent) and state (40 percent) are expected to have an almost equal sharein implementing the projects, while the private sector has 21 percent share. Aggressive push towards asset sales. Monetisation of infrastructure assets. Setting up of development finance institutions.
- Strengthening the municipal bond market.
Why Infrastructure Development is necessary?
- For a massive country such as India, improvement in infrastructure is a necessity.
- Over the next decade, an estimated $1.5 trillion is needed to create infrastructure, and overhaul and refurbish existing infrastructure.
- Infrastructure development will generate growth, employment and pull people out of poverty.
- Infrastructure development will benefit Government’s Ease of Doing Business.
- Developing Renewable Energy sector will help in mitigating climate change.
- Infrastructure investments can also help improve peace and security by enabling, sustaining and enhancing societal living conditions.
Plethora of incomplete infrastructure projects:
- Projects are launched without adequate ground preparation regarding the land requirement and project cost.
- Lack of co-operation at the state level, which is a big hurdle since land acquisition is the state’s business.
- Informality and corruption in infrastructure project delivery and lack of performance pressure.
- Environmental clearance delays, protest by the displaced populations and hurdles due to local politics.
- In some cases tendering process is incomplete or the terms and conditions are unclear.
- Lack of private sector funding.
Way Forward:
- Improving the institutional capacity to implement infrastructure projects effectively is crucial.
- Greater transparency and accountability structures are of fundamental importance to reduce wastage in infrastructure creation.
- Sufficient financing for infrastructure by expanding the role of the private sector; pension funds and life insurance companies.
- Regulatory measures are essential to avoid delays at each stage – from project approval to awarding of the contract, to its implementation.
- Tenders and key contract features should be routinely published, and good record-keeping and quality control must be maintained throughout the process.
- Strengthening of PPP route, as it has been able to deliver world class infrastructure in sectors such as airports.
- In 2015, the Kelkar Committee suggested overhauling of the PPP framework in India through measures such as funding through hybrid models and adoption of international best practices.
- Ensure a robust regulatory environment for domestic and international funding of infrastructure by introducing an independent PPP regulator in India.
Conclusion
- Infrastructure is a key driver of the overall development of Indian economy.
- We can import capital, technology but infrastructure needs to be there with proper skilled people.
- It is seen that investments in infrastructure equal to 1% of GDP will result in GDP growth of at least 2% as infrastructure has a “multiplier effect” on economic growth across sectors.
- The recent headway made in developing transport infrastructure will prove to be the biggest enabler for growth. An efficient infrastructure can provide avenues for employment through trickle-down effect.
- India’s growth story should no longer be impeded by a lack of infrastructure, and the fruits of this growth should reach everyone in the remotest part of the country
