April 30, 2020 3:00:05 am
Energy, roads, railways and urban projects would account for the bulk of projects, involving total estimated infrastructure investment of Rs 111 lakh crore during the five fiscal year period 2020-25. This is according to a final report of the task force on National Infrastructure Pipeline (NIP) submitted to Finance Minister Nirmala Sitharaman on Wednesday. Of the total project capital expenditure, sectors such as energy (24 per cent), urban (17 per cent), railways (12 per cent) and roads (18 per cent) are pegged to contributed nearly 70 per cent of the infra investments in India.
While Centre and states are expected to have almost equal share in implementing NIP, private sector contribution is expected around 21 per cent, as per a statement by the Finance Ministry. The NIP captures all projects — greenfield or brownfield, under implementation or under conceptualisation — costing greater than Rs 100 crore per project.
Besides strengthening the municipal bond market, an aggressive push towards asset sales, monetisation of infrastructure assets, deepening of corporate bond markets, and setting up Development Financial Institutions for infrastructure sector, are among the measures that have been recommended by government panel to aid the process of galvanising investments in infrastructure sector in next five years.
The task force, headed by economic affairs secretary Atanu Chakraborty, has also recommended setting up of three committees: a panel to monitor NIP progress and eliminate delays; a steering committee in each infrastructure ministry for following up implementation; and a committee in Department of Economic Affairs for raising financial resources for the NIP.
Aim is to boost infrastructure investments
Aggressive push towards asset sales, monetisation of infrastructure assets, setting up of development finance institutions and strengthening the municipal bond market are some measures suggested by a government panel to boost infrastructure investments. The panel has drawn up a National Infrastructure Pipeline to bring greater focus in this area, which is crucial to boosting economic growth.
Out of the total expected capital expenditure of Rs 111 lakh crore, projects of Rs 44 lakh crore (40 per cent of NIP) are under implementation, projects worth Rs 33 lakh crore (30 per cent) are at conceptual stage and projects worth Rs 22 lakh crore (20 per cent) are under development. The task force was set up after Prime Minister Narendra Modi, in his Independence Day speech last year, highlighted Rs 100 lakh crore worth of infra investment over the next five years to make India a $5 trillion economy.
The summary report for 2019-2025 was released by Sitharaman on December 31, 2019. The final report has revised up NIP from earlier Rs 100 lakh crore “in light of additional/amended data provided by central ministries/state governments since the release of summary NIP report,” the Centre said.
In its summary report, the panel had suggested effective dispute resolution, contract enforcement and asset monetisation among other reforms for achieving infra investment targets. A critical step in addressing dwindling private sector participation in infrastructure can be institutionalising dispute resolution mechanism to efficiently resolve disputes related to PPP projects. Investments must be made in the institutions created under The Commercial Courts Act 2015, The Specific Relief (Amendment) Act 2018 and the New Delhi Arbitration Centre Act 2019 for speedy resolution, it said.
The RBI’s latest credit growth data shows year-on-year growth in credit outstanding to the infrastructure sector fell to a 19-month low of 3.3 per cent. FY20 saw a decline in banks’ appetite to lend to infrastructure companies. Data shows in the 11-month period ended February 2020, credit outstanding for the infrastructure sector as a whole shrank from Rs 10.55 lakh crore in March 2019 to Rs 10.18 lakh crore in February 2020, thereby contracting by 3.5 per cent.
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