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The infrastructure spending target for 2020-25 was revised because of additional and amended data provided by central ministries, state governments since the release of the summary NIP Report in December 2019 when it was pegged at Rs 100 trillion.
The Union government has increased its portfolio of infrastructure project offering to Rs 111 trillion from Rs 102 trillion last December, at a time when India is looking at a sub 2 per cent growth rate owing to the COVID-19 pandemic.
The estimate has been made for the five-year period ending 2025 by the task force on the national infrastructure pipeline (NIP).
It submitted its final report to Union Finance Minister Nirmala Sitharaman in New Delhi on Wednesday.
The private sector’s share in this spending, however, would be a tad lower at 21 per cent while there is a one-percentage-point increase in the share of state governments at 40 per cent, with the remaining 39 per cent coming from the Centre.
An interim NIP report in December had pegged the Centre and state share at an equal 39 per cent.
The finance minister in her Budget speech 2019-20 announced that Rs 100 trillion would be invested in infrastructure over the next five years.
With the submission of the final report, the government has also decided to host project database on India Investment Grid to provide visibility to projects and help in its financing with prospective investors.
This would mean that the share of private sector in spending could change depending on attractiveness of the projects.
The infrastructure spending target for 2020-25 was revised because of additional and amended data provided by central ministries, state governments since the release of the summary NIP Report in December 2019 when it was pegged at Rs 100 trillion.
The task force has recommended that a committee be set up to monitor NIP progress and eliminate delays.
Besides, a steering committee at the infrastructure ministry-level should be set up for following up on implementation and another in the economic affairs department for raising financial resources for the NIP.
Each line ministry and the state concerned would add new projects and update their respective project details at pre-defined time intervals so that updated data is available to prospective investors.
According to a government statement, the NIP will be a “first-of-its-kind, whole-of-government exercise to provide world-class infrastructure across the country”, and improve the quality of life for all citizens.
“It aims to improve project preparation, attract investments (both domestic and foreign) into infrastructure, and will be crucial for target of becoming a $5-trillion economy by FY25,” it said.
The NIP has been made on a best-effort basis by aggregating the information provided by various stakeholders, including line ministries, departments, state governments and private sector across infrastructure sub-sectors identified in the Harmonised Master List of Infrastructure.
To draw up the NIP, a bottom-up approach was adopted wherein all projects (Greenfield or Brownfield, under implementation or under conceptualisation) costing greater than Rs 100 crore were sought to be captured.
Of the total expected capital expenditure of Rs 111 trillion, projects worth Rs 44 trillion, or 40 per cent of the NIP, are under implementation, projects worth Rs 33 trillion (30 per cent) are at the conceptual stage and projects worth Rs 22 trillion (20 per cent) are under development.
Information regarding the project stage is unavailable for projects worth Rs 11 trillion, or 10 per cent. Sectors such as energy (24 per cent), roads (18 per cent), urban (17 per cent) and railways (12 per cent) amount to around 71 per cent of the projected infrastructure investment in India.
The final report identifies and highlights recent infrastructure trends in India as well as global in all sectors of infrastructure.
It also captures sector progress, deficits and challenges.
In addition to updating existing sectoral policies, the report also identifies and highlights a set of reforms to scale up and propel infrastructure investments in various sectors throughout the country.
The report has also suggested ways and means of financing the NIP through deepening corporate bond markets, including those of municipal bonds, setting up development financial institutions for infrastructure sector, accelerating monetisation of infrastructure assets and land monetisation.
Photograph: Reuters
