A review of the infrastructure sector in the last eight years provides evidence of fresh and bold thinking, and the resultant gear-shifts in policies, processes and practices. Here are nine thrust-areas that together qualify for an overall A+.
First, as it took charge at the Centre in the summer of 2014, the NDA realised that trust and confidence in public private partnerships (PPPs)—the hallmark of the UPA era—had reached an all-time low. The NDA government was quick to conclude that it would necessarily require large dollops of public investments in infrastructure to get the required momentum going and also pump-prime the rest of the economy. It has, subsequently, matched this strategy with ever-increasing allocations of public funds. Infra investments, which were Rs 6.3 trillion in FY14, are now anticipated to hit nearly Rs 16 trillion in FY 22.
Second, there were fears that with the fading away of the Planning Commission, there would be no coherent plan of action. While individual ministries got cracking with their own plans and programmes, the issue finally got settled with the announcement of the National Infrastructure Pipeline in 2020. It laid out a granular road-map, including the macroeconomic target of India setting out to achieve around 8% Gross Capital Formation in Infrastructure (GCFI, as a percentage of GDP). The government went a step further to attempt to create a virtuous cycle where funding for public expenditure is also fueled by the proceeds of monetisation of state-owned assets, as epitomised by the National Monetisation Plan.
The third, and more dramatic shift, was the strategy adopted for delivery of utilities to the aam aadmi. It was not to depend any more on incremental efforts, but pull out all stops in “mission mode” to get water and electricity to reach 100% of Indian households. This, today, stands out as one of the largest “quality of life” improvement efforts amongst all emerging economies.
Fourth, these eight years have seen vast increases in transport connectivity to poorly serviced parts of the country, as evident in the network increases in rail and road for remote areas (particularly the North East and J&K), as well as the opening up of air services to hitherto unserviced towns. The rural roads programme has continued to make impactful strides in the countryside. For urban commuters, metro-rail systems got activated for most of the major towns in India.
Fifth, the emphasis on a cleaner India, Swachh Bharat, saw many initiatives get forcefully pushed. Particularly noticeable was the push towards ODF (Open Defecation Free) communities and river-cleaning. An array of effluent treatment plants has been set up to prevent direct discharge into rivers. The fact that Indian Railways has now 100% of its passenger coaches fitted with bio-degradable toilets, which are open-discharge-barred, has not been adequately noticed.
Sixth, it is universally recognised that India has taken a decisive stand on green energy. India’s achievements in renewables capacity is there for all to see, and the recent push towards 100% railway electrification, electric vehicles and the Hydrogen Mission testify to the strong commitments in the area of carbon mitigation. India’s leadership in the International Solar Alliance has been well recognised, as well as its commitments towards climate change targets.
Seventh, going beyond renewables, it is the roads and highways sector that continued to be the shining star of the infra sector—even in the midst of two years of severe Covid-related challenges in project execution. Add to that the progress on FastTag, monetisation through InVits and the shift towards greenfield expressways (from the earlier carriage-way widening)—all of these have brought well-deserved accolades for the leadership.
Eighth, on processes, three initiatives stand out for their expectedly huge potential impact on operations. First is the iconic Gati Shakti platform that utilises a multi-layered and sophisticated GIS to better design and monitor infra projects. Next is the National Single Window System to enable processing of all clearances and permissions on an e-platform. Finally, there is the semi-revolutionary October 29, 2021, circular of the ministry of finance on changes in public procurement policies, which strike at the root of the much-derided “L1 raj” (lowest cost tendering system) as well as the scourge of delayed payments.
Ninth, for the first time, possibly, in India’s economic history, the capacity to fund infra projects has reached a level of maturity in this period. Between the Union Budget outlay, the states’ share, PSU and extra-budgetary resources and domestic and foreign investments (including the development of InVits and REITs), financing is no more the effective constraint. The setting up of the DFI, NABFID (National Bank for Financing Infrastructure and Development) is expected to considerably enhance long-term funding capacity.
It is well-known that rating scales go beyond an A, to AA and AAA levels. So, why only an A+?
Well, it has to be admitted that there have been challenges and shortcomings along the way. A number of areas stand out as ‘unfinished agenda.’ One is the revamping of institutional systems and processes to revive interest in PPPs. The other is the much-needed “surgical strike” for overhauling India’s electricity distribution sector. The much-vaunted development of inland waterways and coastal shipping is still work-in-progress. The popular belief is that the Smart Cities programme has not lived up to its promise. The bullet train is way behind schedule. India’s energy diversity has been neglected with particular reference to hydro power and the civil nuclear programme. The ministry of statistics and programme implementation calculates that there is a `4 trillion hit on account of cost overruns of stalled and delayed infra projects.
Nevertheless, it has to be acknowledged that India has emerged as the largest infrastructure development market in the world. US resident Joe Biden stitched together a $1 trillion plan for USA’s infrastructure revamp. India’s National Infrastructure Pipeline amounts to $1.4 trillion !
So, A+ it is.
(The writer is Infrastructure expert, and founder & managing trustee, The Infravision Foundation; Views are personal)