Finance Minister Nirmala Sitharaman on Tuesday launched a National Infrastructure Pipeline (NIP), unveiling projects worth Rs 102 trillion, to boost economic growth and help the economy reach the $5-trillion target by 2024-25.
The NIP has identified projects across 23 sectors and 18 states and Union Territories, which will be funded over the next five years by the central and state governments as well as the private sector.
Addressing a press conference while launching the NIP report, Sitharaman said that of the proposed projects, 39 per cent each would be implemented by the Centre and states, and the rest 22 per cent by private players.
She said the government was expecting the private sector’s share to go up to 30 per cent by 2024-25, and added that some additional projects worth Rs 3 trillion would be identified in the coming weeks, taking the total commitment to Rs 105 trillion.
The pipeline includes brownfield and greenfield projects by the Centre, states, the private sector, and state-owned companies, as well as those under the public-private partnership model. According to the data given in the report, some Rs 42.7 trillion (43 per cent) worth of projects are under implementation, Rs 32.7-trillion (about 33 per cent) projects are at a conceptualisation stage, and Rs 19.1-trillion (19 per cent) projects are under development.
The NIP follows a commitment by Prime Minister Narendra Modi in his Independence Day speech, that more than Rs 100 trillion would be invested in infrastructure over the next five years.
A task force led by Economic Affairs Secretary Atanu Chakraborty identified the Rs 102 trillion worth of projects after conducting 70 stakeholder consultations in a short period of four months, Sitharaman said. The first meeting of the task force was held in September 2019. Subsequently, several meetings were held with various central and state departments and corporates engaged in infrastructure development.
Chakraborty said the investment on infrastructure by the Centre, states and the private sector combined was 0.8 per cent of gross domestic product (GDP) currently, and the government expected to improve that to 1.1 per cent by 2024-25.
The sectors identified include traditional power and renewable power, railways, roads, urban development, irrigation, aviation, education, and health. The lion’s share of the funding is expected to go to the energy sector. Nearly Rs 24 trillion in energy projects have been lined up, while projects worth Rs 20 trillion in roads and Rs 14 trillion in railways have been planned. These sectors will form the bulk of infrastructure investment under the NIP, Sitharaman said.
The finance minister admitted concerns regarding financing of these projects, given the current economic slowdown. However, the government believes, and the NIP report states, that India’s GDP growth was expected to gradually swing upwards over the next five years, starting fiscal 2020, following on the clean-up of financial sector balance sheets, corporates starting to leverage for funding capital expenditure, and payoff from various government policies. Sitharaman said the government would look at deepening the debt market and alternative investment funds, which would provide the bulk of the debt financing necessary for this. She said the first edition of the Annual Global Investors' Meet on Infrastructure would be held in the second half of the coming year.