NDA removed supply hitch, created infra: White Paper on Indian economy

The Centre on Thursday claimed that its infrastructure policy differs vastly from that of the previous United progressive Alliance (UPA) government. This difference is reflected in its infrastructure expenditure, which is close to a third of its total budgetary expenditure, compared to 16 per cent between 2004 and 2014.

In the white paper prepared by the Ministry of Finance, it said, “Capital expenditure (capex), which finances public investment in infrastructure, was de-prioritised in those 10 years, creating long-term constraints for the economy and compromising its growth potential. Capex as a percentage of total expenditure (excluding interest payments) halved from 31 per cent in 2003-04 to 16 per cent in 2013-14. The economy remained supply-constrained during the UPA government’s tenure,” the white paper said.

Citing comments by International Monetary Fund (IMF) experts and the Cabinet secretary in 2013, the finance ministry said that infrastructure approval delays, due to overlapping regulations and scandals in major projects, had intensified judicial scrutiny, lengthening the process.

In view of the supply constraints formed on account of lengthy approvals, the Centre set up a project monitoring group in the Cabinet Secretariat in 2013.

In a working paper published in March 2014, two IMF economists identified three main reasons for the investment slowdown in the country: policy uncertainty, delayed project approvals, implementation, and supply bottlenecks, particularly in mining and power.

In contrast, the Centre said infrastructure execution has been put on the fast lane in the previous decade.

“From 2014-15 (FY15) to 2022-23 (FY23), the length of national highways increased from 98,000 kilometre (km) to 145,000 km, cargo traffic at major ports has risen from 581 million tonnes (mt) to 784 mt. Electrified rail route has gone up from 22,224 km (FY15) to 50,394 km (2021-22). India’s aviation industry has undergone significant growth and transformation over the past decade. The number of airports doubled from FY15 to FY23,” the finance ministry said.

Delay in the completion of projects resulted in a cost overrun of Rs 1.07 trillion, the ministry said.

“The railway board took, on average, 43 months to sanction the bridgeworks after identifying for rehabilitation from a safety perspective, and even after that, the bridgeworks were completed with an average delay of 41 months.”

Notably, the latest quarterly Ministry of Statistics and Programme Implementation report pointed out that over 400 projects of the Centre are witnessing cost overruns of Rs 4.82 trillion, with almost a fourth of all major projects incurring escalations.

Shift in resource allocation

The white paper compiled by the National Democratic Alliance government as the country gears for the general election highlighted the initiatives it took to streamline the allocation of public resources such as coal, telecommunications, and improving the state of electricity.

Attacking the Opposition on the various scams during the UPA era, which involved the alleged wastage of the exchequer’s fund, the finance ministry said it took up multiple reforms to enhance competition and bring transparency.

The enactment of the Coal Mines (Special Provisions) Act, 2015, ensured transparent allocation of coal resources and energy security of the country. It also cited India’s first-ever coal block auction, commercial coal mining, rationalisation of coal linkages, single window for e-auction of coal, etc, as efforts to tackle resource inefficiency in the coal sector.

Commenting on the power sector, it said, the “critical issue of power deficiency” has been addressed by adding 1,96,558 megawatt of generation capacity since April 2014, and India has also attained the target of One Nation, One Grid, One Frequency.

“Under the Prime Minister’s vision of Sahaj Bijli Har Ghar, every village and household has been electrified. The availability of power in rural areas has increased from 12 hours in 2015 to 20.6 hours, and in urban areas, it has increased to 23.8 hours. While the power sector has been reformed to provide continuous electricity to all, the PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan) scheme is enabling Annadata — our farmers even to become urjadaata — energy providers, benefiting more than 246,000 farmers,” the white paper said.