Related Topic in KAS Prelims Syllabus:
Economy [Paper-II]: Infrastructure in Indian Economy
Finance Minister Nirmala Sitharaman unveiled a Rs. 102 lakh crore National Infrastructure Pipeline, in accordance with the Central government’s vision to make India a $5 trillion economy by 2024-25.
- Prime Minister Narendra Modi in his Independence Day speech -2019 talked about investing Rs 100 lakh crore in infrastructure.
- To achieve this objective, Finance Ministry had set up a task force headed by Economic Affairs Secretary to prepare a road map for the “national infrastructure pipeline” from 2019-20 to 2024-25 under the 100 lakh crore infrastructure plan.
Task Force on National Infrastructure Pipeline
- The Task Force on National Infrastructure Pipeline that chaired by Secretary, Department of Economic Affairs (DEA), Ministry of Finance (MoF) submitted a detailed report on the infrastructure plan.
- Main function of the task force was to identify technically feasible and financially/ economically viable infrastructure projects that can be initiated in fiscals 2020 to 2025.
- The task force observed that by 2030, around 42% of India’s population would be urbanised from the current 31%. Hence, urban infrastructure is also to be modernised.
What is NIP?
National Infrastructure Pipeline is the investment plan unveiled by the Central Government for enhancing infrastructure in identified sectors for a period of five years from 2020-25.
Funding of the Scheme
- According to Finance Minister, the central government and state governments would have an equal share of 39% each in the NIP.
- The private sector, on the other hand, would have 22% share which the government expects to increase to 30% by 2025.
- Energy sector make up the lion’s share of 24%, followed by Roads (19%), Urban Development (16%) and Railways (13%).
- The shares of rural and social infrastructure projects, which include health, education and drinking water, are 8% and 3%, respectively.
- Out of the total expected capital expenditure of Rs 102 lakh crore, projects worth Rs 42.7 lakh crore (42%) are under implementation, projects worth Rs 32.7 lakh crore (32%) are in the conceptualisation stage and the rest are under development.
- Irrigation and rural infrastructure projects would account for 7.7 lakh crore each. Rs. 3.07 lakh crore would be spent on industrial infrastructure. Agriculture and social infrastructure would account for the rest.
- Road projects will account for 19.63 lakh crore while another Rs. 13.68 lakh crore would be for railway projects.
- Port projects would see spending of Rs. 1 lakh crore and airports another Rs. 1.43 lakh crore. Rs. 16.29 lakh crore would be spent on urban infrastructure and Rs. 3.2 lakh crore in telecom projects.
- According to the sector-wise break-up of projects made available by the Finance Ministry, 24.54 lakh crore investment will flow in the energy sector, and of that Rs. 11.7 lakh crore would be in just the power sector.
- 42 lakh crore NIP projects which are in the implementation stage now include expressways, national gas grid and PMAY-G.
Why National Infrastructure Pipeline is needed?
- Availability of quality infrastructure is a pre-requisite to achieve broad-based and inclusive growth on a sustainable basis.
- Investment in infrastructure is also necessary for sustaining the high growth rate of India.
- To achieve the GDP of $5 trillion by 2024-25, India needs to spend about $1.4 trillion (Rs. 100 lakh crore) over these years on infrastructure.
- In the past decade (FY 2008-17), India invested about $1.1 trillion on infrastructure. The challenge is to step-up annual infrastructure investment so that lack of infrastructure does not become a binding constraint on the growth of the Indian economy.
- To implement an infrastructure program of this scale, it is important that projects are adequately prepared and launched. Thus, NIP assumes great significance.