Increase in infrastructure investment provides a critical push to the potential growth of the economy. The outlay for capital expenditure in 2022-23 (BE) was increased sharply by 35.4 per cent from 5.5 lakh crore in the previous year (2021-22) to 7.5 lakh crore, of which approximately 67 per cent has been spent from April to December 2022 states the Economic Survey 2022-23 which was tabled in Parliament today by the Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman. “The government, in recent years, provided an increased impetus for infrastructure development and investment through the enhancement of capital expenditure even at a time of crisis when the capital expenditure by the private sector has been subdued” observes the Economic Survey in its chapter on Physical and Digital Infrastructure: Lifting Potential Growth.

While the National Infrastructure Pipeline and the National Monetization Pipeline would provide the much-needed impetus for stepping up infrastructure investment, the National Logistical Policy will address the gaps in services, digital infrastructure and skills in the logistics workforce the Economic Survey states. Further, PM GatiShakti, with a multimodal approach, is designed to fill the gaps in physical infrastructure and to integrate existing and proposed infrastructure development initiatives of different agencies. As physical infrastructure requires continuous support over its long gestation period, the government has also set up National Bank for Financing Infrastructure and Development (NaBFID) as development financial institution to set in motion a virtuous investment cycle. An institutional mechanism to fast-track investments has been put in place, in the form of Project Development Cells (PDCs) in all concerned Ministries/ Departments of Government of India, notes the Economic Survey.

Public-Private Partnerships

PPPs are vital instruments for governments in channeling the strength of private sector in critical areas of infrastructure states the Economic Survey. The Public Private Partnership Appraisal Committee has cleared 79 projects with a total project cost of ₹2,27,268.1 crore from FY15 to FY23 it adds.

To provide financial assistance to financially unviable but socially/ economically desirable PPP projects, the Economic Survey notes that the Department of Economic Affairs launched the Viability Gap Funding (VGF) scheme in 2006. From 2014-15 to 2022-23, under the VGF Scheme, 56 projects with TPC of ₹57870.1 crore were granted In-Principle Approval and 27 projects with TPC of ₹25263.8 crore were granted final approval with a Total Viability Gap Funding approval of ₹5813.6 crore (Both GoI & State Share). The total VGF amount disbursed by DEA under the scheme from FY15 to FY23 is ₹2982.4 crore.

Further, a scheme for financial support for project development expenses of PPP Projects – the ‘India Infrastructure Project Development Fund Scheme’ (IIPDF) – was also notified by the government on 3 November 2022 with an outlay of ₹150 crore for a period of 3 years from FY23 to FY25 states the Economic Survey.

National Infrastructure Pipeline

The government launched the National Infrastructure Pipeline (NIP) with a forward-looking approach and with a projected infrastructure investment of around ₹111 lakh crore during FY20-25 to provide high quality infrastructure across the country. The NIP currently has 8,964 projects with a total investment of more than ₹108 lakh crore under different stages of implementation. It has been proposed to integrate NIP and Project Monitoring Group (PMG) portals.

National Monetization Pipeline - Creation through Monetization

Referring to the National Monetisation Pipeline (NMP), the Economic Survey states that it was announced on 23 August 2021 on the principle of ‘asset creation through monetisation’. The estimated aggregate monetisation potential under NMP is ₹6 lakh crore through core assets of the Central Government, over a four-year period, from FY20-25.  Against the monetisation target of ₹0.9 lakh crore in FY22, ₹0.97 lakh crore have been achieved during the period under roads, power, coal and mines.

National Logistics Policy: Reducing the costs of logistics

The Survey notes that many efforts have already been made by the Government of India to improve the logistics ecosystem through ‘infrastructure initiatives’ such as Ude Desh ka Aam Nagrik (UDAN), Bharatmala, Sagarmala, Parvatamala, National Rail Plan, and through ‘process reforms’ GST, e-Sanchit, Single Window Interface for Trade (SWIFT), Indian Customs Electronic Data Interchange Gateway (ICEGATE), Turant Customs, and others.

To integrate all these efforts by different government agencies National Logistics Policy was launched on 17 September 2022, addressing the components of improving efficiency in logistics  states the Economic Survey.

Developments in Physical Infrastructure Sectors

Road Transport

According to the Economic Survey, there has been an increase in the construction of National Highways (NHs)/roads over time, with 10,457 km of roads constructed in FY22 as compared to 6,061 km in FY16. Total budgetary support for investment in the sector has been increasing rapidly in the last four years and stood at around ₹1.4 lakh crore during FY23 (as of 31 October 2022).

In line with the vision of monetisation of public sector assets, National Highways Authority of India (NHAI) launched its InvIT in FY22. So far, NHAI InvIT has raised more than ₹10,200 crore from high quality foreign and Indian institutional investors (up to December 2022).

Railways

Freight traffic was sustained by Indian Railways (IR) despite the Covid-19 shock. During FY22-23 (up to November 2022), IR carried 976.8 million tonnes of revenue-earning freight traffic (excluding KRCL), as against 901.7 million tonnes during the corresponding period in FY21-22 (excluding KRCL), which translated into an increase of 8.3 per cent observes the Economic Survey.

Further, the capital expenditure (Capex) on infrastructure in railways has seen a continuous increase in the last four years with Capex (B.E.) of ₹2.5 lakh crore in FY23, up by around 29 per cent compared to the previous year.

Major initiatives under the Indian Railways include Mumbai Ahmedabad High-speed Rail Project, Dedicated Freight Corridor Project, Gati Shakti Multi Modal Cargo Terminal, Induction of Vande Bharat Trains, Electrical/Electronic Interlocking System, Development of Hyperloop technology and introduction of Kisan Rail trains in FY21 to enable speedy movement of perishables states the Economic Survey.

Civil Aviation

The total number of passengers carried in December 2022 stood at 150.1 lakh, which was 106.4 per cent of the pre-Covid level (average for 11 months from April 2019 to February 2020) as per the Economic Survey. During November 2022, total air cargo tonnage stood at 2.5 lakh MT, which is 89 per cent of the pre-Covid levels.

Ports

The capacity of major ports, which was 871.5 Million Tonnes Per Annum (MTPA) at the end of March 2014, has increased to 1534.9 MTPA by the end of March 2022. Cumulatively they handled 720.1 MT traffic during FY22 notes the Economic Survey.

To further enhance their efficiency, the government is focusing on improving port governance, addressing low-capacity utilisation, modernising berths with techno efficient loading/unloading equipment, and creating new channels for port connectivity. For streamlining the port compliances and for reducing the Turn Around Time for (TAT) for vessels, long strides have been taken at the major ports towards the digitisation of key EXIM processes observes the Economic Survey.

Inland Water Transport

Based on the outcome of techno-economic feasibility and Detailed Project Reports (DPRs), 26 National Waterways viable for cargo movement have been prioritized, out of which developmental activities have been initiated in the 14 most viable NWs states the Econmic Survey. The cargo movement on National Waterways achieved an all-time high of 108.8 million tons during FY22, recording 30.1 per cent growth compared to the previous year the Economic Survey notes.

Electricity

The total installed power capacity of utilities and captive power plants was 482.2 GW on 31 March 2022 as compared to 460.7 GW on 31 March 2021, up by 4.7 per cent. Installed capacity in utilities was 399.5 GW on 31 March 2022 as against 382.1 GW a year back (higher by 4.5 per cent) the Economic Survey notes. Thermal sources of energy make up the largest (59.1 per cent) share of total installed capacity in utilities, followed by renewable energy resources with 27.5 per cent and hydro with 11.7 per cent.

Between FY22 and FY21, the maximum rise in electricity generation was recorded in renewable energy resources for utilities and for captive plants. India has put in place a target of achieving 50 per cent cumulative installed capacity for generating electric power from non-fossil fuel-based energy resources by 2030.

The Economic Survey notes that India is well on its way to fulfilling its commitments with a gradual transition in India’s energy sector from the conventional sources to the non-fossil fuel sources through schemes like PM-KUSUM, Solar Park scheme and others observes the Economic Survey. With the government support, the private sector has actively participated in boosting the overall generation capacity and bringing down unit costs over a short period.

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RM/NJ