Late in January 2020, the government released the National Infrastructure Pipeline (NIP), a detailed sector-by-sector study and compilation of infrastructure projects up to FY25. The release of the report and the headline number of investments of Rs 102 lakh crore generated a lot of excitement. An erroneous impression was created in some quarters that these are all new investments and that more than Rs 100 lakh crore was going to be spent on new projects in the next five years. That’s clearly not the case at all as a detailed study of the government press release makes clear.
About 42% of the projects in the NIP are under implementation, which means construction work is already going on. Another 19% is under a development stage, while a big 31% is still in the conceptual stage. Some projects may not see the light of day, or may be junked, or postponed to beyond 2025.
No, the big news in infrastructure is not the NIP, which is a good, comprehensive and transparent document of intent and progress. The big news has been in the making for the last 18 months or so, both in terms of policies and implementation. Take a look:
1) Privatisation of airports is gathering pace. Six airports have already been privatised and civil aviation minister Hardeep Puri is on record saying that privatisation of six more will be done soon. The Zurich International Airport has just won the bid to build a brand new airport for Delhi, while working on a spanking new airport for Mumbai is going on.
2) Big changes in city gas distribution. IndianOil Corporation, Adani Gas, HPCL have won bids to distribute compressed natural gas to automobile owners and piped gas to households in a majority of cities. The 10th round of city gas distribution bids will cover 55-60% of Indian cities. “It appears that economist analysts are missing the retail gas revolution set to sweep the country,” infra expert Vinayak Chatterjee of Feedback Infra said in a Twitter post on December 20. He estimates an investment of Rs 4 lakh crore in pipelines and support infrastructure.
3) The Mumbai-Nagpur super expressway received full funding from banks of Rs 28,000 crore and work is going on. Much of the infrastructure for Mumbai, estimated to top Rs 1lakh crore, is also going on despite change in the government. Some projects should also get completed by the end of this year.
4) Indian Railways’ plan to allow private train operators on nearly 150 routes and the freeing up of coal mining completely for the private sector is another bold move that could galvanise private investment in these areas. Of course, a lot depends on terms and conditions set by the government, especially in private train operations, and easy funding options for debt-weary private sector companies would be crucial. But no one can deny that these are important reforms.
Banks have been shying away from infra funding and it is very difficult to blame them given all that’s happened in the past few years. But a new set of investors and financiers have appeared on the horizon in the form of JICA (Japan International Cooperation Agency), Asian Infrastructure Investment Bank, our very own National Investment and Infrastructure Fund (NIIF) can help bridge the shortfall created by banks’ reluctance and the absence of a vibrant bond market.
Problems remain and challenges abound. Especially in a country where much of decision-making on these issues is mired in petty politics and depressing red-tapism. An infra boom is not guaranteed and nor is it going to be easy. But the building blocks are being put in place and the country should see much better infrastructure creation in the next 5-10 years than in the past decade.