Background: Infrastructure and economic growth go hand by hand. Investment in infrastructure at times through public spending is undertaken to spur up the economic growth and employment. But years of underinvestment in infrastructure have left the country with poorly functioning transit systems and power grids that have further endangered its slowing economy. Burgeoning trade is putting pressure on India’s inefficient ports, and rapid urbanization is straining the country’s unreliable electricity and water networks. According to The Global Competitiveness Report 2014-15; India ranks 87th in the world in terms of infrastructure. According to World Bank data; from 1990 to 2013 only 813 infrastructure projects by primary sector have reached financial closure and 34 projects have been cancelled accounting to waste of 5% of total investment. Infrastructure and energy are two sectors that have received most attention over the years and Greenfield investment has dominated the mode of PPP investment in primary sector infrastructure. Among 813 primary sector’s infrastructure projects, 423 belong to the transport sector and 339 belongs to the energy sector. Figure 1 depicts the percentage share of different sectors in primary sector infrastructure projects. The cumulative primary infrastructure investment in energy, telecom, transport and water and sewage sector is $139060, $96614, $91649 and $605 respectively.
Current Scenario: Table 1 represents the sub-sector wise projected investment in infrastructure under 12th plan till the last financial year.
|Table 1: Sub sector wise projected investment in infrastructure||Total Eleventh Plan||
|MRTS (Mass Rapid Transport System)||41669||13555||17148||22298||165828|
|Ports (including ILW)||44536||18661||25537||35260||242316|
|Oil and Gas pipelines||62534||12211||16604||23833||211467|
|Irrigation (including watershed)||243497||77113||87386||99178||747866|
|Water supply and sanitation||120774||36569||42605||49728||376093|
It is apparent from the above table that electricity, roads and bridges, telecommunication have received maximum attention from the government. The government has targeted that by the end of 2014-15 8400KM road length will be awarded and by the mid of the last financial year 3419 KM of roadways have already been awarded. The government has targeted to complete construction of 6300 KM and 1984 KM of the same have been achieved by the mid of the last financial year. Among the targeted 3730 KM highway length tolled; 435 KM have been accomplished. NHAI has already collected Rs. 3584 crore toll revenue by the mid of the last financial year of the targeted Rs. 6500 crore.
According to Budget of the Railway Revenue and Expenditure of the Central Government 2015-16 gross traffic receipt of the Indian Railway has increased by Rs. 193, 602, 948 in the year 2014-15 over the previous financial year. In month of March, 2015; 14.482 Km of rail has been renewed together with 11.048 Km sleeper renewal and 25.530 Km of track renewal. Again 10 bridges have been reconstructed as well.
Figure five depicts the fact number of coastal vehicle and Gross Register Tonnage has increased from 2013 to 2014. On the other hand the same for overseas has declined over the same time frame. Total cargo handled at major ports has increased by 7% during the first half of 2014-15 over the first half of 2013-14. Whereas the major ports have accounted for 4.1% of that growth; the non-major ports have contributed 11.1% of the same. Total market opportunity for air cargo in financial year 2014-15 has been estimated to 2.26 million tones.
In the month of January, 2015 the total installed power generation capacity of India was 258701.45 MW whereas the same had been 234601.94 MW in January, 2014. Fig 6 presents the mode wise breakup of the total installed capacity of power stations in India. It is clear from the concerned graph that coal is the prime power resource in India and most of the energy comes from thermal power stations.
Future Trend: Table 2 depicts the projected future trend of the infrastructure spending in India under the 12th plan. According to Industry sources Indian infrastructure sector is poised to grow by 7%-8% in the present financial year. To meet the infrastructure investment gap the country needs $1 trillion fresh investment in the concerned sector by the end of 2017. The air cargo is also expected to grow to 2.8 million tons by the end of financial year 2018.
Policy News: The proposed 100 smart cities project will also boost the growth of Indian Infrastructure. The government has also announced to increase the outlays on roadways and railways by Rs. 14031 and Rs. 10050 crores respectively. Again by 2022 the government has promised to complete 1,00,000 KM of road along with the completion of already under construction 1,00,000 KM road. Instead of thermal power; India is now all set to embrace green energy and The Ministry of New Renewable Energy has revised its target of renewable energy capacity to 1,75,000 MW till 2022, comprising 100,000 MW Solar, 60,000 MW Wind, 10,000 MW Biomass and 5000 MW Small Hydro. Moreover the proposed land bill that is all set to acquire open forest and scrub area for setting up manufacturing hubs (a total area of 1 lakh square kilometers are required) is expected to provide added boost to the infrastructure sector.