After evaluating key measures in the 2015 Indian budget,it is strongly believed that infrastructure investing may chart the country’s trajectory into the next stage of economic development. Upgrading and developing infrastructure have always been at the heart of economic development. Infrastructure may be defined as the essential facilities and services upon which economic productivity of society depends (JP Morgan).
Without the infrastructural support, ranging from roads to water systems to electricity to power and ports and airports, a modern society cannot function. For that reason and in order to catapult India to the pulpit of economic bliss, the Indian government has laid great emphasis on developing key infrastructure India needs.
|Core and Core Plus Infrastructure Development||Value Added Infrastructure Development|
|Roads:Quantum jump in budget allocation to INR 400 billion(up 59%).||Ports:Proposition to attract investment and optimize huge land resource available.|
|Water System: INR 21 billion allocated for cleaning of river Ganga||Railway: Sector allocation up by 53% year on year|
|New houses: Increased government spending on 60 billion new houses(rural and urban)||Power:Increase of 50% allocation in the Deen Dayal Upadyay,Gram joti Yogana, a scheme to provide continuous power supply to rural india. it aims to provide 24/7 uninterrupted power supply to all homes.|
Smart cities: INR 60 billion for the development of smart cities across india.
(Source: MotilalOswal, Kotak and India Infoline)
In India, infrastructure development has often function poorly. Unlike previous provisions on infrastructure development which focused on earmarking of funds, this time the orientation is one that is more productive in nature. It is more action oriented. The creation of the National Investment and Infrastructure Fund (NIIF) is testimony of a progressive idea. With this fund in place, the government will ensure annual money flows and faster execution of infrastructure projects.
In addition to a well-defined cash flow system, the Indian government is also amending rigid bureaucratic laws and processes for faster execution of projects. For example, the replacement of the need for multiple prior permission with a new regulatory mechanism is a bold attempt to reduce the administrative hurdles. The Public Private Partnerships (PPP) model for road development is being revisited for the planning, operations and delivery of projects. Real handshake between the public and private sectors would be more efficient for both sides. This means finding ways to get the private sector involvement along the infrastructure value chain which includes identification of projects, planning and execution.Accelerated construction techniques such as modularisation and pre-fabrication can significantly reduce the time it takes to construct an infrastructure asset.
Another key element which can provide the sweet spot for infrastructure projects in India, is the element of transparency. From the outset of a project, all stakeholders should be easily able to obtain information on the proposed development. Electronic Tendering (e-tender) is an excellent way to provide more viability to a project.
Going by the numbers in the above mentioned table gives a feeling of what may be in store for the future of India infrastructure development. However, if not engineered successfully, this can impede into long delays in execution of projects.
It is also worth noting that India is highly vulnerable to climate change which may harm infrastructure such as roads, ports and airports, impacting on delivery of goods and services. It becomes hereby important to establish a climate change impact assessment programme. The goal of the assessment is to look into the robustness and sustainability of the development vis a vis climate change in the long run.
One major step ahead is that already, infrastructure development has been recognised as an essential pre-requisite for the long term sustainable economic progress of India. The ball is set to reach 8-10% GDP growth rate.