NIP to give a fresh fillip to energy sector, road and urban development

An additional list of projects worth Rs 3 lakh crore will be added to the infrastructure development roadmap after large states such as Gujrat, West Bengal, Rajasthan and Bihar share an updated list with the finance ministry.

According to the plan that has been drawn up, the government’s budgetary support to the identified infrastructure projects will increase from 0.74 percent of GDP in FY20 to 1.11 percent of GDP by end of FY25. The task force has recommended facilitation of JVs between global and domestic companies in infrastructure as “only a handful of strong private sector participants are available, reducing the pace of infrastructure build-out through PPP modes”.

The task force also analysed the risk-sharing norms and found that infra contracts were loaded with difficult financial and non-financial conditions which led to financial stress amongst developers. The panel has suggested that project bidding and award should be done only after 90 percent of contiguious land is acquired.

The task force also recommended that the repudiation of contracts must be restricted only to situations to be clearly defined in the contract and to facilitate out-of-court settlements, ministry-level committees should be set up to resolve complex contractual disputes.

Calling for an urgent need to enhance rating of infrastructure projects, the task force called for setting up a well-capitalised Credit Enhancement Institution at the earliest. The panel also called for a relook at norms for investment by insurance and pension funds in infra projects. In addition, regulatory tweaks for relaxing leverage norms was also recommended.

The sector with the highest investments in the infrastructure roadmap is energy with Rs 25.54 lakh crore, followed by roads at Rs 19.63 lakh crore, urban development with Rs 16.29 lakh crore,  railways with Rs 13.68 lakh crore, irrigation and rural infra with Rs 7.72 lakh crore each, and industrial infra worth Rs 3.07 lakh crore. For the telecom sector, Rs 3.2 lakh crore worth of projects have been identified while Rs 1.43 lakh crore worth of airport projects are also part of the 5-year road map.

The infra development roadmap has been made at a time when, as per finance ministry estimates, investments into the sector by the central and state governments have dipped. According to the finance ministry, in FY 19, total investments in infrastructure stood at Rs 10 lakh core vs Rs 10.2 lakh crore in the previous year.

The proposed investments in the identified projects in  FY20 has been estimated at Rs 13.6 lakh crore, Rs 19.5 crore in FY 21, Rs 19 lakh crore in FY22, Rs 13.8 lakh crore in FY23, Rs 12.8 lakh crore in FY 24 and Rs 11.1 lakh crore in FY25.