Indian infrastrcuture

Trillion Dollar Dream

Infrastructure will redefine the growth of the new India, says Shilpa Sachdev

For one of the fastest growing economies of the world like India, building the corresponding infrastructure has assumed far greater significance than before. With the Prime Minister according top priority to the country’s infrastructure development, work on several infrastructure projects is bound to gain momentum. Tier I cities are already bustling with people but with even Tier II and Tier III cities seeing more migration and growth coming their way, there is an urgent and definite need to put in place a stronger and sustainable road map for infrastructure. And private-public partnership will play a pivotal role to make this a reality.

The Prime Minister has reviewed and approved the targets for the coming year (2012-13). According to PM Manmohan Singh, India is at a critical juncture. He said that it is imperative to take measures to give a boost to the economy and give a thrust to investment, both public and private. There is a need to create an atmosphere which is conducive to investment and to removing any bottlenecks to growth. He also assured that the government will take the necessary measures to reverse the situation and revive India's growth story. These will turnaround India and take it back to a growth path of 9%. 

In this context, infrastructure investment plays a major role. But the needs of the sector are vast. Infrastructure needs over $ 1 trillion in the next five years. The government alone cannot invest this amount and therefore, public-private partnerships will be crucial. Over a period of time, the Government of India has taken several initiatives to accommodate and accelerate private investments in the infrastructure sector. These include sector specific policies, providing incentives and tax holidays to attract private investments, permission of 100% FDI in the infrastructure sector, special provision of Viability Gap Funding (VGF) and PPP approach. Provisions for setting up an Infrastructure Debt Fund have already been announced in the Budget for FY 2012. Norms have also been relaxed for channelizing funds through the Corporate Bond Market.

Ravi Ahuja, MRICS Executive Director, Cushman & Wakefield says, “The present UPA Government has sent out strong signals in the Budget 2012-13 that they would like to tackle infrastructure development across the nation by announcing Rs 50 lakh crores investments during the next five years, setting up an Infrastructure Debt Fund to collect INR 8,000 crores from overseas markets, issuing Tax free bonds of INR 60,000 crores and allocating greater funding limits for priority sub sectors such as highways, railways, ports, power and housing. Half of these investments are expected from the private sector, which would therefore offer opportunities to the infrastructure companies and real estate sector. A number of the projects would have to be developed through the public-private partnership model as neither the Government nor the private sector would be in a position to develop them entirely by themselves.”

The 12^th Five Year Plan that began from April 2012 has revolutionary allocation on infrastructure. The Planning Commission has proposed a set of targets for the five sectors in consultation with the concerned Ministries. To present a few highlights, for Ports, the target will consist of a total of 42 projects for a value of Rs 14,500 crores and a capacity of 244 MTPA. This is three times of what was achieved last year. Two projects for brand new Major Ports will be taken up during the year. These will be in East Coast (Andhra Pradesh) and West Bengal.  

Total Road length to be awarded in FY 12-13 will be 9,500 kms, an increase of 18.7% over last year. The investment will rise by 73.6%. Around 4,360 kms of roads will be awarded for maintenance under the OMT (Operate, Maintain, Transfer) system for the first time.  

In the Civil Aviation sector, work on Itanagar airport would be commenced by AAI. The total investment on AAI projects will be Rs 2100 crores. Three new Greenfield Projects will be awarded in FY 13. These will be at Navi Mumbai, Goa and Kannur. New international airports will be declared in three or four of the following locations this year - Lucknow, Varanasi, Coimbatore, Trichy and Gaya. An airline hub policy would be finalised and hubs would be operationalised at Delhi and Chennai in FY13. By the end-July 2012, additional PPP projects would be finalised for 10-12 existing airports and for 10-12 greenfield airports. These would be awarded during the year. PPP in airport operations would also be explored.

For Railways, a Dedicated Freight Corridor- PPP for the Sonnagar - Dankuni stretch will be awarded in FY 12-13.  An elevated rail corridor in Mumbai with a total investment of Rs 20,000 crores will be awarded in awarded in FY 12-13. 3. Station redevelopment of four or five stations will be done in PPP mode. Proposal and approach for a High Speed Corridor (Bullet Train) from Mumbai to Ahmedabad will be finalised. 

In the Power sector, the capacity addition target for this year will be 18,000 MW (17,957 MW to be precise) including 2,000 MW to be added by the Kudankulam Atomic Power Project. The power generation target is 930 billion Units, an increase of 6.2%.  

Though the Government has presented an ambitious list of proposed infrastructure projects to be developed this year, it needs to place equal attention on ensuring that the projects get delivered on time. Implementation of infrastructure projects has often been reported as the primary bottleneck in the entire process. A futuristic design like a Bandra Worli Sea link or the swanky Delhi airport is proof enough that if the funding and implementation is in place, there is no reason why we cannot shape a new India.