National Infrastructure Pipeline (NIP) and Gati Shakti Master Plan: Infra Boost for India

Mains Marks Booster     5th August 2023        
Samadhaan

Introduction 

India's pursuit of a 5 trillion Economy hinges greatly on the crucial role of infrastructure development. In a bid to accomplish this goal, the country has launched the 'National Infrastructure Pipeline (NIP)' initiative, aiming to bolster infrastructure and foster employment opportunities

Furthermore, India has unveiled the 'PM Gati Shakti Master Plan', a monumental project worth Rs. 100 lakh crores, designed to holistically develop infrastructure and establish an integrated pathway for the country's economy.

Focus areas of the PM Gati Shakti Master Plan

  • Boosting local manufacturers: The plan aims to elevate the global profile of local manufacturers and enable them to compete with their counterparts worldwide. It will serve as a National Infrastructure Master Plan for India.
  • Economic zones: It opens up possibilities for the establishment of new economic zones, promoting both manufacturing and exports.
  • Infrastructure development: Infrastructure development has a multiplier effect, with every rupee invested yielding higher returns.
  • Employment opportunities: The plan aims to create job opportunities for the youth in the future.

Need for such a plan

  • Infrastructure development boosts capital spending and economic growth. It generates jobs and economic growth.
  • Quality infrastructure is crucial for inclusive growth and improving the standard of living.
  • Inadequate infrastructure not only hampers economic development but also burdens people with additional costs and difficulties in accessing essential services.

National Infrastructure Pipeline (NIP)

  • NIP encompasses economic and social infrastructure projects.
  • Sectors such as Energy (24%), Roads (19%), Urban (16%), and Railways (13%) are projected to account for around 70% of the capital expenditure in infrastructure in India from 2020 to 2025.
  • The plan outlines an investment of over ?102 lakh crore in infrastructure projects by 2024-25, with the Centre, States, and the private sector sharing the capital expenditure in a 39:39:22 formula.

Why is the infrastructure sector receiving more emphasis these days?

  • Pandemic-induced slowdown: The slowdown caused by the pandemic presents an opportunity to invest in infrastructure and boost economic growth.
  • Multiplier effect on job creation and the economy: Infrastructure spending stimulates economic activity and job creation.
  • Inclusive growth: Quality infrastructure is crucial for both economic growth and inclusive development.
  • Access to essential social services: Inadequate infrastructure not only hinders economic development but also imposes additional costs on people trying to access essential services.

Key benefits of NIP

  • Economic benefits: A well-planned NIP will increase infrastructure projects, business growth, job creation, quality of life, and equitable infrastructure access, fostering inclusive growth.
  • Government benefits: Infrastructure boosts economic activity, government revenue, and productive spending.
  • Benefits for developers: NIP improves project supply understanding, bidding preparation, aggressive bids, project delivery failures, and investor confidence, which increases finance access.
  • Benefits for banks/financial institutions/investors: Better-prepared projects boost investor confidence and reduce stressed exposures. This reduces NPAs (NPAs).

Major constraints in the implementation of infrastructural projects

  • Revenue shortfall: Slippage in revenue estimates due to lower-than-anticipated increases in GDP growth, direct tax buoyancy, and disinvestment targets.
  • Reduced funds for states: The vertical share of tax devolution from the centre to states has been reduced from 42% to 41% as per the 15th Finance Commission report.
  • Increasing fiscal deficit: Fiscal stimulus may cause high inflation, crowding out, and international rating downgrades due to India's infrastructure development.
  • Structural problems: Land acquisition, compensation payment, and approvals like land access and environmental clearances take time and cause cost overruns. Court cases delay infrastructure projects.

Highlights of the task force's report: 

The task force has proposed the following components under its Infrastructure Vision 2025, which encompasses strategic goals, innovative strategies, and standardized frameworks:

  • Affordable and Clean Energy
      • Ensuring uninterrupted 24x7 power availability.
      • Reducing pollution through the widespread adoption of green and renewable energy sources.
      • Promoting environment-friendly fuels for transportation.
  • Digital Services
      • Ensuring universal access to digital services.
      • Achieving 100% population coverage for telecom services.
      • Providing high-quality broadband connectivity to empower citizens socioeconomically.
  • Quality Education
    • Establishing world-class educational institutions dedicated to teaching, research, and technology-driven learning.
  • Convenient and Efficient Transportation and Logistics
    • Enhancing road connectivity, including expressways, major economic corridors, strategic areas, and tourist destinations.

Housing and Water Supply for All

  • Ensuring housing for all by 2022, minimizing slum populations.
  • Providing piped water to all households meeting national standards by 2024.
  • Agriculture Infrastructure
      • Expanding irrigation and micro-irrigation coverage.
      • Establishing integrated agro-logistics systems to enhance the storage, processing, and transportation of agricultural produce.
  • Good Health and Well-being
    • Establishing superior healthcare facilities, including robust electronic health records infrastructure.
    • Strengthening primary, secondary, and tertiary healthcare infrastructure across India, aligned with the goals of the National Health Policy 2017.

Issues with the report

  • Finance: While the report suggests diversifying financing sources, it does not address the economic slowdown and job losses that India is currently facing.
  • Neglecting the health sector: The allocation for the health sector in the final report is lower than recommended in the interim report, despite the inadequacies highlighted by the COVID-19 pandemic.

Way Forward

  • Striking a balance between physical and social infrastructure is crucial for achieving both economic growth and human development.
  • The government's vision of a $5 trillion economy is achievable through massive infrastructure development.
  • Capacity creation and expansion in various sectors are necessary for sustainable growth and improving the quality of life for all.

Conclusion 

Economic growth and public well-being require infrastructure development. India's economic goals are advanced by the National Infrastructure Pipeline and Gati Shakti Master Plan. India can boost economic growth and job creation by investing in infrastructure. These initiatives must address implementation issues, secure adequate funding, and prioritise the health sector to succeed. India can reach a $5 trillion economy with a well-executed plan that benefits urban and rural areas and improves citizens' lives.

Samadhaan