Speeding Up With Gatishakti

Context: Infrastructure plays an important role in the economic transformation of a country.

Benefits of infrastructure spending

• Multiplier effect: RBI and National Institute of Public Finance and Policy (NIPFP)’s study has estimated the multiplier to be 2.5-3.5 times.

• • For every rupee spent by government in creating infrastructure, GDP gains are worth Rs 2.50-3.50 accrue.
  • In times of economic contractions, this multiplier is larger than the one during times of economic expansion.
• Employment intensive: Provides jobs through increased demand for labour & construction materials.
• Improved connectivity by bringing cost of logistics down through faster movements of goods/people.
• Public investment, if timed and targeted right, can ‘crowd-in’ private investment.

Issues hampering creation of multimodal infrastructure network

• Lack of scale in manufacturing: Due to unavailability of large tracts of land for industrialization.
• Inefficient logistics network: Industrial and logistics parks need to grow in size to be globally competitive.
  • But, many economic zones, industrial parks, logistics hubs, and ports were suffered due to inefficient multimodal connectivity and their small size.
• Silos of departmentalism: resulted in fragmented nature of decision-making and creation of the disjointed industrial network.
• Domination of roadways in the share of traffic (64%) raises prices across the board with any spike in oil prices.

Policy Response: Announcement of National master plan, GatiShakti

• Single platform: All existing and proposed economic zones have been mapped along with multimodal connectivity infrastructure on a single platform.
• Centralised planning: Individual projects of different line ministries will be examined and sanctioned in future within the parameters of the overall plan.
• A geographic information system (GIS)-based enterprise resource planning (ERP) system, with over 200 layers for evidence-based decision-making, is an example.
• Use of satellite imagery for monitoring
• Digitisation for timely clearances and flagging potential issues, and in project monitoring as well.

Way Forward: Continuous easing of business environment, coupled with economic reforms, to boost formality and productivity

• Raise India’s capital expenditure.
• Creation of seamless multimodal transport network: Meaning roads would feed into railway lines that, in turn, would feed into ports, efficiently moving goods from the hinterlands to the ports.
• Balanced regional development through multiple industrial clusters and urban centres.
• Close coordination with state governments through National Industrial Corridor Development Corporation (NICDC). States must take the lead in identifying parcels of land for industrialisation.
• Cleaning up of bank balance sheets will raise availability of credit.
• Incorporation of  climate-change adaptation and mitigation strategies in all projects
  • Indian Railways, has committed towards becoming a net zero-carbon emitter by 2030s &Railway electrification has increased 371% since 2014.