Speeding Up With Gatishakti

The Economic Times     13th October 2021     Save    

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.