Infrastructure push: On Centre’s ₹102-lakh-crore plan (The Hindu)

Mains Paper 3: Economy
Prelims level: National Infrastructure Pipeline
Mains level: Economic growth investment and challenges

Context:

• For an economy that is tottering, a big bang announcement from the government can sometimes work to turn around sentiment.
• The unveiling by Finance Minister Nirmala Sitharaman on Tuesday of a mega push to infrastructure investment adding up to ₹102 lakh crore over the next five years belongs in this category.
• Projects in energy, roads, railways and urban infrastructure under the National Infrastructure Pipeline (NIP) have been identified by a task force.
• About 42% of such identified projects are already under implementation, 19% are under development and 31% are at the conceptual stage.

National Infrastructure Pipeline:

• The NIP task force appears to have gone project-by-project, assessing each for viability and relevance in consultation with the States.
• Considering that the NIP will be like a window to the future, a constant review becomes paramount if this is not to degenerate into a mere collation and listing of projects.
• A periodic review, as promised by the Finance Ministry, is necessary.
• The government’s push on infrastructure development will not only enable ease of living — such as metro trains in cities and towns — but also create jobs and increase demand for primary commodities such as cement and steel.
• From this perspective, this push to invest in infrastructure is welcome.

Challenges ahead:

• Identifying the projects to be put on the pipeline is the easy part. Implementing and commissioning them will be the more difficult one.
• There are a few hurdles that the NIP task force needs to watch out for.
• The financing plan assumes that the Centre and the States will fund 39% each while the private sector will chip in with 22% of the outlay.
• Going by the present fiscal situation, it will be no small challenge for the Centre to raise ₹39 lakh crore, even if it is over the next five years. The financial position of States is even more perilous.
• The ₹22 lakh crore expected from private investment also looks steep considering the lack of appetite for fresh investment by the private sector in the last few years.

Way ahead:

• This factor has been a major drag on economic growth.
• Given the scale of investment, debt will play an important role and it remains to be seen if banks have gotten over their apprehensions on infrastructure financing as a major part of their bad loans originated there.
• The cooperation from States becomes very important in implementing infrastructure projects.
• The experience on this count has not been very happy till now.

Conclusion:

• While these are genuine obstacles that the task force needs to manage, these should not detract from the need for a concerted effort to invest in infrastructure.
• The key will be following up and reviewing the pipeline at regular intervals.

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Prelims Questions:

Q.1) With reference to the Atal Bhujal Yojana (ATAL JAL), consider the following statements:
1. It is a centrally sponsored scheme.
2. It is implemented by the Department of Water Resources, River Development & Ganga Rejuvenation, Ministry of Jal Shakti.

Which of the statements given above are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) None

Ans: B
Mains Questions:
Q.1) What are the challenges in making the plan to boost investment in infrastructure work?