A review of the infrastructure sector over the past eight years provides evidence of fresh and bold thinking and the resulting gear shifts in policies, processes and practices. Here are nine thrust areas that collectively qualify for an overall grade of A+.
First, when the NDA took charge of the center in the summer of 2014, it recognized that reliance on public-private partnerships (PPPs) – the hallmark of the UPA era – had reached an all-time low. The NDA government quickly concluded that it would necessarily require large public investments in infrastructure to kickstart the necessary momentum and boost the rest of the economy as well. It has subsequently supplemented this strategy with ever-increasing allocations of public funds. Infra-investment, which totaled Rs. 6.3 trillion in FY2014, is now expected to reach nearly Rs. 16 trillion in FY22.
Second, there were fears that with the abolition of the Planning Commission there would be no coherent plan of action. While individual ministries launched their own plans and programs, the announcement of the National Infrastructure Pipeline in 2020 finally solved the problem. Gross investment in infrastructure (GCFI, as a percentage of GDP). The government went a step further to try to create a virtuous cycle in which the funding of public spending is also fueled by the proceeds from the monetization of state-owned assets, as typified by the National Monetization Plan.
The third and more dramatic change was the strategy for supplying utilities to the aam aadmi. It should no longer rely on incremental efforts, but pull out all the stops in mission mode to bring water and electricity to 100% of Indian households. This is one of the greatest efforts to improve the “quality of life” of any emerging market today.
Fourth, in those eight years, transport links to underserved parts of the country have improved tremendously, as evidenced by the expansion of rail and road networks to reach outlying areas (particularly in the Northeast and J&K) and the opening of air transport services to previously unserved ones cities. The rural roads program has continued to make great strides in the countryside. For urban commuting, metro systems have been activated for most major cities in India.
Fifth, the emphasis on a cleaner India, Swachh Bharat, led many initiatives to be vigorously pursued. The push toward ODF (Open Defecation Free) communities and river cleanup has been particularly notable. A number of wastewater treatment plants have been set up to prevent direct discharge into rivers. The fact that Indian Railways now has 100% of its passenger coaches equipped with biodegradable toilets that have a lock on the opening has not been sufficiently recognized.
Sixth, it is widely recognized that India has taken a firm stand on green energy. India’s achievements in renewable energy capacity are for all to see, and the recent push towards 100% railway electrification, electric vehicles and hydrogen emission are testament to its strong commitment to decarbonisation. India’s leadership in the International Solar Alliance was recognised, as was its commitment to climate protection goals.
Seventh, beyond renewable energy, the roads and highways sector continues to be the shining star of the infrastructure sector – even amid two years of severe Covid-related project execution challenges. Add to that the advances in FastTag, monetization through InVits, and the shift to greenfield freeways (from the previous lane widening) – all have earned well-deserved awards for leadership.
Eighth, on processes, three initiatives stand out for their predictably huge potential impact on operations. The first is the iconic Gati Shakti platform, which uses a multi-layered and sophisticated GIS to better design and monitor infrastructure projects. Next comes the National Single Window System to allow all clearances and approvals to be processed on one e-platform. Finally, there is the Treasury Department’s semi-revolutionary circular of October 29, 2021 on changes in government procurement policies, which is at the root of the much-ridiculed “L1 raj” (low-cost tendering system) as well as the scourge of late payments.
Ninth, possibly for the first time in India’s economic history, the capacity to finance infrastructure projects has reached a level of maturity during this period. Between the spending of the union budget, the state’s share, PSU and off-budget resources, and domestic and foreign investment (including the development of InVits and REITs), funding is no longer the effective constraint. The establishment of the DFI, NABFID (National Bank for Financing Infrastructure and Development) is expected to significantly improve long-term financing capacity.
It is well known that rating scales go beyond an A to AA and AAA levels. So why only an A+?
Well, it must be admitted that there have been challenges and shortcomings along the way. A number of areas stand out as an “unfinished agenda”. One of these is the overhaul of institutional systems and processes to revitalize interest in PPPs. The other is the much-needed “surgical strike” to overhaul India’s power distribution sector. The much-vaunted development of inland waterways and coastal shipping is still a work in progress. The popular belief is that the Smart Cities program has not lived up to its promise. The bullet train is far behind schedule. India’s energy diversity has been neglected, particularly in relation to hydropower and the civil nuclear program. The Department of Statistics and Program Implementation estimates a $4 trillion loss from cost overruns from stalled and delayed infrastructure projects.
Nonetheless, it must be recognized that India has emerged as the largest infrastructure development market in the world. US resident Joe Biden has put together a $1 trillion plan to transform US infrastructure. India’s National Infrastructure Pipeline is $1.4 trillion!
So it’s A+.
(The author is an infrastructure professional and is the founder and executive trustee of the Infravision Foundation; views are personal)