Infra Development: The Way Forward

The path for India to become a $5 trillion economy in the next
5 years goes through infrastructure development, writes S.K. Khanna


Infra Development - The Way Forward

Although the Indian economy has been facing macro-economic ups and down due to global economic gloom, it has managed to remain stable, recording moderate growth rate consistently. Braving all the problems beyond its control, it has improved its global economic ranking, and notching up to 6th position from 11th in 2018. With these credentials, India is aspiring to become a $5 trillion economy in the next 5 years. The maiden Budget of the new Finance Minister presented on July 5, contains an elaboration on the vision for making India a five-trillion dollar economy by 2023-24 through a fresh thrust on infrastructure development, digital economy, private investment, fiscal discipline, structural reforms, provision of credit growth / financing by the capital market, commitment to improve financial system which can promote private sector investment cycle, and contain imprudent borrowing.

The government also plans to construct 19.5 million houses, ensuring electricity to rural households, providing clean drinking water to all households by 2024, and offering pension benefit to over 30 million small traders and shopkeepers. Some of these measures such as construction of houses, roads and highways, state-of-the art bridges, railways, renewable, ports, airports, metros etc, already undertaken through government spending, are showing positive results. Capacity creation and expansion in important segments like roads and highways, power, railways, renewable sector, ports, airports, metros etc, are delivering impressive results.

The current buoyancy has not just confined to urban areas but also extended to rural areas and improving the quality of life for the masses. Over the period, formalization of the economy has taken place and any growth now and onwards will be more sustainable, rather than a boom-and bust process, opined the Niti Ayyog chairman at a recent seminar.

Private sector participation
Private sector participation and its investment on national projects during the past 3-4 years has been comparatively subdued and has failed to give tangible results. Investments declined sharply from 37- 38% to below 25% during FY 2017-18. As per a Crisil report, the renewable sector which has seen brisk investments, is facing headwind today. Its investment in thermal generation is already in deep trouble with stranded capacities, stressed loans, and weak demand. New investment activities in ports, airports and power transmission have remained tepid. In railways and urban infrastructure, private investments are negligible. In the road sector, some of the companies squandered their capital as the project estimates were too optimistic. They borrowed heavily to finance extravagant expansion plans and soon became cash-strapped, while others became too cautious to invest in projects, which worsened the investment crisis.

The long spell of lack of investment by the private sector has been attributed as one of the reasons for the current industrial slowdown, leading to the current lack of job opportunities and distortion in demand / supply situation, and neutralizing the government’s efforts to resurrect the situation by engaging in its development agenda.

The government’s increased spending has failed to motivate the private sector, but revival of the investment cycle should not be linked with government spending. Some of the private companies in the sector need to revise their business models in tune with the emerging economic realities and need for infra development. A serious introspection is called for and a convergence of approach, including handholding, is the need of the hour to induce infrastructure activities.

Infra Development - The Way Forward

Infra sector – the growth booster
Infrastructure development is the key to economic growth and well-being of the country’s people, as it will propel economic growth, improve quality of life, contribute to GDP nationally, and improve the Development Index globally. Therefore, massive infrastructure development is a sure way of achieving the government’s $5 trillion economy target. The country is currently an epic centre of new generation infrastructures smart cities, smart highways, airports etc., for which the government has an ambitious plan of spending over 100 lakh crores over the next five years. This is will give a boost to several sectors, create new jobs directly and indirectly, and eventually boost the commercial market, thereby propelling the country’s economic growth.

Most economists and even multilateral agencies expect the current slowdown to ebb as the impact of various measures unveiled recently begin to take hold. Speaking on the subject at a meeting, the former RBI Governor Bimal Jalan said that the current slowdown in the Indian economy is cyclical and growth will pick up in one or two years with the government’s plans and strategies for economic recovery.

Bridging Infra deficit & reforms in financing ecosystem
According to the Global Infrastructure Outlook report, although there has been tangible progress in bridging the infra deficit, India is underperforming in infra spending in relation to its GDP, in several infra segments, with its peer group that comprises Bangladesh, Cambodia, Indonesia, Mynamar, Philippines, and even Pakistain, India would need investments to the tune of $4-5 billion till 2040 to accelerate its economic growth and make it the second largest infrastructure market in Asia, after China. Since the government alone cannot do this, its infrastructure burden has to be eased.

According to Dr. Visvesvaraya the burden of infra spending can be eased and infrastructure financing ecosystem deepened and diversified through innovative financing options. We have to shift our reliance on banks and financial institutions and create a strong and robust bond market, particularly, issue rupee dominated bonds to establish the rupee as an internationally accepted currency. Ways and means for long-term capital-intensive projects are to be explored for a stable investment regime for the infra projects. In view of emerging uncertain global economic developments, we should avoid external sovereign borrowing by raising a $10biilion overseas bond, as proposed in the Budget.

PPP Projects
PPP projects need to be encouraged through innovative business models like those available in the highway sector. Simultaneously, a list of strategic bankable PPPs requiring specialized inputs be kept ready always to motivate private sector participation. “The recent example of asset monetization of road projects is a welcome development attracting private sector investment,” said Vipin Sondhi, MD & CEO of JCB India, during an interaction with the author. He added that payments to contractors who have completed their projects should be made promptly.

Conclusion
There is a whiff of fresh air on a number of fronts: the service sector is performing well, the RBI is cutting key interest rates to boost corporate investment and encouraging consumer spending to accelerate economic growth; an important decision has been made to monetize public sector assets and garner ₹3 lakh crore to fund greenfield projects; and, lastly, Australian and Canadian pension fund pledging $2 billion to the National Investment and Infrastructure Fund demonstrates international interest in India’s infra development program. The burgeoning infrastructure market presents many gainful business opportunities to overseas players who can help scale up strategic projects awaiting investment.

Broad-based private and public sector investment for infra development requires holistic efforts by all the stakeholders. The coming years will see the infrastructure sector establishing new benchmarks in project management, timely execution, implementation and completion of projects, and quality inputs within the time and cost targets. Translating the government’s vision to become a USD 5 trillion economy by 2023-24 may be a formidable task, but is achievable, nevertheless.
Click Here
To Know More / Contact The Manufacturer
Please provide your details we will contact you as soon as possible
Please let us know your name.
Invalid Input
Please let us know your Designation.
Invalid Input
Please let us know your City.
Please let us know your State.
Please let us know your Country.
Please let us know your Contact Number.
Please let us know your email address.
Please brief your query.

“Nal Se Jal” - SPML Infra Playing Key Role in Developing Water Infrastructure in India

SPML Infra Limited, India’s leading water management company will play a key role in the development of sustainable water infrastructure to realize the vision of “Nal Se Jal”. This ambitious scheme announced by the Finance Minister during Read More ...

Indian Aviation on a Growth Path

The Aviation Industry in India has emerged as one of the fastest growing industries in the country, especially so during the last three years. Introduction of low-cost carriers, FDI in domestic airlines, advanced information technologies Read More ...

Redefining Urbanity with international transport system

Creative Group presents a new vision for Chandni Chowk (a very congested area in Old Delhi) with re-planned interconnectivity, intermodality, and green spaces, that release the current stress above the ground and create opportunities to restore Read More ...

Rapid Transit System in India Making inroads

To quote Mark Walport, “Industrialisation, Mass Transit, and the Internet are technological revolutions that have reshaped lives, nations, and the planet.” The Indian economy is poised to grow at over 7% in the coming years, placing it Read More ...

Attracting Private Investments to Boost Highway Growth in India

Ever since India set out on a path of economic liberalization in 1991, the policymakers for almost three decades remained focused on developing infrastructure to commensurate with the economic growth of the nation. But the task was humongous Read More ...

Transport Infrastructure in Focus

Transport Infrastructure to continue as a key focus area for new Government with massive capital outlay of up to ₹30 trillion expected over next five years. Construction companies are likely to be the major beneficiaries and will witness Read More ...

Real Estate Market Outlook 2019

India continues to retain its position as the world's fastest growing major economy on the back of improved investor confidence and better policy reforms. The IMF's database also suggested that India's contribution to world growth Read More ...

Infra Construction - Positives Outweigh Negatives

For a large part of the current up-cycle which started in CY2016, road work has largely been the biggest demand driver, followed by railways/metro.Notwithstanding the general slowdown in public/private infrastructure work Read More ...

ICRA - Strong demand growth for Mining & Construction Equipment Industry

The Indian Mining & Construction Equipment (MCE) industry is likely to see a moderation in demand growth, which is expected to fall to 4-6% in the medium term, more particularly during CY2019. The basic reason are the policy Read More ...

THE ILAN AND ASAF RAMON INTERNATIONAL AIRPORT

Israel's Ilan and Asaf Ramon International Airport will service the Red Sea resort city of Eilat and surrounding region. Commissioned by the Israel Airport Authority (IAA), the project was handled from A to Z by design Read More ...

Real Estate

Staving off the triple impact of Real Estate Regulation and Development Act (RERA), Goods and Services Tax (GST) and Demonetization (which had brought the sector to a grinding halt), India's Real Estate is back on Read More ...

Construction Dust Causes, Effects and Remedies

Construction dust can seriously damage the health of construction workers and if exposed for longer times can eventually even kill them. About 22,000 to 52,000 persons per year are dying due to inhaling polluted air in USA alone Read More ...

3-D Printing in Construction: A Review

Three dimensional printing has made its advent in construction in the recent past. With recent advancements in technologies, materials and further inclusion of building information modelling into the construction process, 3D printing is Read More ...

Reforms leading to higher expectations

The RRE has witnessed a prolonged downcycle owing to high inventory, muted demand, weak affordability, and declining investor interest. However structural changes over the last two years in the form of Real Estate Read More ...

Real Estate Industry in 2019

Post the revival of the Indian real estate sector through a series of initiatives by the government, the confidence of the homebuyers has increased with a clear understanding of the market. The developers have also witnessed Read More ...

Technology Transforming Indian Real Estate

One of the most potent and radical ground-breaking technologies set to transform property markets in current times is artificial intelligence (AI), which along with machine learning are reforming technology all Read More ...
NBM&CW

New Building Material & Construction World

New Building Material & Construction World
MGS Architecture

Modern Green Structures & Architecture

Modern Green Structures & Architecture
L&ST

Lifting & Specialized Transport

Lifting & Specialized Transport
II&TW

Indian Infrastructure & Tenders Week

Indian Infrastructure & Tenders Week