Govt unveils mega infrastructure plan to push economic growth

India national infrastructure pipeline
The Union government and the state governments will invest 39% each of the proposed investment while the private sector will chip in with the rest 22%.

Finance minister Nirmala Sitharaman on Tuesday unveiled a mega infrastructure investment plan to make India a $5 trillion economy in five years. The Rs 102 lakh crore national infrastructure pipeline will entail projects in 23 sectors across 18 states and Union territories funded by the Centre, states and the private sector. Of the projects identified for the national infrastructure pipeline, 43% are currently being implemented, 33% are at the concept stage and 19% are in development stage.

While the Union government and the state governments will invest 39% each of the proposed investment, the private sector will chip in with the rest 22%. The government hopes to expand the pipeline by adding state government projects worth Rs 3 lakh crore. India will need an infrastructure investment of $4.5 trillion by 2030. The Union and state governments have spent Rs 51 lakh crore in the last 6 years.

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The infrastructure pipeline will offer a vision for the country’s infrastructure investments, create a large number of jobs, and provide infrastructure access to all, the finance minister told media persons in New Delhi. A robust infrastructure will enhance economic activity and create additional fiscal space by improving the revenue base of the government, the minister said.

India is currently facing a drought of private investment and the government is left with few options but to step up public investment. The economy is facing a severe slowdown and the Reserve Bank of India expects the economy to grow at 5% in the current financial year, the slowest pace since the NDA government led by Prime Minister Narendra Modi came to power in 2014. The first two quarters of the current fiscal year saw the economy growing at 5% and 4.5%. Slowing private demand and absent private investment are blamed for the slowdown. The finance ministry had constituted a committee under the economic affairs secretary to come up with a road map for the national infrastructure pipeline.

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Irrigation and rural infrastructure will see an investment of Rs 7.7 lakh crore each. Industrial infrastructure will attract Rs 3.07 lakh crore funds while the rest will go to agriculture and social infrastructure.

An investment of Rs 19.63 lakh crore is envisaged for road projects, while railway infrastructure will get another Rs 13.68 lakh crore. The country’s airports will attract Rs 1.43 lakh crore investment while port projects will receive Rs 1 lakh crore. Rs 16.29 lakh crore will be spent on urban infrastructure and another ₹3.2 lakh crore on telecom projects. The energy sector will see an investment of Rs 24.54 lakh crore according to the details provided by the finance ministry, of which Rs 11.7 lakh crore will go to the power sector.

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Of the projects identified by the national infrastructure pipeline, those worth Rs 42 lakh crore are currently being implemented in sectors such as expressways and the national gas grid. While 18 states are on board the mega investment plan, Gujarat, Bihar, West Bengal and Rajasthan have not provided a plan, Sitharaman said at the press conference.