National Infrastructure Pipeline

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Context: Union finance minister unveiled Rs 102 lakh crore of infrastructure projects, under the National Infrastructure Pipeline, which will be implemented in the next five years as part of the government's spending push in the infrastructure sector.

Relevance:
Prelims: Economic and Social Development Sustainable Development, Poverty, Inclusion, Demographics, Social Sector initiatives, etc.
Mains: GS III- Infrastructure: Energy, Ports, Roads, Airports, Railways, etc.

To achieve the GDP of $5 trillion by 2024-25, India needs to spend about $1.4 trillion (Rs. 100 lakh crore) over these years on infrastructure. In the past decade (FY 2008-17), India invested about $1.1 trillion on infrastructure.
The challenge is to step-up annual infrastructure investment so that lack of infrastructure does not become a binding constraint on the growth of the Indian economy.

To achieve this objective, a Task Force was constituted to draw up the National Infrastructure Pipeline (NIP) for each of the years from FY 2019-20 to FY 2024-25 with the approval of the Finance Minister.
The Task Force is chaired by Secretary, DEA with CEO (NITI Aayog), Secretary (Expenditure), Secretary of the Administrative Ministries, and Additional Secretary (Investments), DEA as members and Joint Secretary (IPF), DEA as Member Secretary.

National Infrastructure Pipeline:

  • NIP includes economic and social infrastructure projects.
  • On the basis of the information compiled as on date, total project capital expenditure in infrastructure sectors in India during the fiscals 2020 to 2025 is projected at over Rs 102 lakh crore.
  • During the fiscals 2020 to 2025, sectors such as Energy (24%), Roads (19%), Urban (16%), and Railways (13%) amount to around 70% of the projected capital expenditure in infrastructure in India.
  • National Infrastructure Pipeline will ensure that infrastructure projects are adequately prepared and launched.
  • Each Ministry/ Department would be responsible for the monitoring of projects so as to ensure their timely and within-cost implementation.
  • The emphasis would be on ease of living-
    1. safe drinking water,
    2. access to clean and affordable energy,
    3. healthcare for all,
    4. modern railway stations, airports, bus terminals, and
    5. world-class educational institutes.
  • According to the sector-wise break-up of projects made available by the Finance Ministry,  ₹24.54 lakh crore investment will flow in the energy sector, and of that ₹11.7 lakh crore would be in just the power sector.
  • Road projects will account for  ₹19.63 lakh crore while another ₹13.68 lakh crore would be for railway projects.
  • Port projects would see spending of ₹1 lakh crore and airports another ₹1.43 lakh crore.  ₹16.29 lakh crore would be spent on urban infrastructure and ₹3.2 lakh crore in telecom projects.
  • Irrigation and rural infrastructure projects would account for  ₹7.7 lakh crore each. ₹3.07 lakh crore would be spent on industrial infrastructure.
    • Agriculture and social infrastructure would account for the rest.
  • It will help in stepping-up annual infrastructure investment to achieve the Gross Domestic Product (GDP) of $5 trillion by 2024-25.
  • The central government and state governments would have an equal share of 39% each in the NIP.
    • The private sector, on the other hand, would have a 22% share which the government expects to increase to 30% by 2025.
  • Out of the total expected capital expenditure of Rs. 102 lakh crore, projects worth Rs 42.7 lakh crore (42%) are under implementation include expressways, national gas grid, and PMAY-G (Pradhan Mantri Gramin Awaas Yojana).
    • Projects worth Rs 32.7 lakh crore (32%) are in the conceptualization stage and rest are under development. ₹42 lakh crore NIP projects which are in the implementation stage now
    • It is expected that projects of certain states, who are yet to communicate their pipelines, would be added to the pipeline in due course.

How is NIP beneficial?

  1. Economy: Well-planned NIP will enable more infra projects, grow businesses, create jobs, improve ease of living, and provide equitable access to infrastructure for all, making growth more inclusive.
  2. Government: Well-developed infrastructure enhances the level of economic activity, creates additional fiscal space by improving the revenue base of the government, and ensures the quality of expenditure focused on productive areas.
  3. Developers: Provides a better view of project supply, provides time to be better prepared for project bidding, reduces aggressive bids/ failure in project delivery, ensures enhanced access to sources of finance as a result of increased investor confidence.
  4. Banks/financial institutions/investors: Builds investor confidence as identified projects are likely to be better prepared, exposures less likely to suffer stress given active project monitoring, thereby less likelihood of NPAs.



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