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A peek into Modi's infrastructure blueprint

May 27, 2019 13:42 IST

Getting private sector back in a big way would be the topmost priority since the government has a limited fiscal headroom.

Illustration: Dominic Xavier/Rediff.com

In line with its election promise of Rs 100 trillion investment in the infrastructure sector by 2024, the NDA government would be targeting low-hanging fruits, such as Metro projects, inland waterways, natural gas grids and airport privatisation, to give a fillip to private sector investment in the first few months of its tenure.

 

Getting private sector back in a big way would be the topmost priority since the government has a limited fiscal headroom.

Fitch said in a May 24 report that reducing general government debt to 60 per cent of the GDP ceiling by FY25, from the rating agency’s 68.8 per cent of the GDP in FY19 would require a significant deficit reduction of about 0.5 per cent of GDP annually.

The government’s own budgetary support would, therefore, be largely limited to creating infrastructure support for agriculture, IT in education and digital networks for its social outreach programmes.

The road sector, however, would have to continue to depend on borrowings and budgetary resources, like the railways.

While wayside amenities, along the national highways would be planned as part of corridor approach towards road development, private investment in the sector would largely come in monetisation of existing assets over the next few weeks.

Though the BJP manifesto talks of doubling the length of national highways by 2022 and building of 60,000 km over the next five years, besides launch of Bharatmala 2.0, getting back of big construction companies would be a key challenge and might need over 100 days.

According to the BJP, there were 65 functional airports in 2014 and it has gone up to 101 now.

The plan is to double the number of functional airports, though their feasibility could be a concern since they would start competing with each other for traffic.

The growth in domestic traffic slowed down for the second consecutive year to 13.8 per cent in 2018-19.

Besides, four airports, costing around Rs 56,000 crore, are already delayed despite contracts being awarded, due to land acquisition issues.

Avoiding financial stress among airport operators would be important, especially since the two biggest airlines of the country, government-owned Air India and now non-functional Jet Airways, are struggling with huge debt, impacting the service side of aviation business.

Underscoring the need for a sharp focus on execution, Shubham Jain, group head & VP, Corporate Ratings, Icra, said, “With the return of NDA, one can expect that the large programmes, viz. Bharatmala, Sagarmala, inland waterways, housing for all, AMRUT, smart cities, Metro rails and railways would continue to remain in focus and it is expected the government will continue to improve its efforts in terms of achieving higher execution rates to meet the ambitious targets.”

In case of railways, private investment would remain in the periphery segments, such as wagon ownership, container carriage, station redevelopment and warehousing.

Electrification of 10,500 km of railway tracks by 2022 would again gain impetus, besides conversion of all viable rail tracks to broad gauge by then.

Marque projects, such as bullet train between Ahmedabad and Mumbai, and Vade Bharat Express, would be pushed, despite cost concerns.

Urban mobility through National Urban Mobility Mission would be a focus area in order to promote use of public transport and provide technology-based mobility solutions to local bodies.

Use of electric vehicles in public transport would get a leg-up.

Building walking and cycling tracks would simultaneously be pushed though the success of these measures and large portion of funding would depend on local and state governments.

Jyoti Mukul in New Delhi
Source: source
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