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National Infrastructure Pipeline

National Infrastructure Pipeline

Why in News?

  • Recently, the task force headed by Atanu Chakraborty (economic affairs secretary) on National Infrastructure Pipeline (NIP) submitted its final report to the Finance Minister.

National Infrastructure Pipeline

  • NIP will enable a forward outlook on infrastructure projects which will create jobs, improve ease of living, and provide equitable access to infrastructure for all, thereby making growth more inclusive.
  • NIP includes economic and social infrastructure projects.
  • It also includes both greenfield and brownfield projects.
  • It will help in stepping-up annual infrastructure investment to achieve the Gross Domestic Product (GDP) of $5 trillion by 2024-25.
  • The Centre and states are expected to have almost equal share in implementing NIP, while the private sector contribution is expected to be around 21%.

Key benefits of NIP

  • Economic: 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.
  • 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 in productive areas.
  • 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.
  • Banks/financial institutions (F1s)/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.

Background

  • The task force was set up after the Prime Minister, in his Independence Day speech of 2019, promised to roll out an infrastructure push worth ₹100 trillion over five years to make India a $5 trillion economy.
  • The summary report for, National Infrastructure Pipeline (NIP), 2020-25 was released by the finance minister on 31 December, 2019.
  • Out of the total expected capital expenditure of Rs 111 lakh crore
    • Projects worth Rs 44 lakh crore (40 % of NIP) are under implementation.
    • Projects worth Rs 33 lakh crore (30 % of NIP) are at conceptual stage.
    • Projects worth Rs 22 lakh crore (20 % of NIP) are under development.

Task force on National Infrastructure Pipeline

  • A Task Force was constituted to draw up the National Infrastructure Pipeline (NIP) for each of the years from financial years 2019-20 to 2024-25.
  • A task force of senior bureaucrats chaired by Economic Affairs Secretary Atanu Chakraborty then identified
  • 102 lakh crore projects in 18 States as part of a National Infrastructure Pipeline. Government also added that another
  • 3 lakh Crore worth of projects are likely to be added soon. The investment is phased over a six-year period, including the current financial year. The funds would come from budgetary and extra-budgetary resources, as well as funds raised from the market and internal accruals of the relevant state-owned companies.

Major Focus Areas of Investment

  • Almost a quarter of the capital expenditure will be going to the energy sector, with ₹24.5 lakh crore expected to be invested in power, renewable energy, atomic energy and petroleum and natural gas.
  • The other major focus areas are roads (19%) and railways (13%), urban (16%) and rural (8%) infrastructure, and irrigation (8%).
  • Social infrastructure, including health and education, will get 3% of the capital expenditure, with digital communication and industrial expenditure each getting the same amount as well.
  • Agriculture and food processing infrastructure will get one per cent of the planned capital expenditure.
  • The emphasis would be on ease of living: safe drinking water, access to clean and affordable energy, healthcare for all, modern railway stations, airports, bus terminals and world-class educational institutes.

Challenges While Implementing The NIP

  • Fund constraints for large projects as the size of the proposed investment is big when compared to the previous six years’ completed investment in the infrastructure sector. Centre and states invested Rs.51 lakh crore during the previous six years. Here, realising Rs.102 billion in the next five years will be a huge task given the precarious financial situation of the governments.
  • Lengthy procedures in land acquisition and payment of compensation Environmental concerns while implementing the infrastructure.
  • Time and cost overruns due to delays in project implementation and procedural delays and lesser growth rate than expected
  • Risks during project implementation due to stalled or languishing projects or shortfall in funds for maintenance.

 

ALSO READ : https://www.brainyias.com/financial-action-task-force/

Indian Economy

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