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Last Updated : Jul 04, 2019 06:46 PM IST | Source: Moneycontrol.com

Economic Survey 2019: Robust and resilient infra must to create $10 trillion economy by 2032

The Economic Survey for 2018-19 asserts that India needs to spend 7-8 per cent of its GDP on infrastructure annually, which translates into annual infrastructure investment of US$200 billion currently

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Representative Image

A robust and resilient Infrastructure is fundamental and essential for the country’s budding industries. The eight core infrastructure supportive industries that include the road sector, railways, civil aviation, telecom, shipping, petroleum, power, housing and smart cities have achieved an overall growth rate of 4.3 percent during 2018-19, noted the Economic Survey 2019.

It said road construction grew at the rate of 30 kms per day in 2018-19 as compared to 12 kms per day in 2014-15. Rail freight and passenger traffic grew by 5.33 percent and 0.64 percent, respectively in 2018-19 as compared to 2017-18.

Total telephone connections in India touched 118.34 crores in 2018-19. The installed capacity for electricity increased from 3,44,002 MW in 2018 to 3,56,100 MW in 2019.

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While India has invested in its infrastructure over the years, the challenge is to mobilize adequate investment in infrastructure sector which runs into several trillions of dollars, as per the Survey.

It said in order to create a $10 trillion economy by 2032, India needs a robust and resilient infrastructure and public investment cannot fund the entire infrastructure investment requirements of the country. Therefore, the real challenge lies in bringing adequate private investment across the country with the collaboration of the public sector.

“Given the fiscal constraints that leave less room for expanding public investment at the scale required, there is an urgent need to accelerate the flow of private capital into infrastructure,” it noted.

One of the challenges facing the sector is to devise a comprehensive resolution/ settlement option for projects which are either stuck-up mid-way or wherein the arbitral disputes/claims have not been settled. The need is to establish an institutional mechanism to deal with the time-bound resolution of disputes in infrastructure sectors.

It asserted that India needs to spend 7-8 percent of its GDP on infrastructure annually, that translates into annual infrastructure investment of $200 billion currently.

It said India has been able to spend only about $100-110 billion annually on infrastructure, leaving a deficit of around $90 billion per annum.

With the aim of boosting investment in infrastructure, the National Investment and Infrastructure Fund has been created with a capital of approximately Rs 400 billion to provide investment opportunities to commercially viable projects, it noted.

In addition, a Credit Enhancement Fund for infrastructure projects for increasing the credit rating of bonds floated by infrastructure companies is going to be launched in the country. A new Credit Rating System for infrastructure projects, based on Expected Loss approach, has also been launched which seeks to provide additional risk assessment mechanism for informed decision making by long-term investors. Further, measures like infrastructure investment trusts and Real Estate Investment Trusts have been formulated to pool investment in infrastructure, it notes.

Road construction in kms grew at the rate of 30 kms per day in 2018-19

The Survey noted that the healthy growth in highways construction to a new high of 30 km per day in 2018-19 from 12 km per day in 2014-15 was achieved through proactive policies that include process streamlining, better inter-ministerial coordination, steps to address languishing projects, innovative project financing leveraging both private and public funds, streamlining land acquisition processes etc. The investments in the sector rose from Rs 51,914 crore in 2014-15 to Rs 158,839 crores in 2018-19.

Some of the major outcomes in the road sector during the period 2014-15 to 2018-19 include the construction of Eastern and Western Peripheral Expressways around Delhi, Delhi Meerut Expressway, Chenani- Nashri tunnel in Kashmir, Dhola –Sadiya Bridge over the Brahmaputra in Assam, it says.

Domestic air transport for passenger and goods rose by 14 percent and 12 percent, respectively in 2018-19

The Survey observed that India’s scheduled domestic air transport for passenger and goods rose by 14 percent and 12 percent, respectively in 2018-19. Domestic passenger traffic in Revenue Passenger KM (RPK) recorded the fastest growth in the world at about 20 percent for over 50 consecutive months up to December 2018.

New Greenfield airports are being developed very fast. At the end of  2018-19, 107 airports were providing scheduled airlines operation.

Under the UDAN (Ude Desh Ka Aam Nagrik) Scheme for regional air connectivity, a total of 719 routes have been awarded, 182 of which are operational. The scheme has provided connectivity to 23 unserved airports against the aim to operationalize 100 airports by 2026-27.

Domestic air cargo grew by 12.1 percent in 2018-19, with cargo handled reaching 3.6 MMT The first National Air Cargo Policy outline was released in January  2019. It aims to take cargo handling to 10 MMT by 2026-27.

High airport tariffs, royalty, shortage of skilled manpower, recourse to overseas suppliers of Maintenance, Repair and Overhaul (MRO) facilities, high and unpredictable change in global crude oil prices and high taxes on aviation turbine fuel are some of the challenges faced by the sector, points out the Survey.

Cargo traffic on inland waterways grew by 31 percent in 2018-19

As on January 31, 2019, India had a fleet of 1,405 ships with Dead Weight Tonnage (DWT) of 19.22 million (12.74 million GT). Ports handled 90 percent of EXIM cargo by volume and 70 percent by value. Expansion of port capacity has been accorded highest priority under projects like Sagarmala, Project Unnati etc. The Ministry of Shipping has taken many steps towards facilitating Ease of Doing Business. These include steps for reducing dwell time and transaction cost at major ports.

On the inland waterways front, India’s first inland waterway multi-modal terminal at Varanasi was inaugurated in November 2018 by Prime Minister, who also received the first container consignment that sailed over Ganga from Kolkata. Inland waterways are being promoted as cheaper and more environment-friendly modes of transport.

Efforts are on to develop a waterways route to the North Eastern states through the Indo Bangla Protocol Route. The cargo traffic on inland waterways was 55 million tonnes in 2017-18 and has grown by 31 percent in 2018-19.

5G an opportunity for the Indian industry to reach out to global markets

The Survey noted that total telephone connections in India rose to 118.34 crores in 2018-19 from just 93.3 crores in 2013-14, registering a growth of 26.84 per cent. There are as many as 51.42 crore connections in the rural areas.  Wireless telephone constitutes 98.17 percent of all subscriptions. The overall teledensity in India stands at 90.10 percent, the rural teledensity being 57.50 per cent and urban teledensity being 159.66 per cent at the end of March 2019.

The mobile industry in India has witnessed exponential growth over the last few years. As per a GSMA report, the Mobile industry supports about 6.5 per cent of India’s GDP and is expected to reach 8.2 per cent by 2020.  In 2018, mobile technologies and services generated 4.6 per cent of GDP globally, a contribution that amounted to US$4.8 trillion (4.8 per cent of GDP) and also supported a total of 32 million jobs (directly and indirectly)

Going forward, 5G technologies are expected to contribute$2.2 trillion to the global economy over the next 15 years, with key sectors such as manufacturing, utilities and professional/financial services benefiting the most from the new technology. The 5G has been conceived as a foundation for expanding the potential of the Networked Society.

The Government has constituted High-Level 5G India 2020 Forum to articulate the Vision of 5G in India and submitted its report on Making India 5G Ready in August 2018.

During 2018-19 FDI flow to the telecom sector touched US$2.67 billion which is more than double the level of US$1.3 billion in 2015-16, the survey notes.

Over 7.189 crore LPG connections released under Pradhan Mantri Ujjwala Yojana as of March 31, 2019

The Survey has observed that the government aims to Reform, Perform and Transform the energy sector of the country by achieving self-sufficiency. Ministry of Petroleum and Natural Gas has undertaken a series of reforms and new initiatives. Some of these include Hydrocarbon Exploration Licensing Policy (HELP)/ Open Acreage Licensing Policy (OALP), Discovered Small Field (DSF) Policy, Policy to Promote and Incentivize Enhanced Recovery Methods for Oil and Gas etc.

The Government has taken several decisions this year with the view to promote exploration, early monetization, incentivize production, streamline procedure and promote ease of doing business.

Pradhan Mantri Ujjwala Yojana was launched with the objective of providing LPG connections to five crore women belonging to the Below Poverty Line families.

Over 7.189 crore LPG connections have been released under this scheme as of March 31, 2019, notes the survey.

2.62 crore households have been electrified since the launch of SAUBHAGYA scheme

The installed power capacity has increased from 3,44,002 MW in 2018 to 3,56,100.19 MW in 2019. Total generation of energy during 2018-19 was 1376 BU (including imports and renewable sources of energy).

As on March 2019, as many as 2.62 crore households have been electrified since the launch of SAUBHAGYA scheme (Pradhan Mantri Sahaj Bijli Har Ghar Yojna).

Housing: 4,427 cities and towns included under PMAY (U)

The Real Estate Regulation and Development Act, 2016 (RERA) was brought in to ensure regulation and promote the real estate sector in an efficient and transparent manner and to protect the interest of home buyers,

Pradhan Mantri Awas Yojana (Urban) was launched on June 25, 2015, with the objective of providing housing facilities to all the eligible families/beneficiaries by 2022. So far 4,427 cities/towns have been included under PMAY (U).

Smart Cities Mission: Command and control centres worth Rs 2,927 crore completed in 16 cities

Smart Cities Mission was launched in June 2015 for a five-year period with the objective of promoting cities that provide core infrastructure and give a decent quality life to its citizens. Under the SCM, all 100 cities have incorporated Special Purpose Vehicles, City Level Advisory Forums and appointed Project Management Consultants.

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First Published on Jul 4, 2019 02:48 pm
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