Successful achievement of an investment target of Rs 100 lakh crore in the infrastructure sector over the next five years, would need planning, monitoring, and implementation at a hitherto unrealized scale.
It was very heartening to hear the Finance Minister focus on infrastructure development and growth right at the beginning of her speech!
In recognition of infrastructure’s role in catalysing the economy, the budget speech emphasised the importance of infrastructure creation and connectivity across rural and urban markets.
This included taking forward programs and services across various key sub-sectors through existing programs like Bharatmala, Sagarmala, Pradhan Mantri Gram Sadak Yojana, dedicated freight corridors, Jal Marg Vikas and UDAN, as well as a focus on newer themes and reforms across segments like Electric Vehicles and charging infrastructure, aircraft financing and leasing, Maintenance, Repair and Overhaul (MRO) of commercial aircraft, transformation of discoms, etc.
The successful achievement of an investment target of Rs 100 lakh crore in the infrastructure sector over the next five years, would need planning, monitoring, and implementation at a hitherto unrealized scale!
The focus on preparing comprehensive plans and blue prints for various infrastructure segments is welcome – especially in the context of (1) considering systemic trade-offs and the development of economic and efficient infrastructure, and (2) interaction with other infrastructure segments/ parts of the economy.
The Budget speech also had made references to key enablers for infrastructure development - in terms of land availability, financial resources and private sector participation.
On land availability, while the budget mooted the concept of pooling/ joint models by central/state departments to make land parcels available for large-scale public infrastructure projects, it will need on-ground coordination and cooperation between multiple agencies. This is easier said than done and there is no panacea to this issue! Over the last few years, land acquisition has been contributing to delays in execution as well as increase in overall projects costs!
While the focus on integration with the global financial system and leveraging of capital from international pension/sovereign-wealth funds/ etc. is welcome, there is an urgent need and opportunity to start closer to home. The budget’s focus on deepening and energising the long-term bond and corporate debt markets should be of shorter-term focus. The expert committee proposed to be set up to study the current situation relating to long-term finance and our experience with Development Finance Institutions (DFIs) should also recommend the structure andvthe required flow of funds through such institutions in a time-bound manner to enable further action in order to bear fruit within this financial year.
Finally, the budget had a lot of focus on private sector participation for delivery of various programs/initiatives. In this context, it would be important to review and revitalize private participation models based on experiences as well as stakeholder consultations so that there is a clear road-map for their viable operational and financial performance.
Without an effective partnership with the private sector, the ‘last mile delivery’ of the infrastructure investment target or the envisioned scale of asset creation and operation would not be possible!
The author is a Partner at Deloitte India.Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.