Infra Investment of Rs102 lakh cr in FY20-25: Economic Survey 2020

The Union Minister for Finance & Corporate Affairs, Nirmala Sitharaman tabled the Economic Survey 2019-20 in Parliament today. The Economic Survey gave a detailed analysis of the trends in India’s infrastructure sector.

The Survey emphasized that investment in infrastructure is necessary for growth.  Power shortages, inadequate transport and poor connectivity affect overall growth performance.  Since the provision of adequate infrastructure is essential for inclusive growth, India recently launched the National Infrastructure Pipeline (NIP) for the period FY2020-2025.

To achieve GDP of USD 5 trillion by 2024 – 2025, India needs to spend about USD 1.4 trillion (Rs100 lakh cr) over these years on infrastructure so that lack of infrastructure does not become a constraint to the growth of Indian economy.  NIP is expected to enable well-prepared infrastructure projects that will create jobs, improve ease of living and provide equitable access for infrastructure for all thereby making growth more inclusive, the Survey observes.

As per the NIP, Central Government (39 per cent) and State Government (39%) are expected to have an equal share of funding of the projects followed by the private sector (22 per cent).  Projects worth Rs42.7 lakh cr (42%) are under implementation.  Financing of the National Infrastructure Pipeline will be a challenge but the Survey hoped that a bouquet of the well-prepared project will attract from Central and State Government, urban local government, banks and financial institutions, PE funds and private investors, both local and foreign.

The Economic Survey gave an overview of sectoral developments relating to Railways, Road Transport, Civil Aviation, Shipping, Telecom, Petroleum and Natural Gas, Power, Mining, Housing and Urban Infrastructure.

Road Sector
The Economic Survey noted that road transport is the dominant mode of transportation in terms of its contribution to Gross Value Added (GVA).  In 2017-2018 the share of the transport sector in the GVA was about 4.77% of which the share of road transport is 3.06% followed by Railways (0.75%), air transport (0.15%) and water transport (0.06%).

Total investment in the roads and highways sector has gone up more than 3 times in the 5 years of 2014-15 to 2018-19.

The Survey marked that during the year 2018-19 Indian Railways carried 120 crore tones of freight and 840 crore passenger making it the world’s largest passenger carrier and fourth-largest freight carrier.

Civil Aviation
Taking a comprehensive view of Civil Aviation, the Survey observed that India has 136 commercially managed airports by Airport Authority of India and 6 under Public-Private Partnerships for operation, maintenance and development of airports.  A total of 43 airports have been operationalized since the scheme for operationalizing unserved airports (UDAN) was taken up.  India stood first along with 7 other countries in airport connectivity according to the Global Competitiveness Report 2019 of the World Economic Forum.

To ease the strain on existing airport capacities 100 more airports are to be made operational by FY2023-24.  The Survey noted that to continue with the high growth trajectory the Government has been providing a congenial environment so that Indian carrier double their fleet from about 680 aircraft at the close of 2019 to 1200 by FY2023-24.

Talking about the strides in the Shipping sector, the Economic Survey stated that around 95% of India’s trade by volume and 68% in terms of value is transported by sea.  As on September 30, 2019, India had a fleet strength of 1,419 ships.

The major ports in the country have an installed capacity of 1514.09 MTPA as on March 2019 and handled traffic of 699.09 MT during 2018-19.  The Survey said that the Ministry of Shipping is striving to improve operational efficiencies through mechanization, digitization and process simplification.  The average turnaround time in 2018 improved to 59.51 hours as against 64.43 hours in 2017-18.

Telecom Sector
Taking a view of the Telecom Sector the Economic Survey noted that there are four major players in the telecom sector in India today - three in the private sector and BSNL and MTNL in the public sector. The survey highlighted that since the price of data in India is among the lowest in the world it will help to achieve the goal of developing broad-band highways as part of the digital India campaign. The Government is implementing the Bharat Net programme in a phased manner for providing Broadband connectivity to all the 2.5 lakh Gram Panchayats in the country.

Petroleum and Natural Gas
The Economic Survey observed that India is the 3rd largest energy consumer in the world after USA and China.  India’s energy requirement is fulfilled primarily by coal, crude oil, renewable energy and natural gas.  With major reforms undertaken by Ministry of Petroleum and Natural Gas in exploration and licensing policy to enhance exploration activities, attract domestic and foreign investment and accelerate domestic production of oil and gas from existing fields there has been a surge of reserves of crude oil in 2019.

The Survey said that India has a refining capacity of 249.4 MMTPA and is the fourth largest in the world after the United States, China and Russia.  There is a need to augment refining capacity to meet the growing demand for petroleum fuels and petrochemicals.

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