Manmohan Singh promises to speeden up infrastructure development
Prime Minister Manmohan Singh on Wednesday (June 06, 2012) sent a strong
signal by outlining an ambitious agenda to put infrastructure projects on the fast
track. He promised a big push to infrastructure development and pledged quick
action in awarding airports, highways and port projects in a meeting with
ministers and top officials from the power, coal, aviation, railways, highways and
shipping ministries. With Indian economy in doldrums and general elections
round the corner, this was anticipated. The Prime Minister said that
infrastructure development was a key part of the strategy to revive the India
growth story and has outlined an impressive target for the same.
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Sector wise target
Sectors Proposals
Ports i. 2 major ports in Andhra Pradesh and West Bengal at an
investment of Rs 205 bn for a capacity of 116 MTPA
ii. Target for FY13 consists of a total of 42 projects costing Rs 145
bn with a capacity of 244 MTPA
Roads i. Target of 9,500 km of road projects to be awarded in FY13
ii. Target to award 4,360 km of road projects for maintenance
Civil
Aviation
i. 3 new projects to be awarded in Navi Mumbai, Goa and Kannur
ii. International airports to be announced in 3 – 4 locations out of
Lucknow, Varanasi, Coimbatore, Trichy and Gaya
iii. An airline hub policy to be finalized and to be operationalised
in Delhi and Chennai
iv. Public Private Partnership (PPP) for at least 20 airports
Railways i. Elevated rail corridor to be awarded for Mumbai at an
investment worth Rs 200 bn
ii. Plans for Mumbai-Ahmedabad high-speed corridor or bullet
train project to be finalised
Power i. 18,000 MW capacity to be added including 2,000 MW of
Kudankulam Atomic Power Project
Coal i. Coal India to dispatch 470 MT of coal to all sectors, power
sector to get an increase of 8.8% at 347 MT
Despite huge infrastructure growth opportunity, the world’s second fastest growing economy has been a laggard
when it came to developing its infrastructure. Be it macro conditions, lack of effective government policy or just
plain underperformance by companies. To bridge the infrastructure deficit to achieve an inclusive growth as well
as accelerate GDP growth, investment in infrastructure across segments is likely to increase tremendously in the
12th Five Year Plan period as against 11th Plan.
The government’s projected investment in 12th Plan is Rs40,152 bn as compared to an investment of Rs19,481 bn
in the 11th Plan. The government has plans to rely more on infrastructure investment by private sector and has
targeted for private investment contribution of 50% in 12th Plan as compared to 37% in the 11th Plan and 25% in
the 10th Plan. This indicates increased PPP projects/participation in future.
Infrastructure sector continues to be one of the exciting growth opportunities in India. However, given the large
quantum of projects and the majority funding being targeted through the PPP route, funding and timely execution
have assumed key significance. Initiatives taken by the government in the last few years indicate that alternate
source of long-term funds for the infrastructure sector is being worked out. Government initiatives like increasing
the FII limit in corporate bonds, likely creation of Infrastructure Debt Fund, IIFCL takeout financing scheme and
tax-free infrastructure bonds for individuals are among the steps taken to minimize this concern.
The News:
Manmohan Singh promises to speed up infrastructure development
Prime Minister Manmohan Singh promised a big push to infrastructure development and pledged quick action in
awarding airports, highways and port projects, as he sought to boost investment and growth in "turbulent" times.
At a meeting with ministers and top officials from the power, coal, aviation, railways, highways and shipping
ministries, he said infrastructure development was a key part of the strategy to revive the India growth story,
which faced "formidable" challenges because of the international situation and inflationary pressures.
The Prime Minister promised contracts for 9,500 km of highways, port projects worth Rs 35,000 crore, pubic
private partnership (PPP) projects for at least 20 airports, two new major ports on the east coast, and the Rs
20,000 crore project for Mumbai's elevated rail corridor. Singh said the government was keen to take effective
steps to tackle the challenges faced by the economy. "After achieving remarkably high growth rates over the past
eight years and emerging as the second-fastest growing large economy in the world, we are now running into
more turbulent weather," he said.
PM said that by the end of July, PPP projects would be finalised for 10-12 existing airports and a similar number of
greenfield airports, which would be awarded during the current fiscal year. He also said new international
airports would be declared in three to four locations out of Lucknow, Coimbatore, Trichy and Gaya, and an airlines
hub policy would be finalised. Hubs would be operationalised at Delhi and Chennai in the current fiscal year. The
PM's meeting had raised expectations of bold announcements and reforms, helping lift shares of some
infrastructure sectors as investors expected the government to break out of policy uncertainty that has dogged
investor sentiment in recent months. Industry officials said the Prime Minister's meeting was a positive step,
although it fell short of the high expectations.
In the power sector, the government aims to add new capacity of 18,000 mw in the current fiscal year. In the roads
sector, the government plans to award contracts for 9,500 km, up 18.7% over the previous year, and involving a
74% rise in investment. In addition, 4,360 km of roads will be awarded for maintenance. For ports, the current
fiscal would see 42 projects worth Rs 14,500 crore and a capacity of 244 MTPA, which is three times the previous
year's achievement. In the coal sector, the government plans to strictly enforce targets of Coal India. He said Coal
India would dispatch 470 million tonnes to all sectors, an increase of 8.8%. Of this, it will dispatch 347 million
tonnes to the power sector in the current fiscal, up 11.2% from the previous year.
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