Context: Monitoring of all infrastructure projects under the Rs 111-trillion National Infrastructure Pipeline (NIP) will be allowed on a digital platform to ensure access to updated project information for investments across various sectors, as per Finance Ministry. The projects will be mapped and evaluated by the departments concerned and the finance ministry to monitor the implementation and actual progress, compared to the initial estimates of the NIP for each project. The move assumes significance as increased focus on infrastructure projects will help revive the economy following the covid-19 crisis.

Current Scenario

• The dashboard is being hosted on the India Investment Grid (IIG).
• The NIP project database hosted on India Investment Grid (IIG) would provide visibility to the NIP and help in financing with prospective investors; domestic and foreign, able to access updated project level information.

Background

• In the budget speech of 2019-2020, an outlay of Rs 100 lakh Crore was announced for infrastructure projects over the next 5 years.
• In furtherance to this, a high level Task Force submitted a final report on the National Infrastructure Pipeline with projected infrastructure investment of Rs 111 Lakh Crore during FY 2020-25.

About National Infrastructure Pipeline (NIP)

• It is the investment plan unveiled by the Central Government for enhancing infrastructure in identified sectors for a period of five years from 2020-25.
• NIP will improve project preparation, attract investments (both domestic & foreign) into infrastructure, and will be crucial for attaining the target of becoming a $5 trillion economy by FY 2025.
• The funding of the National Infrastructure Pipeline will be jointly made by the Centre, states and the private sector in the proportion of 39:39:22.
• It covers both economic and social infrastructure projects– based on the updated Harmonized Master List of Infrastructure.

India Investment Grid (IIG):

• IIG is an interactive and dynamic online platform to showcase the best of investment opportunities in India to the global investor community.
• It has been developed and managed by Invest India, the National Investment Promotion and Facilitation Agency.
• IIG serves as the gateway to investments in India, and is also widely used by Indian missions and embassies across the world.

IIG allows investors to:

• Search a pan-India database for investment opportunities across sectors
• Track the progress of preferred projects and indicate interest
• Directly communicate with project promoters

Various bottlenecks to infrastructure creation in India

• Financing: The infrastructure projects are highly capital intensive and funding has been one of the major impediments in achieving the infrastructure goals. Due to rise in NPA banks are not giving loans to private firms easily.
• Land Acquisition: Land acquisition has been the single largest roadblock for the development of infrastructure. Several projects have been stalled or delayed due to land acquisition issues. One primary reason has been resistance from farmers or local communities whose land is being acquired. There was generally a huge difference between the price offered by the agency than the prevailing market value, which resulted in major disputes and litigation.
• Delay in regulatory clearance: Most of the infrastructure projects in India suffer from delays in completion. This is mainly due to an inadequate regulatory framework and inefficiency in the approval process. Infrastructure projects require multiple sequential clearances at various levels of government.
• Complex Environmental clearance: Environmental safeguards and guidelines are evolving, which are complex in nature. Clearly, better governance will be a big help in mitigating long delays in infrastructure projects.
• Capacity of private players: Infrastructure projects in India are becoming larger in size and complexity and such projects require financial patronage and additional project management skills which most medium-to-small Indian companies currently lack.

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 on 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.

Measures Suggested by Atanu Chakraborty headed task force

• Aggressive push towards asset sales
• Monetisation of infrastructure assets
• Setting up of development finance institutions
• Strengthening the municipal bond market

Streamlining Process: The task force has also recommended to set up of three committees:

• Timely Execution: Panel to monitor NIP progress and eliminate delays.
• Follow Up: Steering committee in each infrastructure ministry for following up implementation
• Raising Financial Resources: Committee in the Department of Economic Affairs for raising financial resources for the NIP.

Road Ahead

• The development of India’s infrastructure presents a huge task as well as a huge opportunity. The key issues that need to be addressed for a major step-up in infrastructure development will also enable robust marketing of the pipeline of projects requiring private investment through the India Investment Grid (IIG), National Investment & Infrastructure Fund (NIIF), etc.
• A country’s level of human and economic development is closely related to its levels of achievement in physical and social infrastructure.
• While physical infrastructure is an important determinant of domestic production, good social infrastructure is vital for human development as well as economic progress through better educated, better skilled, and healthier citizens.