Be Mains Ready

Approach

• Give a brief introduction to the National Infrastructure Pipeline(NIP) project.
• Discuss its significance for Indian Economy.
• Mention associated challenges.
• Give a suitable conclusion.

Introduction

• Recently, the Government has released a report of the task force on the National Infrastructure Pipeline (NIP) for 2019-2025. Accordingly, total project capital expenditure in infrastructure sectors in India during the fiscals 2020 to 2025 is projected at over Rs 102 lakh crore.
• NIP includes economic and social infrastructure projects in sectors such as Energy (24%), Roads (19%), Urban (16%), and Railways (13%) amount to around 70% of the projected capital expenditure in infrastructure in India.

Body

Significance of the National Infrastructure Pipeline (NIP):

• Inclusive development: NIP will enable a forward outlook on infrastructure projects which will create jobs, improve ease of living, and provide equitable access to infrastructure for all, thereby making growth more inclusive.
• Impetus in growth: It is estimated that India should invest $4.5 trillion in infrastructure by 2030 to support faster growth. The National Infrastructure Pipeline is a part of that attempt to invest $4.5 trillion.
  
  • It will help in stepping-up annual infrastructure investment to achieve the Gross Domestic Product (GDP) of $5 trillion by 2024-25.
• Timely implementation of projects: The National Infrastructure Pipeline will ensure that infrastructure projects are adequately prepared and launched.
• Boosting rural economy: It will boost the agrarian economy by strengthening agricultural and rural infrastructure.
  
  • It will further increase the connectivity in India, especially in rural areas, through the expansion of roads and railways.
• Enhance credit availability: It will ensure credit availability from the government sources to boost economic growth, in a time when there is a lack of private investment.
• Improve revenue base: 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 in productive areas.
• Overcoming slowdown: The policy of high government spending in infrastructure energises demand in other sectors and leads to more fund flows to various sectors besides creating valuable assets.

Challenges

• Credit availability is the biggest challenge in the backdrop of the NPA crisis. Envisaged Private sector participation in capital expenditure (22%) may largely suffer due to this.
• State governments’ financial commitment may not be realised because of fiscal concerns. Presently, more than 20 states already have a debt-GSDP ratio of above 25 per cent.
• Land acquisition is a big challenge for the completion of infrastructure projects.

Conclusion

• Availability of quality infrastructure is a prerequisite to achieve broad-based and inclusive growth on a sustainable basis. If the concerns regarding fiscal availability are addressed properly, the National Infrastructure Pipeline would be a massive exercise to realise the vision of becoming a 5 trillion $ economy by 2024.