A robust and resilient infrastructure is fundamental and essential for the country’s budding industries, the Economic Survey tabled in the Parliament on Thursday noted.
The eight core infrastructure supportive industries that include the road sector, railways, civil aviation, telecom, shipping, petroleum, power, housing and smart cities have achieved an overall growth rate of 4.3 per cent during 2018-19, according to the Economic Survey 2019.
It said road coverage grew at the rate of 30 km per day in 2018-19 as compared to 12 km per day in 2014-15. Rail freight and passenger traffic grew by 5.33 per cent and 0.64 per cent, respectively in 2018-19 as compared to 2017-18.
Total telephone connections in India touched 118.34 crores in 2018-19. The installed capacity for electricity increased from 3,44,002 MW in 2018 to 3,56,100 MW in 2019.
While India has invested in its infrastructure over the years, the challenge is to mobilize adequate investment in infrastructure sector which runs into several trillions of dollars, as per the survey.
It said in order to create a $10 trillion economy by 2032, India needs a robust and resilient infrastructure and public investment cannot fund the entire infrastructure investment requirements of the country.
Therefore, the real challenge lies in bringing adequate private investment across the country with the collaboration of the public sector.
“Given the fiscal constraints that leave less room for expanding public investment at the scale required, there is an urgent need to accelerate the flow of private capital into infrastructure,” it noted.
One of the challenges facing the sector is to devise a comprehensive resolution/ settlement option for projects which are either stuck-up mid-way or wherein the arbitral disputes/claims have not been settled. The need is to establish an institutional mechanism to deal with the time-bound resolution of disputes in infrastructure sectors.
It asserted that India needs to spend 7-8 per cent of its GDP on infrastructure annually, that translates into annual infrastructure investment of $200 billion currently. India has been able to spend only about $100-110 billion annually on infrastructure, leaving a deficit of around $90 billion per annum.
With the aim of boosting investment in infrastructure, the National Investment and Infrastructure Fund has been created with a capital of approximately Rs 400 billion to provide investment opportunities to commercially viable projects, it noted.
In addition, a Credit Enhancement Fund for infrastructure projects for increasing the credit rating of bonds floated by infrastructure companies is going to be launched in the country.
A new Credit Rating System for infrastructure projects, based on Expected Loss approach, has also been launched which seeks to provide additional risk assessment mechanism for informed decision making by long-term investors. Further, measures like infrastructure investment trusts and Real Estate Investment Trusts have been formulated to pool investment in infrastructure, it notes.
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