Nirmala Sitharaman announces Rs 105 lakh cr infrastructure projects; to reach $5 tn target in next 5 years

At her second press conference held in less than a week, Finance Minister Nirmala Sitharaman on Tuesday (31 December) announced infrastructure projects worth Rs 102 lakh crore. "We have a Rs 102 lakh crore worth projects compilation.  In the next few weeks, another Rs 3 lakh crore worth of projects will be added," Sitharaman said.

India plans to invest about Rs 105 lakh crore in the infrastructure sector in the next five years to achieve the GDP target of $5 trillion by 2024-25. The projects will implemented in the next five years.

These projects are on top of Rs 51 lakh crore spent by the Centre and the states during the last six years, she said, adding the new pipeline consists of 39 percent projects each by the Centre and states and the balance by 22 percent by private sector. The finance minister expected the share of the private sector to increase to 30 percent by 2025.

Nirmala Sitharaman. File pic

Called the National Infrastructure Pipeline, Sitharaman said Prime Minister Narendra Modi had said in his Independence Day speech that the government would invest Rs 100 lakh crore in infrastructure .

Subsequently, a task force identified Rs 102 lakh crore worth of projects after conducting 70 stakeholder consultations with ministries, state governments, developers, NBFCs, bankers and others in a short period of four months, Sitharaman said.

Outlining the spent on infrastructure by both the Centre and the state, Sitharaman said the total spent has been Rs 51 lakh crore in the last six years. The government is committed to spending another Rs 100 lakh crore, she said.

The projects identified are in sectors such as power, railways, urban irrigation, mobility, education and health.

Nearly one-fourth of the Rs 102.5 lakh crore of infrastructure project pipeline announced by Finance Minister will be in the energy sector with roads and railways being the other two big spender sectors.

According to the sector-wise break-up of projects made available by the Finance Ministry, Rs 24.54 lakh crore investment will flow in the energy sector, and of that Rs 11.7 lakh crore would be in just the power sector.

Road projects will account for Rs 19.63 lakh crore while another Rs 13.68 lakh crore would be for railway projects.

Port projects would see spending of Rs 1 lakh crore and airports another Rs 1.43 lakh crore. Rs 16.29 lakh crore would be spent on urban infrastructure and Rs 3.2 lakh crore in telecom projects.

Irrigation and rural infrastructure projects would account for Rs 7.7 lakh crore each. Rs 3.07 lakh crore would be spent on industrial infrastructure. Agriculture and social infrastructure would account for the rest.

Out of total expected capital expenditure of Rs 102 lakh crore under National Infrastructure Pipeline, projects worth Rs 42.7 lakh crore are under implementation, projects worth Rs 32.7 lakh crore are in conceptualization stage and rest under development, she said.

She said the projects in power including renewable sector, railways, urban development, irrigation, mobility, education, health, water and digital.

These sectors will form the bulk of the infrastructure investment under National Infrastructure Pipeline being announced on Tuesday, Sitharaman said.

The NIP will enable a forward outlook on infrastructure projects, it will create jobs, improve ease of living, and provide equitable access to infrastructure for all, thereby making growth more inclusive

The National Infrastructure Pipeline (NIP) Coordination Mechanism to be launched will comprise of the Centre, states and private sector, for detailed planning, information dissemination and monitoring implementation of the NIP framework.

Industry reactions

Hailing the announcement as a welcome move for the infrastructure sector, Anshuman Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa, said it reinforces the government’s commitment towards making India a leading world economy. "It is clear that the government is willing to do the needful and is ready to take the initiative by providing the required funds. Infrastructure projects worth Rs 102 lakh crore for next five years under National Infrastructure Pipeline will provide opportunities to all the stakeholders engaged in areas such as urban development, renewable sector, railways, irrigation, mobility, education, health, water and digital and will pave the way for long term development in all other areas. The step will also go a long way in the ambitious program to make India a U 5 trillion economy by 2025. It is a good time for everyone present in the infrastructure sector and we all must be prepared to do our bit,” he said.

Ashok Mohanani, Chairman EKTA World and Vice President NAREDCO Maharashtra said the investment of Rs 102 lakh crore in the national infrastructural plan will boost the sector as sentiment will see an uptick. "Given the economy’s situation, this is promising and will add impetus to the sector’s growth. The investment of Rs 20 lakh crore on road projects promises both quality infrastructure and better connectivity which will benefit both buyers and developers by providing good value to the housing assets. On the other hand with the central and state governments expectations on private shares of national infrastructure rising to 30 percent from 22 percent will get the sector organised and act as a game-changing regulatory. We are hopeful that the annual investors meeting will turn the tables for the sector at large and increase much-needed liquidity in the sector," he said.

--With PTI inputs