Relevance: Mains: G.S paper III: Economy
- The NIP task force appears to have gone project-by-project, assessing each for viability and relevance in consultation with the States.
• Considering that the NIP will be like a window to the future, a constant review becomes paramount if this is not to degenerate into a mere collation and listing of projects.
• A periodic review, as promised by the Finance Ministry, is necessary.
• The government’s push on infrastructure development will not only enable ease of living — such as metro trains in cities and towns — but also create jobs and increase demand for primary commodities such as cement and steel.
• From this perspective, this push to invest in infrastructure is welcome.
Challenges ahead:
- Identifying the projects to be put on the pipeline is the easy part. Implementing and commissioning them will be the more difficult one.
• There are a few hurdles that the NIP task force needs to watch out for.
• The financing plan assumes that the Centre and the States will fund 39% each while the private sector will chip in with 22% of the outlay.
• Going by the present fiscal situation, it will be no small challenge for the Centre to raise ₹39 lakh crore, even if it is over the next five years. The financial position of States is even more perilous.
• The ₹22 lakh crore expected from private investment also looks steep considering the lack of appetite for fresh investment by the private sector in the last few years.
Way ahead:
- This factor has been a major drag on economic growth.
• Given the scale of investment, debt will play an important role and it remains to be seen if banks have gotten over their apprehensions on infrastructure financing as a major part of their bad loans originated there.
• The cooperation from States becomes very important in implementing infrastructure projects.
• The experience on this count has not been very happy till now.
Conclusion:
- While these are genuine obstacles that the task force needs to manage, these should not detract from the need for a concerted effort to invest in infrastructure.
• The key will be following up and reviewing the pipeline at regular intervals.