Views of Amitabh Kant

“The NMP is the largest structured monetisation programme that any developing economy has created”

India’s economy has demonstrated remarkable resilience. The sharp rebound and recovery of the country’s economic growth, at 9.2 per cent, is the highest among all the large economies of the world. To sustain and accelerate this further, there is a requirement for large-scale infrastructure and focused infrastructure investments in the coming years.

The Union Budget for financial year 2022-23 reinforces the government’s commitment to infrastructure and lays the blueprint for “Amrit Kaal” – the next 25 years of independent India. Several initiatives are under way to propel infrastructure investments. The National Infra­structure Pipeline (NIP) lays down the overall infrastructure blueprint, while the National Monetisation Pipeline (NMP) lays down the plan for monetising existing assets, the proceeds of which will be utilised to fund new developments and maintain existing infrastructure.

Envisioning growth through private participation

With the NIP, India has embarked on very ambitious targets, envisioning investments worth nearly Rs 1.48 trillion. With a total of over 27,000 infrastructure projects (including NIP), there is scope for all states and union territories (UTs) to leverage these opportunities and provide a much better environment for both business and lifestyle. The transport and logistics sec­tors offer the bulk of such opportunities, followed by water and sanitation. Additionally, the NMP is the largest structured monetisation programme that any developing economy has created.

In order to achieve the targets set by the government, private sector participation is critical and emphasis needs to be placed on it. India’s domestic credit to the private sector as a percentage of gross domestic product rema­ins low compared to its global peers such as Chi­na, Vietnam and South Korea. To sustain long-term growth, one of the most important aspects mandated in the recent Union Budget is that public spending needs to crowd in private sector investment.

For achieving the vision of bringing in more private sector participation, asset monetisation is an innovative approach. It requires us to change the way infrastructure is created, operated and funded in India. India has committed to offer a pipeline of close to Rs 80 billion to the global investor community within the next four years. States and UTs are also very significant stakeholders, such as in the NIP, where state projects contribute an equal amount in ter­ms of total value. They have a significant pot­ential to adopt asset monetisation. NITI Aa­yog is working very closely with the states and investors to identify attractive and low-risk assets in states for monetisation.

It is remarkable that the total investment un­der asset monetisation is over Rs 9 trillion. Ag­a­inst this, in the current year, around Rs 1.6 trillion worth of transactions have already been realised. Proactive identification of assets and structuring of proposals is currently under way at the level of ministries to strengthen the pipeline.

The government has embarked on building reforms to enhance the flow of capital in infrastructure. Enabling policy and regulatory measures such as real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), a new public-private partnership (PPP) model, tax exemption to pension and sovereign wealth funds for investments in infrastructure, and creation of institutional mechanisms are some of the notable interventions to this end. Regulators have also played a proactive role in conceptualising, popularising and promoting REITs and InvITs. There is a need to continuously evolve the regulatory framework in view of the dynamic and fast-changing realities of the infrastructure financing landscape.

Fast-tracking implementation through Gati Shakti

The centre, the states/UTs and the private sector need to play a very critical and important role in ensuring the success of the projects planned. In order to ensure efficient, and cost- and time-bound project delivery by the private sector, it is important to find routes of collaboration bet­ween the centre, the states and the local governments. One of the most prominent interventions of the government, the PM Gati Shakti –  Natio­nal Master Plan, bridges the departments that have been working in silos and ensures integrated planning across ministries, as well as the execution of projects in a cost-efficient and time-bound manner. A dynamic dashboard has been prepared to facilitate monitoring and provide a bird’s eye view of all developments in the country. A network planning group has been set up to ensure integrated planning right from the conceptualisation of a project. All transport ministries (including roads, railways, ports, civil aviation), along with ministries related to ur­ba­nisa­ti­on, agriculture, mines, coal, steel, pe­t­roleum, telecom, co­m­­merce, consumer affairs, the environment, etc., and their counterparts at state and local le­vels converge at Gati Shakti. All studies, project proposals, approvals and clearances will be routed through the Gati Shakti portal. This will enable all ministries to plan, allocate resources and finance and monitor the projects with better data. This will help improve the overall quality of infrastructure, giving an impetus to economic activities including improving living standards, reducing costs, increasing employment opportunities and providing benefits to investors. In the coming years, NITI Aayog will continue to partner with the ministries to ensure successful adoption of Gati Shakti. It will focus on ironing out financial challenges in the infrastructure sector by creating an enabling environment for a national asset monetisation plan. It will also push for PPP and land value capturing.

Infrastructure projects face many challenges throughout their life cycle. These in­clude intersectoral coordination, land acquisition, clearances, rehabilitation and resettlement, lack of project preparedness, lack of outcome-linked approaches, financial constraints, etc. Many of these challenges result in time and cost overruns at different stages of the project.

The government recognises these inefficiencies and believes that it is important that projects are well developed, and all necessary app­rovals and clearances are taken. There is a particular focus on creating an output-outcome mo­ni­toring framework, building the capacities of key infrastructure ministries, leveraging PPPs, asset monetisation, land value capturing and sharing, and developing aspects of efficient project management through building information modelling or by improving the conciliation mechanism and model concession agreements.

Creating a virtuous cycle of investment

Urbanisation is the key to unlocking economic opportunities in India. The country has massive potential, as it is still at the beginning of the ur­banisation process. Coordinated infrastructure development will guide sustainable urbanisation in India. The country is endeavouring to focus on high quality urban infrastructure services to ensure that the urban areas of the country are amongst the best in the world. This will further catalyse infrastructure investments, thereby resulting in a completely virtuous cycle. NITI Aayog will continue to focus on making urban areas synonymous with transit-oriented development. There are plenty of opportunities for the private sector to participate in the growth story of India. The country is all set to grow into an economic superpower and infrastructure development is going to be the most fundamental as­pe­ct of it. Industries are expected to evaluate the already existing opportunities and invest according to their expertise and risk appetite.

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