The Indian Central Government has extended Rs111cr ($1.5 trillion) towards National Infrastructure Pipeline to cover more projects by 2025 to push economic growth in India as the country recovers from the economic impact of the COVID-19 pandemic, Finance Minister Nirmala Sitharaman said while announcing Union Budget 2021-2022 in New Delhi.
NIP was launched in December 2019 with 6,835 projects. The union budget has extended the policy to include 7,400 projects. The scheme aims to invest in projects spanning across sectors such as energy, social and commercial infrastructure, communication, water, and sanitation.
The government will set up a new Development Finance Institution (DFI) called the National Bank for financing infrastructure and development with a capital base of Rs200bn and will have a lending target of Rs5 lakh crores (Rs5,000bn) in three years.
Roads and highways infrastructure
The Centre has announced an enhanced outlay of Rs1,181bn for the Ministry of Road Transport and Highways, of which Rs1,082.30bn is for capital- the highest ever allocation. The center plans to create more economic corridors to augment the road infrastructure. The government will be awarding 8,500km and complete an additional 11,000km of national highway corridors by March 2022 under the Bharatmala Pariyojana project.
The government has announced a new scheme at a cost of Rs180bn to support the augmentation of public bus transport services, raising the share of public transport in urban areas.
The Indian Railways have prepared a National Rail Plan for India – 2030 to create a ‘future-ready’ railway system by 2030.
To bring down the logistic costs is the core of the government’s strategy to enable ‘Make in India’. A Western Dedicated Freight Corridor (DFC) and Eastern DFC will be commissioned by June 2022. Railways will monetize its dedicated freight corridor assets for operations and maintenance, after the commissioning.
The government also provided Rs1,100.55bn for the Railways, of which Rs1,071bn is for capital expenditure.
Ports, shipping, waterways
The government has allocated Rs20bn to manage major ports on a Public-Private Partnership (PPP) basis in FY21-22.
India will launch a scheme to promote the flagging of merchant ships by providing subsidy support to Indian shipping companies in global tenders floated by Ministries and CPSEs. An amount of Rs16.24bn will be provided for over five years. This initiative will enable greater training and employment opportunities for Indian seafarers besides enhancing Indian companies’ share in global shipping.
The government has also committed Rs1,970bn in the next five years for the Production Linked Incentive (PLI) scheme for manufacturing companies in 13 sectors to become an integral part of global supply chains. The initiative is expected to help bring scale and size in key sectors.
Reacting to the budget, Sheshagiri Rao, joint MD JSW Steel & Group stated, that the financial sector reforms creating an institutional structure for financing infrastructure, recapitalization of banks, increased FDI threshold in the insurance sector to 74pc, a framework for addressing stressed assets in the banking sector, single securities market code are the hallmarks for a healthy financial sector to accelerate the financing and augment credit flow to the economy. The steel sector, in particular, will benefit immensely from the surge in demand due to higher outlays on infrastructure and public capital spending.