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Infra revival key to bring economy back to pre-COVID levels, says Economic Survey 2020-21

Nevin John     January 29, 2021

Giving indications that the government will focus on infrastructure revival in Budget 2021 to drive the economy back to pre-COVID levels, the Economic Survey 2021 said that the Rs 111 lakh crore National Infrastructure Pipeline (NIP) projects will hold the key to rapid and inclusive economic growth.

"Basic infrastructure facilities in the country provide the foundation of growth. In the absence of adequate infrastructure, the economy operates at a suboptimal level and remains," said the survey.

NIP will boost the economy, generate better employment opportunities, and drive the competitiveness of the economy. The NIP targets to complete major projects in sectors like energy, roads, urban infrastructure, and railways.

During FY20, the Public-Private Partnership Appraisal Committee (PPPAC) recommended five projects -- four passenger train projects, and one port sector -- with a total project cost of Rs 4,321 crore. In FY21, PPPAC recommended seven projects -- one each in telecom and port sectors, three in railways, and two eco-tourism projects -- worth Rs 66,600 crore.

The government has also extended the Infrastructure Viability Gap Funding (VGF) scheme until 2024-25 to attract more Public-Private Partnership (PPP) projects and facilitate private investment in social sectors like health, education, wastewater, solid waste management, and water supply, the survey noted.

In the roads sector, India is next only to the United States (US) which has a road network of 63.86 lakh kms of rural-urban roads and national-state highways. The pace at which roads have been constructed has grown significantly from 12 kms per day in 2014-15 to 30 kms per day in FY19 before it moderated to 28 kms in FY20.

The decline in the construction of roads per day to 22 kms in FY21 is mostly on account of the COVID-19 shock. With the unlocking of the economy, construction of roads is expected to return back to the high pace attained before COVID-19, said the survey. The annual investment in the roads and highway sector has gone up more than three times to Rs 68,665 crore in FY20, compared to FY15.

Another major improvement happened in the ports and shipping sector. The Sagarmala project has identified over 500 projects under four pillars -- 211 port modernisation projects, 200 port connectivity projects, 32 port-led industrialisation projects, and 62 coastal community development projects.

It is expected to mobilise more than Rs 3.59 lakh crore of infrastructure investment. Between July 2019 and October 2020, 37 Sagarmala projects worth Rs 8,461 crore were completed. The installed capacity of major ports in India has increased to 1534.91 MTPA in March 2020 compared to 871.52 MTPA in March 2014. The average turnaround time for unloading the cargo from a ship improved to 61.75 hours in FY20 as against 126.96 hours in FY11 and 96 hours in FY15.

Indian Railway carried 1.2 billion tonnes of freight and 8.1 billion passengers in FY20 -- making it the world's largest passenger carrier and fourth -- largest freight carrier, said the survey. "The GoI has allowed the private players to operate in the Railways sector through the PPP mode under the "New India New Railway" initiative. The initiative is expected to garner an investment of about Rs 30,000 crore from the private sector," it stated.

The power sector continues to be a major contributor to infrastructure development. The total installed capacity has increased from 3,56,100 MW in March 2019 to 3,70,106 MW in March 2020. Furthermore, the generation capacity increased to 3,73,436 MW in October 2020. The capacity addition in the power sector was largely driven by the government in FY20.

At the same time, crude oil and natural production have witnessed a decline. India's indigenous crude oil production declined to 32.17 million tonnes (MT) in FY20 as against 34.20 MT in FY19.

In the April-December 2020 period, oil production registered a decline of 5.7 per cent as compared to the corresponding period in FY20. The natural gas production during FY20 was 31.18 billion cubic meters (BCM) as against 32.87 BCM in FY19. In April-December 2020, gas production declined 11.3 per cent to 21.13 BCM.

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