“The report released by Finance Minister Nirmala Sitharaman last week is the executive summary of sorts of the proposed pipeline,” said the source.
The ministry feels the numbers on the list would explain why private sector participation has been estimated to be so low.
Private sector projects made up about 38 per cent of the infrastructure
projects during the Eleventh Five Year Plan (2007-2012). It slid to about 30 per cent in the next five-year period (2013-18).
The current estimate of 22 per cent over 2019-25 shows an equally steep dip. The official said the percentage is expected to go up, but would be visible only after the companies announce specific programmes on the ground and as communications to the stock exchanges.
Incidentally, the NIP also shows a tapering off of projects nearer to 2025. The source said this would reverse once ministries are sensitised to appraise projects on their financial implications, year wise.
That investment in infrastructure has been low is evident from the data on capital formation in the economy. A Business Standard report notes that growth in gross fixed capital formation, a proxy for investment, fell to a 19-quarter low in the July-September period of fiscal year 2019-20. It grew by just one per cent in Q2FY20, compared to a 4.04 per cent growth in the previous quarter, as per data released by the Central Statistics Office. As a share of GDP, the metric shrank to 27.8 per cent during the quarter, against 29.7 per cent in the previous quarter.
India’s first NIP is modelled on similar annual exercises in the UK, the US, and other countries. The ministry hopes to make the data available from now through the year, and it will be revised annually.
India had built up estimates of this sort in the erstwhile Planning Commission, but those ran every five years. There is also a list put out by the infrastructure and project monitoring division of the ministry of statistics and programme implementation, but this is only about government projects and is often not updated due to lack of data from the concerned ministries.
A government release earlier this year said, “The National Infrastructure Pipeline would include greenfield and brownfield projects costing above Rs 100 crore each. Other qualifications for inclusion in the pipeline for the current year will include availability of a DPR (detailed project report), feasibility of implementation, inclusion in the financing plan and readiness/availability of administrative sanction.”
In addition to the data set, the ministry might also come up with a reform score card for the public to understand how key ministries appraise projects. Both these are expected to be open to public inspection, almost on a real time basis, which is a first for India.
Once the data is put up on the finance ministry’s website, any investor, domestic or foreign (such as sovereign wealth funds) would be able to do their homework instead of having to run to the ministries to obtain information. It is expected that the list would be seen as a sign of commitment to the projects by the concerned agencies, and also enable investors to make more informed subsequent inquiries.
“Infrastructure Priorities for Job Creation in India”, a report released by the IDFC Institute in September 2019, notes that investment in the sector would spur job creation. “There is enough evidence from around the world to suggest that infrastructure investment could lead to substantial job creation,” it says.
Vivek Dehejia, lead author of the report, adds that better infrastructure such as roads, reliable supply of electricity and water, and so on, would allow companies to spend less on these and, instead, invest more in their core business. “For firms in the industrial region…for every 10 per cent increase in cost savings…4.3 per cent more jobs will be created,” the report said.