FM hits the 'road' in New Year, announces Rs 19.63-trn worth projects

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Finance Minister Nirmala Sitharaman ended 2019 on a benevolent note for the road sector by announcing a pipeline of road projects worth Rs 19.63 trillion. The new pipeline comprises 39 per cent projects each of the Centre and states, and 22 per cent of the private sector. 

"It is good to see the government focusing on substantial infrastructure agenda to put the economy back on track," said Vinayak Chatterjee, chairman, Feedback Infra. As part of the infrastructure vision 2025, the government has envisaged enhanced road connectivity to remote areas and trunk connectivity to major economic corridors, strategic areas, and tourist destinations through expressways.  Ratings agency ICRA in a statement said: “Indian infrastructure is likely to witness a massive increase in investment with the target of Rs 102 trillion to be spent over the next five years (FY2020-FY2025).”

At a time when economic growth is slowing down, increasing investment in infrastructure can be a booster dose. 

While a large development plan is already underway for the national highways under the Bharatmala Pariyojana scheme, many states have taken up large road development projects. Similarly, for the Railways, besides the regular capex of railway lines upgrade, modernisation of railway stations and the bullet train project foresee a higher capital outlay over the next five years.

Until FY25, the expected investment in the Railways sector comes to around Rs 13.7 trillion, of which 87 per cent is likely to be contributed by the Centre government. The share of the private sector is as low as 12 per cent and that of states is only 1 per cent.

At this pace, the national transporter may fall short of its ambitious target of bringing in additional Rs 50 trillion investment by 2030, as it may not be able to achieve even half of it by FY25. “The Railways will be one of those sectors where private sector investments will be the lowest. It may turn out to be a challenge for it to convince the private sector to bring in even this much investment, as a large chunk of this investment is expected to come in plans like station redevelopment,” said R Sivadasan, former financial commissioner of the Railways.

Major projects that will be part of the Railways infrastructure expansion include dedicated freight corridors and a high-speed railway project between Ahmedabad and Mumbai. In addition, the network will go for 100 per cent electrification. Moreover, work to upgrade tracks, including renewal and doubling, is also expected to be completed by then to improve safety and efficiency of infrastructure.

Among annual investment plans, the highest investment of Rs 3.09 trillion in the rail sector is expected to come in FY22. This can be compared with the capital expenditure plan of Rs 1.6 trillion lined up for the current financial year. 

According to a report, from 2008-2019, power, roads and bridges, urban, digital infrastructure, and railways sub-sectors together constituted 85 per cent of the total infrastructure investment in India. The government also plans to privatise 30-35 airports in the next five years.

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