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[Answered] What are various bottlenecks to infrastructure creation in India? Discuss the significance of the National Infrastructure Pipeline (NIP) for infrastructure creation.

Demand of the question Introduction. Contextual introduction. Body. Discuss various bottlenecks to infrastructure creation in India. Mention significance of National Infrastructure Pipeline (NIP) for infrastructure creation. Conclusion. Way forward.

Economic development of any country, along with other factors, depends on the infrastructure development. India is aiming to be a $5 trillion economy by 2025 which needs spending of about $1.4 trillion (Rs. 100 lakh crore) over five years on infrastructure. India can increase economic growth to full potential, provided it improves the infrastructure facilities, which are at present not sufficient to meet the growing demand of the economy. Failure to improve the infrastructure in the country has certainly, slow down India’s growth process. There is a wide gap in railways, roads, energy infrastructure that hinders India’s growth.

Various bottlenecks to infrastructure creation in India:

  1. Financing: The infrastructure projects are highly capital intensive and funding has been one of the major impediments in achieving the infrastructure goals. Due to rise in NPA banks are not giving loans to private firms easily.
  2. Land Acquisition: Land acquisition has been the single largest roadblock for the development of infrastructure. Several projects have been stalled or delayed due to land acquisition issues. One primary reason has been resistance from farmers or local communities whose land is being acquired. There was generally a huge difference between the price offered by the agency than the prevailing market value, which resulted in major disputes and litigation.
  3. Delay in regulatory clearance: Most of the infrastructure projects in India suffer from delays in completion. This is mainly due to an inadequate regulatory framework and inefficiency in the approval process. Infrastructure projects require multiple sequential clearances at various levels of government.
  4. Complex Environmental clearance: Environmental safeguards and guidelines are evolving, which are complex in nature. Clearly, better governance will be a big help in mitigating long delays in infrastructure projects.
  5. Capacity of private players: Infrastructure projects in India are becoming larger in size and complexity and such projects require financial patronage and additional project management skills which most medium-to-small Indian companies currently lack.

Significance of National Infrastructure Pipeline (NIP) for infrastructure creation:

  1. $5 trillion goal: India’s growth potential has not been achieved mainly due to poor infrastructure in various sectors. The National Infrastructure Pipeline would help in improving the infrastructure and realising the growth potential. To achieve the GDP of $5 trillion by 2024-25, the National Infrastructure Pipeline is important.
  2. Positive sentiment: India can’t achieve high growth without investment. NIP will build investor confidence as identified projects are likely to be better prepared, exposures less likely to suffer stress given active project monitoring, thereby less likelihood of NPAs.
  3. Fiscal space: Well-developed infrastructure enhances the level of economic activity, creates additional fiscal space by improving the revenue base of the government, and ensures quality of expenditure focused on productive areas.
  4. Better Projects: The National Infrastructure Pipeline will ensure that infrastructure projects are adequately prepared and launched. It will provide a better view of project supply, provides time to be better prepared for project bidding, reduces aggressive bids in project delivery, and ensures enhanced access to sources of finance as a result of increased investor confidence.
  5. Rural infrastructure: It will strengthen agricultural and rural infrastructure. Irrigation and rural infrastructure projects would account for 7.7 lakh crore each.
  6. Connectivity: It will further increase the connectivity in India, especially in rural areas. Road projects will account for Rs. 19.63 lakh crore while another Rs. 13.68 lakh crore would be for railway projects.

The development of India’s infrastructure presents a huge task as well as a huge opportunity. The key issues that need to be addressed for a major step-up in infrastructure development. The National Infrastructure Pipeline is an ambitious plan that would include Greenfield and brownfield projects costing above Rs 100 crore each. It will also enable robust marketing of the pipeline of projects requiring private investment through the India Investment Grid (IIG), National Investment & Infrastructure Fund (NIIF), etc.

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