Economic Survey: Financing of infrastructure projects a challenge1 min read . Updated: 31 Jan 2020, 04:20 PM IST
- To achieve GDP of $5 trillion by 2024-25, India needs to spend about $1.4 trillion on infrastructure
Financing projects under the government’s ambitious infrastructure creation roadmap for the next five years under National Infrastructure Pipeline (NIP) could be a challenge, the Economic Survey 2019-20 points out.
“It is hoped that a bouquet of well-prepared projects would attract investment from Central and State Governments, Urban Local Bodies, Banks and Financial Institution, PE funds, and private investors, both local and foreign," the survey said.
The Economic Survey is an annual exercise and is prepared by the chief economic adviser. It is tabled by the finance minister in Parliament a day before the Union budget.
To boost growth, Finance Minister Nirmala Sitharaman last month launched an NIP coordination mechanism with an investment plan worth ₹102 trillion, towards creation of social and economic infrastructure for the next five years.
In a first, a task force was set up last year to compile a list of projects across a bunch of ministries. Headed by economic affairs secretary, the task force gave its recommendations on required changes to several key sectoral policies and other reform initiatives by the Centre and states, such as developing a robust bond market for infrastructure companies, speedy resolution of infrastructure disputes, optimal risk sharing through better and balanced public private partnership (PPP) contracts, and sanctity and enforceability of contracts.
The government’s renewed thrust on infrastructure projects is expected to increase economic activity, generate employment and boost demand, amid a slowdown in the broader economy.
“To achieve the GDP of $5 trillion by 2024-25, India needs to spend about $1.4 trillion on infrastructure. The challenge is to step-up annual infrastructure investment so that lack of infrastructure does not become a binding constraint on the growth of the Indian economy," the survey said.
"To experience the potential of the perfect blend of Industry 4.0 and next generation infrastructure, it is necessary to clear the decks which are obstructing the way forward," the survey said.