Home / Opinion / Columns /  Opinion | Declarations of intent are not enough to do what’s needed

The growth slowdown and incoherent management of the economy during the second half of 2019 appeared, rather abruptly, to put India’s economic prospects in some jeopardy. High-frequency indicators suggest that the current slowdown began in the early part of 2018, and, abetted by a perfect storm of macro and micro events, continued well into the third quarter of 2019-20. No single factor was paramount, but a consumption slump, along with a slowing export sector, compounded the already insipid investment performance. All the classical components of economic growth C (consumption), I (investments), G (government) and X-M (net exports) failed more or less together. Giddy from its electoral majority after the summer’s general elections, the government’s policy responses only took shape well into the third calendar quarter of the year. Monetary policy action by the Reserve Bank of India (RBI), which was in a tightening frame of mind in 2018, began to ease from February 2019. In 2019, RBI eventually reduced its repurchase (or repo) rate five times, to 5.15%, the lowest point in nine years.

There is a lot of confusion among economists in diagnosing the slowdown and agreeing on a clear path forward. There is some consensus that while supply-side structural reforms are required, demand-side action is more urgent to kick-start the economy. The government’s plan to launch a massive 102 trillion National Infrastructure Pipeline (NIP) project, announced at the tail-end of the year, is a welcome step.

Newspaper reports carried the announcement, but were sketchy on the details. Let me unpack the NIP, as gleaned from the report of the relevant governmental task force and from other institutions.

The task force was constituted by the Prime Minister immediately after his Independence Day speech in 2019 and comprised a total of six officials from the ministry of finance (MoF), ministry of administration and the NITI Aayog. Its terms of reference were to “identify" large, technically feasible and financially viable projects from all central government ministries for the years 2020 to 2025, validate their capital investment, and then guide them on their implementation. The infrastructure vision for 2025 is affordable and clean energy, digital access for all, quality education, convenient and efficient transportation and logistics, doubling farming income, good health and well-being, and housing and water supply for all. The report correctly recognizes that this vision will need to be delivered in the backdrop of a fast-changing world and an even faster changing India, with challenges arising from demographic changes, rapid urbanization, and the need to account for climate change and disaster resilience.

At the highest level, the NIP is classified into economic infrastructure (roads, railways, power, telecom, etc.) and social infrastructure (drinking water, education, agriculture, sports, etc.). Of the total 102 trillion outlay, the split between the two appears lopsided, with 99% allocated to economic infrastructure and 1% allotted to social infrastructure. More than 75% of the pipeline is devoted to energy, roads, railways, urban and irrigation. A mere 25,000 crore is for tourism and higher education, and these appear to have more projects in the pipeline than school education.

It appears from the initial report that the task force has merely collated such projects and laid them out to give markets a sentiment boost. Beyond sentiment, it will require focus and effort to get these projects cleared, financed and delivered. Take the case of the Zoji La tunnel meant to connect Srinagar, Kargil and Leh, and touted to be one of Asia’s longest tunnels. Six years and five failed bids later, this 14km, billion-dollar landmark project of economic and political interest remains a scarred construction site. This inability to deliver large-scale projects, even allowing for reasonable delay is not a recent Indian phenomenon. The Chenab railway bridge in Reasi district of Jammu and Kashmir was first expected to be delivered in 2009. It is now expected to be finished in 2021, a full half-generation later. This delivery deficit is not restricted to technically challenging projects such as Zoji La and Chenab. The Kathipara junction flyover in Chennai, a simple grade separator, took nearly 10 years (with eight overflow years and repeated cost overruns) to reach completion.

The NIP is likely to materially underperform unless there is a sharp focus on prioritization, financing and delivery. In that sense, what we need is not a “pipeline" taskforce, but one organized to “get it done". The prioritization between social and economic infrastructure needs to be re-evaluated and a lot more detailed work (absent in the initial task force report) needs to be done on financing institutions and mechanisms, particularly in the context of the limited fiscal space that India has. Case studies of successful large-scale projects (Delhi Metro, Delhi and Mumbai Airports), as well as unsuccessful ones, such as Zoji La, need to be studied and applied in a systematic way to reduce India’s implementation deficit. Otherwise, the pipeline is likely to remain a pipe dream.

PS: “It always seems impossible, until it is done", said Nelson Mandela.

Narayan Ramachandran is chairman, InKlude Labs. Read Narayan’s Mint columns at

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