From UPSC perspective, the following things are important :
Prelims level : National Infrastructure Pipeline
Mains level : $5 trillion economy: Prospects and Challenges
Union Finance Minister has unveiled Rs 102 lakh crore of infrastructure projects, under National Infrastructure Pipeline. It will be implemented in the next five years as part of the government’s spending push in the infrastructure sector.
What is the National Infrastructure Pipeline (NIP)?
- NIP includes economic and social infrastructure projects.
- During the fiscals 2020 to 2025, sectors such as Energy (24%), Roads (19%), Urban (16%), and Railways (13%) amount to around 70% of the projected capital expenditure in infrastructure in India.
- It has outlined plans to invest more than ₹102 lakh crore on infrastructure projects by 2024-25, with the Centre, States and the private sector to share the capital expenditure in a 39:39:22 formula.
Key benefits of NIP
- Economic: Well-planned NIP will enable more infra projects, grow businesses, create jobs, improve ease of living, and provide equitable access to infrastructure for all, making growth more inclusive.
- Government: Well-developed infrastructure enhances the level of economic activity, creates additional fiscal space by improving the revenue base of the government, and ensures the quality of expenditure focused in productive areas.
- Developers: Provides a better view of project supply, provides time to be better prepared for project bidding, reduces aggressive bids/ failure in project delivery, ensures enhanced access to sources of finance as a result of increased investor confidence.
- Banks/financial institutions (F1s)/investors: Builds 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.
Is NIP a road to $5 trillion economy?
- Finance minister said that the Rs 102 lakh crore National Infrastructure Projects will help make India a $5 trillion economy by 2025.
- These projects are on top of Rs 51 lakh crore spent by the Centre and the states during the last six years.
- The new pipeline consists of 39 per cent projects each by the Centre and states and the balance by 22 per cent by private sector.