The infrastructure sector has received significant attention in the last four years of the present government. There has been a concerted focus in revamping the governance structure and create an enabling framework that would spur the rate of growth of development.
The road sector has probably been one of the most significant growth stories in the last four years. It has seen a rate of growth of almost 25% CAGR (compound annual growth rate) from 11km/day to over 26km/day over the last four years. Disputes between contractors and the government have been largely addressed, thereby freeing unproductive assets, enabling fast-track completion of pending projects and generating capacities with EPC (engineering, procurement and construction) players to be able to achieve an enviable rate of more than 30km/day.
Allocation from the Central Road and Infrastructure Fund (erstwhile Central Roads Fund) for inland waterways has given the long pending impetus to a green and viable alternative to the fast choking road/rail network. This revenue source for the Inland Waterways Authority of India along with World Bank funding on a number of waterways has generated confidence and witnessed active participation by international players in the development of allied infrastructure for shipbuilding, port and terminal handling, navigation, and LNG (liquefied natural gas) terminals among others.
Creation of a JV (joint venture) like Indian Port Rail Corporation Ltd, to address last-mile connectivity at ports to increase the viability of port projects through faster and seamless evacuation of cargo at lower costs, has resulted in the offtake of multiple projects with investments of over Rs15,000 crore in progress and in the pipeline.
In the urban infrastructure sector, the Smart Cities mission, coupled with the project-based AMRUT (Atal Mission for Rejuvenation and Urban Transformation) programme to improve lives of citizens, after the initial slow start, has started showing traction. The themes covered under the mission include affordable housing, water and electricity supply, sanitation, mobility and urban transport, telecommunication, and security. The mission, which is expected to bring in investments of around Rs1 trillion from central, state and local bodies, is attracting participation by top global technology and urban development players.
The railways has had one of the largest allocations in the budget this year. The commissioning of the first stages of the dedicated freight corridors starting 18 November, the take-off of the high-speed rail project between Mumbai and Ahmedabad, modernization of the network and connectivity of satellite towns with metros are significant achievements for the sector.
While the intent and action by the government has been commendable and a robust framework has been created, the sentiment of private investors in the schemes through active participation and in the development of supporting infrastructure has not matched the government’s enthusiasm. Demonetization and a yet-to-stabilize goods and services tax regime have possibly impacted confidence. Maybe what is needed is an assurance that the political environment and predictable continuity shall be maintained in the coming months.
Sanjay Garg is partner and leader (capital projects) at PricewaterhouseCoopers Pvt. Ltd.