View from India: Riding high on MoRTH projects
Infrastructure development, education and transport are among the highlights of the Union Budget 2021-22.
Union Finance Minister (FM) Nirmala Sitharaman had announced the National Infrastructure Pipeline in December 2019. This first-of-its-kind, whole-of-government exercise undertaken by Government of India was launched with 6,835 projects. The project pipeline has now expanded to 7,400 projects. Around 217 projects worth Rs 1.10 lakh crore under key infrastructure ministries have been completed.
“The government’s focus on restarting economy is clear in its commitment to the time-tested Keynesian principle of spurring infrastructure to create jobs and channelise economy-multiplier cycles. With a 5.4 lakh cr budget, there is huge focus on strengthening infrastructure through industrial corridors, highways, BRT, railways, ports and power, especially with the highest-ever allocation to MoRTH (Ministry of Road Transport Highways),” said Vivek Agarwal, Partner, Infrastructure, Government and Healthcare Practice, KPMG in India. BRT, or bus rapid transit, is a bus-based public transport system designed to improve capacity and reliability relative to a conventional bus system.
The MoRTH allocation opens out corridors for PPP (private public partnership) and special schemes for faster resolution of disputes. There’s also a clear intention to augment infra-financing sources such as debt-financing institutional support, which has a clear target of creating a lending portfolio of over Rs 5 lakh cr in three years. This comes with a thought-through specified asset monetisation (especially surplus non-core land with corporations) and strategic disinvestment plan. “We are optimistic about the renewed focus on road safety with advanced traffic-management system with speed radars, variable message signboards, GPS-enabled recovery vans... this comes along with the outlay of Rs 2.28 lakh crores for developing the highways, roads and railways,” said Sudhindra Holla, director, Axis Communications, India & SAARC.
As indicated in the Budget, it is intended to raise the share of public transport in urban areas through the expansion of the metro rail network and augmentation of the city bus service. With an outlay of Rs 18,000 crore, a new scheme will be put in place to support the augmentation of public bus transport services. The scheme will facilitate the deployment of innovative PPP models to enable private sector players to finance, acquire, operate and maintain over 20,000 buses. “The scheme will boost the automobile sector, provide a fillip to economic growth, create employment opportunities for the youth and enhance ease of mobility for urban residents,” said the FM optimistically.
Infrastructure needs long-term debt financing. A professionally managed Development Financial Institution (DFI) will be created to act as a provider, enabler and catalyst for infrastructure financing. Accordingly, a bill will be introduced to set up a DFI with a sum of Rs 20,000 crore to capitalise the institution. The ambition is to have a lending portfolio of at least Rs 5 lakh crore for this DFI in three years time. “A highlight of the Budget is the focus on infrastructure expansion coupled with that on building resilient infrastructure in terms of solar energy. India has tremendous potential in solar and the proposed capital infusion (to the tune of Rs 2,500 crore) and capacity addition to the tune of 7,500 megawatt, are very encouraging as the country continues to take giant strides in development. The increased outlay on roadways and railways infrastructure spending and the creation of a Development Finance Institution are very welcome,” said Hadi Riachi, market head, Swiss Re India Branch, a reinsurance-insurance provider.
The National Education Policy has been a strategic move towards guiding the development of India’s education. “To strengthen the policy further, this Union Budget is focusing on National Digital Educational Architecture (NDEAR), which will provide a diverse education eco-system for the development of digital infrastructure, educational planning, governance and administrative activities. The complete shift from using assessments to not only judge the cognitive levels of the learner but also use it as an opportunity to identify the unique strengths and the potential is a student-centric approach. This will lead to the holistic development of a child and provide them a greater edge, globally,” explained Vamsi Krishna, CEO and co-founder of Vedantu, a live and interactive online tutoring platform. The move to establish NDEAR in the context of a Digital First Mindset to ensure digital learning, as well as planning infrastructure, will empower the youth of the nation.
As per the Budget, data shows that India now has one of the lowest Covid-19 death rates of 112 per million population and one of the lowest active cases of about 130 deaths per million. This has laid the foundation to the revival we are seeing now in the economy. “Pertinent steps are being taken to revitalise the economy with key focus on allocating budget for healthcare, metro railways, ports, airports, and logistics to boost urban infrastructure. These in turn will be stepping stones towards invigorating the planning of smart cities and urban development and help in generating more jobs,” expressed Holla.
Other than infrastructure, seaweed farming is an emerging sector with potential to transform the lives of coastal communities. It will provide large-scale employment and additional incomes. A Multipurpose Seaweed Park will to be established in Tamil Nadu to promote the cultivation of seaweed. The spotlight is on agriculture and farming as well. “To provide adequate credit to our farmers, I have enhanced the agricultural credit target to Rs 16.5 lakh crores in FY22. We will focus on ensuring increased credit flows to animal husbandry, dairy, and fisheries,” said the FM. The scope of ‘Operation Green Scheme’, currently applicable to tomatoes, onions, and potatoes, will be enlarged to include 22 perishable products. This initiative is to boost value addition in agriculture and allied products and their exports.
Substantial investments will go towards the development of modern fishing harbours and fish landing centres. To begin with, the fishing harbours of Kochi, Chennai, Visakhapatnam, Paradip and Petuaghat will be developed as hubs of economic activity. The vision will be fulfilled by the development of inland fishing harbours and fish-landing centres along the banks of rivers and waterways.
“This budget has rightly signalled the need for greater inclusion in India's workforce. Women being allowed to work in all sectors and in night-shifts with adequate protection, and social security benefits extended to gig workers will provide an impetus for women to step up their contribution towards Atmanirbhar Bharat,” concluded Nikhil Rungta, country manager, India, Verizon Media.
In a nutshell, this is a 'get well' budget with an expansionary outlook and focused on growth. The budget is practical and thoughtful, which will propel consumption and growth of business.
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