Modi Government: Connecting Growth Corridors
The story of infrastructure growth, in terms of clearance and award of projects to on-ground construction and execution, has been the highlight of the Modi government. So much so, Nitin Gadkari, the road transport, highways and shipping minister says with confidence that India’s infrastructure projects today are attracting interest from global investors such as Temasek and GIC of Singapore and DBS. “Global investors are keen to participate in India’s infrastructure story because we have awarded contracts worth Rs 3 lakh crore in the past three years,” Gadkari said before leaving for London where he launched the National Highways Authority of India’s (NHAI) first overseas Masala bond issue on 11 May. The bond issue mopped up Rs 3,000 crore with Asia contributing 60 per cent of the subscription and the balance coming from European investors.
Abhaya Agarwal, partner, infrastructure and public-private-partnership at EY says that development of infrastructure — railways, roads or ports — in the past three years has been “pretty impressive”. “The PPP story has not taken off. It will take time for the private sector and banks to develop confidence because a lot of cleaning up is required,” adds Agarwal.
Gadkari has already met a host of international investors who have expressed their keenness to invest in the highway projects under the Toll-Operate-Transfer policy. Under this policy, the global investment firms can take over the completed highway projects for 30 years for an upfront payment. They can collect toll and operate the project with a local operator. As per government estimates, if, for example, 100-plus such projects are leased, India could easily get over Rs 1 lakh crore, which could fund several more roads and infra projects. From Blackstone, Temasek, GIC to DBS, a host of foreign investors have already had several meetings with the roads minister and the ministry officials. Now, the roads ministry is busy planning the award of construction contracts of over four-dozen economic corridors and logistic parks.
“The industrial corridors’ work is not showing up on ground yet. However, it is a fact that furious planning is going on the Visakhapatnam-Chennai corridor, the Bengaluru-Chennai corridor, or the Mumbai-Bengaluru industrial corridor,” says Jaijit Bhattacharya, partner of strategy and economics at KPMG India. “However, the results will be evident in a year-and-half,” he adds.
Ground Movement
A report by India Ratings & Research (Ind-Ra), a Fitch Group Company, says that due to speedy land acquisition and timely clearances in FY16, the highway construction gained pace by as much as 37 per cent compared to the same period in FY15. The April-September 2016 data indicates a similar run rate of construction. Increased compensation per hectare and deployment of additional officers at the local level also aided in quickening land acquisition, says the report.
The national waterways policy has been a game changer and an achievement for the government, says Bhattacharya. He says that it will be a paradigm shift once the Kolkata-Guwahati waterways through Bangladesh picks up substantial traffic. “That will give huge advantage to all stakeholders. With more waterways getting active, the cost of logistics transportation will come down drastically,” says Bhattacharya.
The government is spending around Rs 4,000 crore for developing waterway facilities in the Ganga. There are several other key projects that have been announced, some of which are underway. Some of these include the Setu Bharatam project (highways without railway crossings), the Bharatmala Project (linking Gujarat to Mizoram and Maharashtra to West Bengal via road), or the Sagarmala Programme (transport goods to and from ports quickly). Many of these projects are expected to be completed by 2019.
Unfinished Agenda
What should the government focus on for the remaining two years in office? What should be the intent? Agarwal says the government has announced several metro projects, which are now stuck due to various reasons. “Some are stuck due to land acquisition issues, others due to utility clearances or availability of finance. Similarly, a lot was announced on Smart Cities and Amrut, but on-ground movement is not visible. It will be prudent to focus on moving many of these projects instead of announcing more projects,” he says.
Bhattacharya agrees, “We should focus on deep sea ports, costal shipping ports, industrial corridors, inland waterways. We just need to complete these projects and they will become game changers. It is now a question of executing all these key projects in a time-bound manner,” he adds.
