ON JUNE 29, in his first meeting with top secretaries after taking charge, Prime Minister Narendra Modi reminded the bureaucracy to abide by the philosophy of “Pancha Prana” or five pledges to make India developed by 2047. These pledges — making India developed, erasing traces of servitude, instilling pride over legacy, strength of unity, duties of citizens — were adopted by the prime minister on Independence Day in 2022.
The first, building infrastructure fit for a developed economy, is the most crucial. The new BJP-led NDA government declared infrastructure as its top priority in its second Cabinet meeting itself by approving the ₹76,200 crore Vadhavan port project in Maharashtra’s Dahanu with a capacity of 23 million twenty-foot equivalent units or TEUs. It was conceived 60 years ago. “Infrastructure has been the key focus of the government over last 10 years. The port will be among the top 10 in the world. Its capacity will be more than the combined capacity of all the ports in the country at present,” railway minister Ashwini Vaishnav said, while announcing the decision. The project will be executed by a joint venture between JNPT (76% share) and Maharashtra Maritime Board (26%) in two phases. The first phase of 15 million TEUs will be over by 2029. Other ministries have also lined up mid to long-term plans in line with the NDA government’s Vision 2047.
Mega Plans Of Key Ministries
Railway and road transport ministries are working on projects worth ₹33 lakh crore to be implemented over next seven-eight years. These will be cornerstones of the country’s growing economy. The investment will increase as the projects get going.
In fact, highways ministry had started working on Vision 2047 before general elections. It even shared some aspects in prime minister’s meeting with top bureaucrats in early March. The plan involves building 60,000 kms of access-controlled greenfield expressways by 2047. The target is to build a world-class road network criss-crossing the length and breadth of the country with links to existing highways. The idea is to replicate the Delhi-Mumbai expressway in other parts of the country. A top ministry official says plan for ₹20 lakh crore investment to build over 30,000 kms of access-controlled high-speed network by 2037 is being readied. Also in the works are additional projects covering almost the same length beyond 2037. “All these will be high-speed corridors,” says the official. In effect, the ministry is looking at building about 60,000 kms of high-speed road corridors by 2037. It is now finalising the funding plan, which may include a mix of central grants, NHAI funding, asset monetisation and public-private partnerships on build operate transfer model, which government is planning to revive after a decade. The ministry will approach the Cabinet after finalising the plan and the funding roadmap.
Ministry of railways, too, is focusing on connectivity corridors. Its 67,000-km network, which handles 23 million passengers and 14,000 trains daily, is insufficient, as indicated by long waiting lists and overcrowded trains. The country has added just 12,000 kms railway network over the 55,000 kms it had at Independence. Now, the railway ministry is working on a plan to end passenger waiting lists in next six-eight years by adding capacity. The two key areas where it is working are network expansion and rolling stock. Central to the plan are multi-modal corridors for both passenger and freight movement. “Several initiatives are being discussed. The ministry is looking at expanding the railway network by at least 50% to 90,000 kms in next six-eight years. This will require an investment of ₹11 lakh crore,” says an official. The ministry is in the process of procuring rakes for semi-high speed Vande Bharat trains and Amrit Bharat, an express service which will have only sleeper and unreserved seats.
Ports & Shipping: New Vistas
Since Covid, the Central government has pumped in huge funds in highways and railways. Both have together received ₹15.62 lakh crore Central support between FY22 and FY25 (Budget estimate). In its third term, government has indicated a significant focus on ports and shipping, too. “By 2030, the ports and shipping ministry plans to invest ₹3.5 lakh crore in port capacity augmentation, shipping and inland waterways and give a push to creating jobs in the maritime sector,” says an official close to the development. The ministry’s Amrit Kaal Vision 2047 envisages world-class ports, inland water transport projects, coastal shipping and a sustainable maritime sector. The ministry has formulated the vision after consultations with stakeholders and referring to over 50 international benchmarks. It wants to tap the maritime tourism opportunity too by increasing annual cruise passenger traffic from 4.68 lakh to more than one-and-a-half million by 2030.
Other Sectors
Housing will be another focus area. The new government approved assistance for building three crore rural and urban houses under the Pradhan Mantri Awas Yojana in its very first Cabinet meeting. The outlay could be ₹5 lakh crore. Under the scheme, it has given help for around 4.2 crore houses, either in the form of direct cash transfer or interest subsidy, till date. However, housing sector representatives say more out-of-the-box solutions may be required to address the issues in the sector in view of growing urban population, paucity of resources and civic challenges. They suggest a new leasing model for urban housing and connecting nodal urban centres to bigger cities with faster mobility. “We have to ensure that the quality of life improves. One of the challenges in affordable housing is rise in land prices. Government can provide affordable houses on long-term lease,” says G Hari Babu, president, National Real Estate Development Council.
“We need to debottleneck cities through multiple urban centres with better connectivity. That will be big for housing. Big cities cannot sustain beyond a point. They will become like Latin America, even Jakarta. The country (Indonesia) has to move its capital to a different island as it takes hours to drive a kilometre due to traffic,” says Dhruv Agarwala, group CEO, housing.com and proptiger.com.
The Funding Paradigm
The line-up by the infrastructure ministries has made it clear that the country is planning to build massive infrastructure in next 25 years. A significant part of the effort will involve arranging funds. Raising such huge amounts will not be easy considering that the fiscal consolidation roadmap announced in Interim Budget in February restricts central support to highways and railways. The Interim Budget gave ₹2.8 lakh crore for capex by the highways ministry.
However, sectors where a secondary market has developed are expected to see a lot of funding action, say experts. This includes highways, where developers are aggressively putting up projects for monetisation, majorly through infrastructure investment trusts (InvITs). This will help both government and private sector raise funds. “Operational assets are growing. This class of projects is becoming an investment destination for both domestic and global investors. Secondary market is growing with InvITs now having assets worth ₹2 lakh crore,” said P.R. Jaishankar, MD, India Infrastructure Finance Company Ltd.
But the railway ministry may not find it easy to raise funds. At ₹2.78 lakh crore (BE FY25), revenue receipts are just one-fourth of investments it is planning for network expansion over next six-eight years. After factoring in expenses, the net revenue left with the ministry is a mere ₹2,800 crore. Clearly, there is an urgent need for the ministry to raise funds as it depends solely on central budgetary support (₹2.52 lakh crore in FY25). Infrastructure experts say nothing stops the ministry from adopting an InvIT or real estate investment trust model for revenue generating assets like dedicated freight corridor and revisiting the idea of starting private trains.
Planning for a $15-20 trillion economy will require sustainable funding plans and models. Infrastructure building at current scale is not a knee-jerk reaction to an economic crisis. It is part of a bigger plan for building a developed economy. Planning big is one thing, but when it comes to funding models for the next 25 years, policy makers need to tread carefully.