A KEY driver of high economic growth rate in India, and a major source of global confidence in India, is the scale and pace of expansion and upgrading of India's infrastructure, long seen as the single biggest bottleneck in India's progress.
India's infrastructure represents the largest investment opportunity in any single country in the world. It exists in an environment of political continuity, policy reforms, stable currency and low inflation rate.
A snapshot of its infrastructure sector reveals the pace of expansion over three years:
- In less than three years, investment by the central government alone in national highways and shipping has touched US$60 billion.
- Capital investments in the railways sector over the past three years amounted to US$45 billion.
- For the current fiscal year ending March 2018, the central government's outlay on the transportation sector (port, national highways and railways) has increased to US$60 billion.
- 352 affordable housing projects, valued at US$6 billion, to build 200,000 houses in 53 cities have been launched.
India has targeted to invest US$1.5 trillion in the medium term to expand and upgrade its infrastructure. Over the next three years alone, aggregate investments in infrastructure will be a staggering US$400 billion.
Roads and highways
- India plans to double its national highway network from 96,000km to 200,000km within a time frame of five years. These will constitute 4 per cent of road network and carry 80 per cent of road traffic, creating an attractive revenue model. Projects for nearly 60,000km have been awarded.
- Pace of highway construction has gone up from 2km per day in 2014 to 23km per day in 2017 and is targeted to reach 40 km per day in 2018.
- Construction of rural roads has increased from 73km per day to 133 km per day.
- 1,000km of expressways are being built in high density corridors.
- 2,000km of coastal connectivity highways are being built.
- Indian aviation market is growing at around 20 per cent per year, with India likely to emerge as the third largest market by early 2020s. Eight hundred new aircraft are likely to be added by Indian air carriers.
- The government has sanctioned 18 new greenfield airports; site clearance has started for five of them.
- Airport Authority of India (AAI) plans to revive and operationalise around 50 airports in India over the next two years to improve regional and remote air connectivity.
- There are 75 operational airports in India; 33 unserved airports are being added for scheduled flights in one year.
- Eventually, around 250 small and regional airports are likely to be developed, as the government accelerates its low-fare regional aviation connectivity programme under UDAN.
The Indian aviation sector is likely to see investments totalling US$15 billion during 2016-2020 of which US$10 billion is expected to come from the private sector.
Shipping and ports
- Six new major ports are being built; existing ports are being expanded and upgraded.
- Port sector added handling capacity of 95 million tonnes per annum in 2015-16.
- 14 coastal economic zones are being planned in line with Prime Minister Narendra Modi's vision of port-led development.
- 111 rivers have been declared as national waterways.
- Development of the first stretch of 1,620 km on Ganga River has started.
- Five-year investment plan is about US$125 billion; this includes about US$15 billion on station redevelopment.
- It expects to meet about US$40 billion through PPP and institutional finance.
- Annual investment doubled between 2014-15 and 2016-17; pace of track expansion also doubled.
- 400 stations to be modernised; 23 stations already put out for bids in 2017.
- Two high-speed dedicated freight corridors being built.
- Construction of high-speed rail between Mumbai and Ahmedabad to start soon; six others planned.
- Amenities for 23 million daily passengers improving rapidly. Sixty per cent of tickets are e-tickets; nearly 2,900 automatic ticket vending machines were installed in 2015-16 alone, up from an average of 770 a year till 2014.
- Railways working on multi-modal logistics.
- 35 logistics park to be built by Ministry of Highways and Shipping; 27 by the Railways' logistics company, CONCOR.
- India's long-term power generating capacity is targeted to reach over 800,000MW by 2031-32. Current capacity is a little above 300,000MW.
- 76GW of power capacity was added in the last three years, of which 20GW was in the solar and wind sector.
- Transmission projects worth US$25 billion commissioned in three years.
- Solar capacity has increased from 2.7GW to 12.25GW in three years. Thirty-two solar parks with capacity of 19GW bid out. Launch of second phase of National Solar Mission for additional 20GW of solar parks capacity. Wind tariff bid touched a low of 3.46 rupees/unit and solar tariff a low of 2.44 rupees/unit.
- Over 560 million LED bulbs distributed as energy efficiency measure.
- App-based tracking of every village and household to meet the objective of power for all.
Real estate and urban development
- The real estate sector, comprising housing, hospitality, commercial and retail, is the second largest employer after agriculture and one of the major determinants of economic activity. The housing sector alone contributes 5-6 per cent to the country's gross domestic product (GDP).
- The Indian real estate market is expected to touch US$180 billion by 2020.
- India's real estate sector is poised for mega growth through many government initiatives, besides rapid expansion of private investments.
*100 Smart Cities projects and Urban renewal programme through AMRUT: US$16 billion investments have been approved so far.
*New cities, such as the Amravati capital city in Andhra Pradesh, being built in partnership with Singapore.
*Housing for all by 2022, which would entail construction of 50 million affordable houses; 10 million rural houses to built by 2019.
*Industrial parks and cities; logistics parks and special economic zones; the Delhi-Mumbai Industrial Corridor and other economic corridors.
- The government has strengthened regulations, opened up the sector and improved incentives.
*100 per cent FDI in township and settlements development.
*Investment trusts and real estate investment trusts liberalised.
*Real Estate (Regulation and Development) Act.
*Infrastructure status for affordable housing; tax benefits for investment in affordable housing; reduction in duration of holding for application of lower long-term capital gains tax.
*Introduction of GST will stimulate demand for real estate, especially in the logistics sector.
If India is the world's most attractive infrastructure investment opportunity, Singapore is among the best placed countries to exploit it. It has companies with capabilities to design and develop world-class infrastructure; and a financial market with the capacity to raise funds for it. Singapore's signature is clearly visible in many pockets of India. There is opportunity to do much more.
- The writer is High Commissioner of India to the Republic of Singapore.