The Narendra Modi-led government has scaled up targets for infrastructure growth in 2015-16 after the NITI Aayog found targets in other sectors have been substantially achieved.
The first review of the progress in infrastructure sector taken by Prime Minister Narendra Modi last week found that several projects were on target: work has started picking up in stalled projects, building rural roads and connecting gram panchayats with broadband; power capacity added has exceeded target for the first time in the last 10 years, and renewable has got an unprecedented boost.
The presentation by NITI (National Institution for Transforming India) Aayog to Modi, however, showed that the pace of infrastructure building has not picked up, and railways, highways and ports were lagging, due to poor response to public private partnership projects.
NITI Aayog has been tasked by the Prime Minister’s office (PMO) with monitoring infrastructure sectors. “Investment stuck in stalled projects has been in the range of 8-9% of GDP in the last three years, but it improved to 7% of GDP as on December 2014,” the presentation said.
The government subsequently hiked targets by 15-20 % for most of the infrastructure ministries, as indications were that the economy was reviving and investors were showing interest once again, a government official said.
As a result, the rural development ministry has been asked to ensure construction of 26,000 kms of all-weather roads, 20% more than the target for 2014-15. The electricity-for-villages target has been almost doubled from 1,900 in 2014-15, and the PMO wants micro-irrigation to cover 3.7 million hectares of farm land (see graphic).
“Tax-free infrastructure bonds for in rail, road and irrigation projects, as announced in 2015-16 budget will help revitalise the PPP mode of infrastructure development,” a NITI Aayog functionary said. “Also, the government has enhanced public funding for infrastructure sectors such as roads and railways.”