Indian Infrastructure Sector

18 August 2022
6 min read

A nation's infrastructure must be developed if its sectors and overall economy expand. The Indian economy's main engine is the infrastructure sector. As it entails manufacturing and industrial growth, the increased spending in this sector multiplies overall economic growth. This then increases aggregate demand by enhancing living standards.

Electricity, roads, telecommunications, railroads, irrigation, water supply and sanitation, ports, airports, warehousing facilities, and oil and gas pipelines are the main components of the infrastructure sector.

Present Scenario of the Indian Infrastructure Sector

The Budget has rightly emphasized accelerating infrastructure development, in both its physical and digital avatars, as a component of the stockpile upgrade initiatives for delivering a booster dose to revive economic growth.

These initiatives will work together to increase and modernize India's infrastructure stock, speed up the creation of jobs, and rekindle the economy's vitality, all while keeping India's climate change-related objectives in mind.

After an approximately 19.3% increase in May, India's infrastructure output increased 12.7% year over year in June 2022, flagging the second month of double-digit economic expansion.

While the production of crude oil decreased by 1.7%, other commodities saw increases in production, including coal (31.1%), cement (19.4%), electricity (15.5%), refinery products (15.1%), fertilizers (8.2%), steel (3.3%), and natural gas (1.2%). In addition, when April through June is considered, infrastructure output increased by 13.7%.

Some Recent Investments & Initiatives in The Infrastructure Sector in India

Following are a few recent government projects and investments in the infrastructure sector:

  • In June 2022, Mr Nitin Gadkari, Minister of Road Transport and Highways, opened 15 national highway projects worth Rs. 13,585 crores ($1.7 billion) in Patna and Hajipur, Bihar.

  • Nitin Gadkari, Minister of Road Transport and Highway, opened 19 National Highway projects in Rajasthan and Haryana in March 2022, investing a total of Rs. 1,407 crores (US$ 183.9 million).

  • The Asian Development Bank (ADB) approved a loan in November 2021 for US$250 million to support the National Industrial Corridor Development Program (NICDP). This is a portion of the 500-million-dollar loan for constructing 11 industrial corridors connecting 17 states.

  • With the launch of the "Infrastructure for the Resilient Island States" initiative in November 2021, India will have a significant opportunity to improve the lives of other vulnerable nations around the globe.

  • The Dubai government and India signed a contract in October 2021 to build infrastructure in Jammu and Kashmir, including industrial parks, IT towers, multipurpose towers, logistics centres, medical colleges, and specialized hospitals.

  • Road building will be accelerated in FY22 by government initiatives like the National Infrastructure Pipeline, National Monetization Pipeline, Bharatmala Pariyojana, modifications to the Hybrid Annuity Model (HAM), and a quick pace of asset monetization.

  • The PM GatiShakti National Master Plan, which includes implementation, monitoring, and support mechanisms, was approved by the Indian Union Cabinet in October 2021.

  • For a redesigned, reform-based, and result-linked fresh electricity distribution sector scheme over the next five years, the government declared Rs. 305,984 crores (US$ 42 billion).

  • The Mega Investment Textiles Parks (MITRA) scheme was introduced to create seven textile parks over three years and world-class infrastructure for the textile industry.

  • The Ministry of Railways intends to monetize a number of assets, including the Eastern and Western Dedicated Freight Corridors once they have been put into service, the introduction of 150 modern rakes via PPP, station renovation via PPP, railway land parcels, multifunctional complexes (MFC), railway colonies, hill railways, and stadiums.

The Union Budget & The Infrastructure Sector

  1. The government has allocated Rs. 10 lakh crore (US$ 130.57 billion) to improve the infrastructure sector, giving it a significant boost.

  2. The National Highways Authority of India received a budget of Rs. 134,015 crores ($17.24 billion) from the government (NHAI).

  3. According to the government, the Ministry of Road Transport and Highways will receive an investment of Rs. 60,000 crores (US$ 7.72 billion).

  4. The Ministry of Housing and Urban Affairs will receive $9.85 billion from the government, or Rs. 76,549 crores.

  5. To build and improve the nation's telecom infrastructure, the government gave the Department of Telecommunications a budget of Rs. 84,587 crores (US$10.87 billion).

  6. It is anticipated that Railways will spend a total of Rs. 234,640 crores (US$30.48 billion).

  7. Over the next three years, 100 PM-GatiShakti Cargo Terminals for multimodal logistics facilities will be built.

  8. The PM GatiShakti - National Master Plan for multimodal connectivity to economic zones received the majority of attention. The PM GatiShakti National Master Plan will integrate everything—from highways to trains, from aviation to agriculture, and many ministries and departments.

You may also want to read Budget Expectations - Things to Know about Union Budget 2022

Some Remarkable Infrastructure Development in India

  1. Roadways

Under PM Gati Shakti, two lakh km of national highways are expected to be finished by 2024–25. In 2022–2023, the government plans to add 25,000 kilometres to the National Highways Network. All over the nation, NH construction is moving along more quickly. In 2020–21, national highways were built for an average distance of 37 km. The 1,380 km, eight-lane Delhi–Mumbai expressway, which is currently under construction in India, is anticipated to be finished in March 2023.

The Eastern Peripheral Expressway, the Delhi-Meerut Expressway, the Narmada Bridge, the Chenani - Nashri Tunnel, and the Dhaula-Sadia Bridge are among the significant Bharatmala Pariyojana projects that have been finished.

  1. Airways

The government established the UDAN program to improve provincial air connectivity from the nation's underserved and unserved airports and lower air travel costs for the general public. 415 routes and 66 airports have been operationalized as part of the program.

The Krishi Udan program helps farmers locate markets for their goods both domestically and abroad. On an annual year-over-year basis, there was a 22.5 per cent increase in the volume of agricultural goods transported under the program in FY 21–22.

  1. Railways

From 2018 to 2030, the government has proposed spending Rs. 50,000 crores on rail infrastructure. The Vande Bharat semi-high-speed train was introduced as part of the "Make in India" initiative. By 2025, India will have produced 400 new Vande Bharat trains. On broad gauge lines, all unmanned level crossings have been removed.

The Indian Railways completed 6,015 Route km of electrification in 2020–21, the most in a single year. Compared to the previous seven years (2014–21), electrification increased by more than 5 times. By 2024, Indian railways will be powered by electricity at this rate.

  1. Waterways

Ninety-nine billion rupees worth of Sagarmala projects have been finished. Since 2014, the capacity for handling cargo has increased by 79%. Major Ports handled 6.94% more traffic during FY 2021–22 than the previous year. As of March 24, Non-Major Ports' capacity, which stood at 689 MTPA until 2014, had risen to 1,224 MTPA.

  1. Power & Electricity

Until March 31, 2021, 2.817 crore households had electricity installed since the start of Saubhagya. In addition, 4.34 lakh of the 11.84 lakh households with DDUGJY approvals that were made have electricity. A total of 2.86 crore households were electrified as of 24 March 2022.

Conclusion

Although the rate of change in the infrastructure and construction sector has not yet been as rapid as in some other sectors, this is starting to change, and the change will be both significant and unstoppable.

We sincerely hope that this blog has aided you in getting a grasp on the most recent information regarding the Indian infrastructure industry. However, please keep in mind that this blog only provides information. Therefore, before making any financial or investment decisions, kindly conduct your market research.

Disclaimer

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