The infrastructure sector has become a high political priority and the launch of the Gati Shakti initiative by Prime Minister Narendra Modi this week adds a new dimension of implementation to the company. This is an important step forward for the country’s logistics, where inefficiencies result in an estimated cost of 13-14% of gross domestic product (GDP), compared to 6-8% in more competitive economies.
Gati Shakti’s National Master Plan is expected to deploy a digital geospatial platform that will provide real-time information on infrastructure projects in 16 ministries. The use of digital technologies to map infrastructure facilities has been lacking in India, and with the now availability of relevant data and satellite information, the launch of such a portal catapults the country into a process system of modern infrastructure. Greater visibility in key areas such as railways, shipping, and roads and highways should serve to fuel the development of facilities in an integrated manner. With a single portal comprising multi-layered data levels, decision making and various implementation processes can be streamlined and made both efficient and timely.
The initiative builds on previous government actions and policies to promote infrastructure. Public-private partnerships have been redesigned and include new models such as toll-operate-transfer and a hybrid rent model. Access to finance has opened up through innovative mechanisms such as infrastructure and real estate investment trusts and development finance institutions.
The National Infrastructure Pipeline was launched with 8,200 projects, representing a cost of ??111 trillion, and it meets the demand of Indian industry for a shelf of investment-ready projects. Another landmark initiative is the National Monetization Pipeline, which engages the private sector in India’s infrastructure mission by leasing assets for operation and maintenance as well as for new investment. As expected, ??6,000 billion can thus be mobilized for the government to inject into new projects.
Gati Shakti has several potential benefits for the economy. At a time when public spending is expected to support growth, it would ensure better use of scarce funds and maintain investment in new projects. Faster construction of infrastructure can be a great job multiplier, creating new employment opportunities in rural areas. New connectivity and linkages will allow currently excluded regions to join the mainstream economy, which in turn could generate multiple business opportunities as rural and urban business activity becomes more integrated.
In addition, multimodal transport has shortcomings in India due to the lack of last mile connectivity and the asymmetric nature of prices among available transport modes resulting in higher transport costs overall. Several modes, such as inland waterways and air freight, are insufficiently developed. Once the various transport routes are seamlessly connected, India’s logistics sector will shift to greater containerization for the movement of goods, using the cheapest options available, whether by road, rail or inland waterways.
Time and cost overruns have characterized the implementation of the project so far. According to the Ministry of Statistics and Program Execution, which tracks infrastructure projects worth ??150 crore and over, out of 1,736 projects, 449 experienced cost overruns and 547 were delayed. This has been a challenge in the infrastructure sector, with delays in approvals by ministries working in silos playing a role. Gati Shakti should facilitate the planning, implementation, monitoring and administration of transport infrastructure projects so that they do not experience delays. The time savings will lead to monetary savings, which can be reinjected into the social sector, among others in need.
For the industry, the availability of detailed facility data at a particular location would save a lot of time and effort in making investment decisions. A plug-and-play model for industrial parks, as promised under the program, has long been a demand from Indian industry to have approvals and permits pre-obtained for a business to start operating quickly. .
The plan contemplates a targeted approach to the completion of industrial parks, with an end date of 2024-25. No less than 109 pharmaceutical and medical device clusters, 90 textile parks (or clusters), 197 food parks and agrifood centers, 11 industrial corridors and two defense corridors are planned for integration via transport facilities. Our need for better backcountry connectivity and faster access to ports can now be addressed holistically. This will promote the competitiveness of exports.
The vision of using a digital geospatial platform will need to be implemented by all relevant departments and agencies to ensure that it achieves its goals. With all projects uploaded to the portal, greater coordination between relevant agencies on approvals etc. should catalyze the projects. Additionally, while working with state governments on project implementation, close cooperation with local field services would yield definitive results for last mile connectivity. These local organizations can also be part of the portal. It is proposed that the monitoring of the projects be undertaken by various committees of senior officials, and Gati Shakti will provide timely data on the points where the processes are stuck, allowing for swift action. With the Prime Minister’s emphasis on infrastructure, interventions are likely to be solution-oriented to get projects back on track.
In summary, Gati Shakti ensures the adoption by Indian infrastructure of digital technology, which will improve the overall execution and efficiency of the project. Productivity gains for the Indian economy are expected to be significant, as will the drop in logistics costs for industry. This is another such transformational initiative that we are expecting from this government.
Chandrajit Banerjee is Managing Director, Confederation of Indian Industry
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