2016 – An Infrastructure Leap Year

United Nations General Assembly has declared 2016 to be the year of ¨pulses¨. With pulse prices going sky-high in 2015, another source of protein for the poor people has well-nigh gone out of reach in our country. So, we are obviously circumspect about what to expect with pulses in the New Year, United Nations notwithstanding! But what we can safely forecast is that all infrastructure segments – roads, power, ports, waterways, airports, urban infra and railways are going to set our pulses racing. The government is relentlessly and intensely pushing all these infra sectors towards their overhaul, leading to an inescapable conclusion that the sector is in for an upswing in the coming year.

Of course, there´s no denying that it´s also that time of the year when one tends to put on those rose-tinted glasses to look back, or look ahead, as the case may be. But, one has to accept that the numbers and hard facts do tell a story of improvement and of growth, whether it be the pace of roads construction per day, numbers of stalled projects that have been cleared, investments in renewable energy, addressing the woes of the mining and power sectors (DISCOMs in particular), ports or railways.

Starting the year off with a big-bang announcement about setting up of the Rs.40,000 crore National Investment and Infrastructure Fund (NIIF), the Narendra Modi government may have launched an initiative that could yet be the game-changer. Certainly, it has been conceived as a sovereign wealth fund, whose mandate is ¨to maximise economic impact through infrastructure development in commercially viable projects¨. This is a major step to fix India´s infrastructure financing issues. The sector is saddled with most of India´s stalled projects to the tune of Rs.8.8 lakh crore, and bad loans of about Rs.s40000 crore. On top of all these woes of the past, it is estimated that investment of Rs.26 lakh crore will be needed in this sector till 2020. In that context, 40000 crore seems to be a small number, but it must be understood that NIIF is only one of the many answers to the financing conundrum that plagues the sector.

Policy gaps are also being addressed and by all accounts, the recent recommendations of the Vijay Kelkar Committee seem to be a significant step in the right direction with respect to setting up a more viable framework for public private partnerships (PPP). Even before that, some ¨toolkits¨ were innovated to improve the working of PPPs in a few specific sectors like highways. Likewise, the groundwork being done in the areas of dispute resolution, arbitration, bankruptcy, etc., may just be the right signals to generate more confidence in our legal eco-system, and in speedy enforcement of contracts, which is very important for infrastructure construction projects.

Public investments in infrastructure is perhaps the only lever the central government has today to push for jobs, for ¨Make in in India¨ and for economic growth. And the year 2016 may well see this lever being pulled with all the might that our government has. Let us see if we can make 2016 the ¨Leap¨ Year of Infrastructure.