February 11, 2021
Dola Sen makes a Special Mention on infrastructure
Thank you, Chairman Sir. My subject is infrastructure.
You know investments in infrastructure have a multiplier effect on economic growth. In April 2020, the task force for National Infrastructure Pipeline (NIP) submitted recommendations to the Finance Ministry, earmarking a total investment of Rs 110 trillion for energy, roads, railways and urban projects.
Envisaging that 50 per cent of the total fund of NIP would come from the government, it was also assumed that the government would increase the capital expenditure by 10 per cent each year. But COVID-19 has substantially affected the revenue flows of the government, leading to a paucity of fiscal potential for undertaking such investments on expenditure as proposed. Various financiers of the NIP are themselves struggling, which has left NIP in a utopia.
According to the CMIE, new project announcements from the government have decreased drastically since March 2020. Apart from the government, other primary sources of infrastructure financing are also suffering, for example, IL&FS downfall in 2018 because of issues like cost escalations and untimely completion of projects plaguing the infrastructure financing system.
The states invest more in capital asset. The combined capital expenditure of states is 2.9 per cent of India’s gross domestic product (GDP), and is nearly twice that of the Centre’s capital expenditure of 1.6 per cent But the lockdowns have disproportionately affected the revenues of states. Then, the delayed payments from the Centre as compensation under the GST framework aggravated the problem.
Therefore, I would like the government to provide sound allocation for NIP and other works regarding infrastructure.