By Shashank Agarwal
Infrastructure is crucially an crucial sector for the general improvement of any nation. In India, it is regarded as the backbone of the country’s economy as it integrates projects on a massive scale and strengthens its competitiveness on a international level. The infrastructural facilities such as roads, railways, metro rails, and so on are essential to potentially boost the productivity and seamless functioning of other small business sectors in India.
According to the estimates of a current report – India will call for a whopping Rs 50 trillion (US$ 777.73 billion) in infrastructure by 2022 for sustainable improvement in the nation. It is also showcasing a myriad of possibilities for foreign investors to invest in the country’s infrastructure improvement. Furthermore, the estimates shared by the Department for Promotion of Industry and Internal Trade (DPIIT) recommend – FDIs in the building improvement and infrastructure activities stood at US$ 17.22 billion in September 2020.
Given the present marketplace situation, the Indian government plans to invest USD 1.4 trillion throughout 2019 – 2023 on infrastructure with an investment of USD 750 billion on railways infrastructure by 2030. On the other hand, the onset of the pandemic posed a daunting predicament in front of infrastructure firms to recover from an all-time low of the preceding year. This calls for an urgent require to come up with hugely impactful techniques to stimulate development in the sector.
Successful completion of infrastructure projects is capital intensive and demands a enormous capital inflow. The most essential method to stimulate development in the sector is an productive deployment of capital sources by the government. As per the current price range – the government has announced the allocation of about Rs 1.07 Lakh crore to the Ministry of Railways and Rs 25,933 crore to the Department of Telecommunications for capital expenditure. The deployment of the allocated sources in the proper way is anticipated to boost the quantity of tenders announced and completed. As a outcome, there will be a massive quantity of projects and greater demand for infrastructure firms, accelerating the cashflows in the nation. Additionally, if the time taken to fulfill contractual obligations is lowered than the present, the operations in the sector will proceed with swiftness.
Besides resource allocation, it is incredibly vital to introduce pan-India policies in the sector for standardization. Inter-departmental disparities have a tendency to hinder the progress of the projects drastically. This has been clear in the telecom sector that possesses differentiated pricing by municipal corporations, for instance in Delhi. This becomes a big detriment for the sector as a entire specifically at the time when telecommunication is not a luxury, but a necessity. Thus, the sector requires a universal policy for the smoother execution of projects and tenders.
Another major challenge faced by massive infrastructure firms is the sourcing of raw components such as steel. Earlier, the infrastructure firms have been essential to procure steel from main producers who charged a premium, for that reason driving up expenses for the sector as a entire. Recently, the ministry of steel released a clarification stating that the raw material can be procured from any producer. However, the implementation of such recommendations requires a terrific push in order to enhance the industry’s development by decreasing the expense of raw components. Furthermore, the value fluctuations on raw components have a tendency to delay the completion of infrastructure projects though slowing down the whole sector’s development. Providing relief on procurement of raw components can outcome in expediting the delivery of the projects, thereby, accelerating the development of the sector.
Any sector that requires a robust push requires to determine the roadblocks and come up with a resolution for its progress. In the infrastructure sector, one of the greatest hurdles is incomplete projects. These are generally left for as well lengthy in the final stage of improvement and the completion of them would make way for new projects as effectively as provide assistance for them. This case is evident specifically with physical infra projects such as roadways and railways. Focus on physical infrastructure projects will make the movement of sources simpler and also provide help to logistics.
In the previous 3 years, there has been a buzz about the improvement of wise cities in India. Expediting the method of project approvals can assistance the government fulfil the mission of wise cities, and alleviate infrastructural gridlock in tier 1 and tier 2 cities, exactly where most of the population is concentrated.
(Shashank Agarwal is the Managing Director at Salasar Techno Engineering Ltd. The views expressed by the author are his personal.)