Rs 7-L cr infra boost to revive economy
The Government on Tuesday came out with two bold decisions to revive investment as well as growth by unveiling a massive Rs 6.92 lakh crore infrastructure spending and another Rs 2.11 lakh crore for recapitalisation of State-run banks.
Flanked by all his five secretaries and Chief Economic Adviser, Finance Minister Arun Jaitley reeled out economic indicators to substantiate the Government contention that GDP growth slowdown has bottomed out and economy is turning around.
In its effort to give a spending push to the infrastructure sector to lift the economy and create more jobs, the Union Cabinet on Tuesday approved the Bharatmala highway project, a mega plan to build 83,677 km of roads and bridges in phases by 2022 at an investment of Rs 6.92-lakh crore. This is expected to generate 14.2 crore man-days of jobs.
Bharatmala will replace National Highways Development Project, launched in 1998 by then Prime Minister Atal Bihari Vajpayee. The project, considered to be India’s biggest, is aimed at improving economic activity and speeding up traffic flow on key corridors for faster movement of cargo.
The Bharatmala project will connect 17 States and include 44 economic corridors that will link border areas, improve international, port and coastal connectivity besides developing highway corridors connecting key economic and commercial hubs. The Government will fund most of the Bharatmala projects using budgetary support through the Central Road Fund. Besides Government funding, works will also be taken up in the Public-Private-Partnership (PPP) mode.
Union Minister for Road Transport and Highways Nitin Gadkari would unveil the details of the Bharatmala highway project on Wednesday. The first 34,800 km of roads will include 9,000 km of economic corridors; 6,000 km of inter-corridors and feeder routes, 5,000 km of National Corridors Efficiency Improvement, 2,000 km of border roads and international connectivity, 2,000 km of coastal roads and port connectivity, 800 km of greenfield expressways, and 10,000 km of remaining work of the NHDP.
According to MoRTH officials, the Ministry has already prepared a road map for the project. According to the plans, most of the projects under Bharatmala will be implemented using the Engineering-Procurement-Construction model and the National Highway Authority of India (NHAI) will be given full autonomy irrespective of project cost. However, in case projects are under PPP mode, after a certain amount, the project will need clearance from MoRTH.
Officials said that Rs 2.09-lakh crore will be raised as debt from the market, Rs 1.06-lakh crore of private investments would be mobilised through PPP and Rs 2.19-lakh crore would be provided out of accruals to the Central Road Fund, Toll-Operate-Transfer monetisation proceeds and toll collections of the NHAI. In addition to 34,800 km under Bharatmala, the balance works of 48,877 km under ongoing schemes would be implemented in parallel by NHAI/ MoRTH with an outlay of Rs 1.57-lakh crore. This will be financed with Rs 0.97-lakh crore from CRF and Rs 0.59-lakh crore as Gross Budgetary support.
For the first time ever, monetisation of 82 operating highways under a low-risk TOT model has been initiated with a private investment potential of Rs 34,000 crore. The first bundle of 9 NH stretches of 680.64 km has been put out to tender by NHAI with potential monetisation value of Rs 6,258 crore.
The move comes at a time when growth in Asia’s third-largest economy has slowed to a three-year low of 5.7 per cent in the quarter ended June, leaving many experts to call for an expansionary fiscal policy.
In August, official data showed fiscal deficit at July-end touched 92.4 per cent of the Budget mainly because of front-loading of State expenditure. This is also a sign that Government spending is buoying up an economy, whereas private investment is scarce.
The deficit figure for 2016-17 was 73.7 per cent of the target. The economic slowdown has offered the Congress ample grist for its campaign against Prime Minister Narendra Modi ahead of the crucial Assembly polls in Gujarat and Himachal Pradesh, leading up to the general elections in 2019.
Under Bharatmala, the MoRTH plans to undertake a network of economic corridors and a detailed project report on these has already been prepared by the global consultancy firm AT Kearney. The firm has identified 44 economic corridors for development and these include Mumbai-Cochin-Kanyakumari, Bengaluru-Mangaluru, Hyderabad-Panaji and Sambalpur-Ranchi. These economic corridors plan to open up India’s hinterland for development.
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