Long-Term Investment Push To Boost Economy

Boost Economy

In News

The Finance Minister Nirmala Sitaraman has unveiled and investment plant to the tune of Rs. 102 lakh crore in infrastructure in the next five years. This is a major step taken by the government to boost the economy.

In-Detail

  • The Rs. 102 lakh crores will be invested in infrastructure projects by 2024-25.
  • The capital expenditure is shared between the centre, state governments and the private sector with a ratio formula of 39:39:22.
  • Over the last six years, the central and state governments combined invested Rs. 51 lakh in infrastructure. Considering this, the announcement from the FM is a significant increase.
  • The government is seeing this announcement as step towards making India a $5 trillion economy by 2024-25.

The Task Force

  • The announcement comes after a task force constituted by the Finance Ministry to identify infrastructure projects across the country as part of a National Infrastructure Pipeline.
  • It is the task force that has proposed the Rs. 102 lakh crore investment across infra sectors like power, renewable energy, atomic energy, petroleum and natural gas, roadways, railways, irrigation, health, education, digital communication, industrial expenditure etc.
  • The percentage of capital expenditure for some of the sectors are as below:
    • Roads – 19%
    • Railways – 13%
    • Urban infrastructure – 16%
    • Rural infrastructure – 8%
    • Irrigation – 8%
    • Social infrastructure – 3%
    • Digital communication – 3%
    • Industrial expenditure – 3%
    • Agriculture and food processing – 1%
    • Energy sector – 24%
  • Almost 24.5 lakh cores will be invested in the energy sector.
  • The task force will also be monitoring the progress and will also have the flexibility to change course with the power of dropping a project and picking up a new one.

Eighteen States

  • The projects will be implemented in 18 states as part of the National Infrastructure Pipeline.
  • The reason behind investing in only 18 states is because some states are yet to put forward their pipelines.
  • For example, states like Gujarat, West Bengal, Rajasthan and  Bihar did not share their proposals with the task forces.
  • As such, the FM has clarified that an additional Rs. 3 lakh crore will be added to the Rs. 102 lakh crore in the future.
  • The total investment is phased over a six-year period including the current year.
  • The funds would come from budgetary and extra-budgetary resources, funds raised from the market and internal accruals of the relevant state-owned companies.
  • Funds can also be raised from foreign investors, by monetising existing railway, power and highway projects.

Key Targets

  • The Finance Minister also revealed key targets to be achieved with this investment.
  • They are:
    • 74% rise in power generation capacity, from 356GW to 619GW.
    • 50% rise in length of national highways
    • Double farmer income
    • 50% of additional capacity to be in renewable and nuclear energy
    • 10% of NH to be expressways
    • 100% of households to have piped water supply
    • 80% internet penetration – up from 40% today
    • 73 new medical colleges

Other Targets

  • 36% jump in per capita electricity use, from 1,181kWh to 1,616 kWh
    • Increase irrigated land to 85 million hectares from 68 million hectares at present
    • Increase the use of micro-irrigation to 28% of all irrigated area from 15%
    • Build modern silos for storage with a capacity of 100 lakh MT. Existing silos have a capacity of 7.25 lakh MT
    • Expressways to account for 10% or 20,000 km of the total NH length
    • 500 passenger trains & 30% of 750 stations to be privatised
    • 100% of the existing railway network to be electrified from 46%
    • 30-35 airports owned by AAI to be privatised. Target is to be in the top 2 of the global aviation market from no.3 rank at present
    • Raise gross enrolment ratio in higher education to 40% from 25.8%
    • Increase spending on health to 2.5% of GDP from 1.28%
    • Treat 100% municipal solid waste, up from less than 25% treated currently.
    • Make metro rail transit available in more than 25 cities.
    • Pucca houses with basic civic amenities for 100% of the rural population.
    • Implement 5G technologies

Sanctity of Contracts

  • Also underlined in the investment plan is the need for maintaining the sanctity of contracts.
  • Many newly formed state governments have revoked contracts made by the previous governments.
  • This is leading to the bad sentiment among private investments.
  • Thus, the investment plan calls for upholding the sanctity of contracts by the central, state and local governments.
  • It wants privations of the contracts to be legally enforceable to make the parties to the contracts abide by them. 

Conclusion

The announcement came at the right time and has the potential to receive the economy. It gives a long-term boost to the economy.

Best IAS Coaching in Delhi, Best IAS Academy in Delhi, Best upsc coaching in Delhi, Best IAS Institute in Delhi

About Classic IAS Academy 447 Articles
Classic IAS Academy is at the forefront of providing best IAS coaching in delhi, India. The Academy helps the aspirants to tap their innate analytical power to become successful in the exam.

Be the first to comment

Leave a Reply