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Modi says India will soon unveil $1.35 trln infrastructure plan
NEW DELHI, Aug 15 (Reuters) - India will launch a 100 trillion rupee ($1.35 trillion) national infrastructure plan that will help generate jobs and expand use of cleaner fuels to achieve the country's climate goals, Prime Minister Narendra Modi said on Sunday.The infrastructure programme, called "Gati Shakti", will help boost productivity of industries and boost the economy, Modi said during his speech at the Independence Day celebrations in New Delhi.
"We will launch a masterplan for Gati Shakti, a big programme ... (it) will create job opportunities for hundreds of thousands," Modi said from the ramparts of the historic Red Fort in the capital city.
While Modi did not announce details of the plan, he said the plan will help local manufacturers compete globally and create new avenues of future economic growth.
Boosting infrastructure in Asia's third largest economy is at the heart of the Modi's plan to pull back the country from a sharp economic decline worsened by the COVID-19 pandemic.
In the last fiscal year, India's economic output fell by a record 7.3% and a second wave of COVID-19 has delayed economic recovery.
The prime minister also set a target to become energy independent by 2047, saying the goal can be achieved through a mix of electric mobility, moving to a gas-based economy and making the country a hub for hydrogen production.
Modi said the country spends more than 12 trillion rupees annually on energy imports and becoming energy independent was critical, as he also announced the launch of a National Hydrogen Mission to boost the government's clean energy plans.
"India is moving fast towards achieving its climate goals," he said.
Modi says India will soon unveil $1.35 trln infrastructure plan
India will launch a 100 trillion rupee ($1.35 trillion) national infrastructure plan that will help generate jobs and expand use of cleaner fuels to achieve the country's climate goals, Prime Minister Narendra Modi said on Sunday.
The country's foreign exchange (forex) reserves are accumulated from investment flows and are not "ours" as there are liabilities against them. Hence, the forex kitty works as a buffer against exchange rate volatility and is not for deploying to fund projects.
wap.business-standard.com
Forex reserves for hedging, can't use them to fund projects: Experts
Carry liability and not 'free' resource for funding
The country's foreign exchange (forex) reserves are accumulated from investment flows and are not "ours" as there are liabilities against them. Hence, the forex kitty works as a buffer against exchange rate volatility and is not for deploying to fund projects.
Forex reserves for hedging, can't use them to fund projects: Experts
Carry liability and not 'free' resource for funding
Our Reserves have been built by Investment Inflows , Loans and Remittances
We still have a large trade deficit
Which has to be financed every year
Once Global economy is in trouble
This money will flow out and the Rupee will crash , which is exactly what should
Not happen
I wonder what will be the duration of this project. If the duration is the similar to the National Infrastructure Pipeline (NIP), from 2020-2025, then we will be spending US$ (1.35 + 1.4) = US$ 2.75 trillion with in 5-6 years.Modi says India will soon unveil $1.35 trln infrastructure plan
NEW DELHI, Aug 15 (Reuters) - India will launch a 100 trillion rupee ($1.35 trillion) national infrastructure plan that will help generate jobs and expand use of cleaner fuels to achieve the country's climate goals, Prime Minister Narendra Modi said on Sunday.
The infrastructure programme, called "Gati Shakti", will help boost productivity of industries and boost the economy, Modi said during his speech at the Independence Day celebrations in New Delhi.
"We will launch a masterplan for Gati Shakti, a big programme ... (it) will create job opportunities for hundreds of thousands," Modi said from the ramparts of the historic Red Fort in the capital city.
While Modi did not announce details of the plan, he said the plan will help local manufacturers compete globally and create new avenues of future economic growth.
Boosting infrastructure in Asia's third largest economy is at the heart of the Modi's plan to pull back the country from a sharp economic decline worsened by the COVID-19 pandemic.
In the last fiscal year, India's economic output fell by a record 7.3% and a second wave of COVID-19 has delayed economic recovery.
The prime minister also set a target to become energy independent by 2047, saying the goal can be achieved through a mix of electric mobility, moving to a gas-based economy and making the country a hub for hydrogen production.
Modi said the country spends more than 12 trillion rupees annually on energy imports and becoming energy independent was critical, as he also announced the launch of a National Hydrogen Mission to boost the government's clean energy plans.
"India is moving fast towards achieving its climate goals," he said.
Modi says India will soon unveil $1.35 trln infrastructure plan
India will launch a 100 trillion rupee ($1.35 trillion) national infrastructure plan that will help generate jobs and expand use of cleaner fuels to achieve the country's climate goals, Prime Minister Narendra Modi said on Sunday.www.reuters.com
That's some serious investment. That's almost the size of India's nominal GDP. Admittedly I don't understand economics, so let me ask this. Where will we get this massive amount of money ? Loans from foreign banks ? That doesn't sound like a great plan.
Also doesn't this new "Gati Shakti" mission overlap with the NIP ? Why do we need 2 separate projects of this size ?
@Ashwin @Nilgiri @_Anonymous_ @randomradio et al.
I don't think it's a separate program. The naming could be different but it's the same program. Modi has a habit big making grandiose announcements on certain important occasions. This is likely one of them . Moreover even if we see it as a single project the figures quoted 1.3 trillion USD in 5 yrs seems highly exaggerated. Take it with a pinch of salt .
That is possible.
Apparently ~ USD 1.4 trillion was sanctioned in the 2020. There is a website with real time upgrades on all projects under the NIP's gambit. From the website it seems they have indeed sanctioned the money. Out of 8000+ projects under the NIP, 1800+ are under construction now. There is substantial work being done under the NIP despite the pandemic. Whether they can complete all the projects & use up the entire fund, that remains to be seen.
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Do check out the the website. It is incredibly well designed, given the usually state of govt. websites.
The cumulative investment plan for these projects already show close to 2 trillion USD as projected costs . These are likely the escalation in costs. In all probability by the time we see completion of say 80% of these projects , I expect it'd be close to 2028-30 timelines & close to 3 trillion USD expended if not more. That's how things normally proceed out here .
I don't know if this is right forum to write this but aside from massive investments & massive project undertakings on a fast track basis there's also the typical compromise with quality & safety happening apart from massive corruption.
I say this on the basis of anecdotal evidence of a personal nature in case of multiple projects in the railways , ports , roads & highways sectors , a likely fallout of the speed at which these projects are being pursued , sanctity of project deadlines , patronage network of party supporters in the form of businesses who've to be assuaged & personal corruption.
In many ways you can see it as a replay of how China massively built up it's infrastructure & industrial capacity in the decades between 1990-2010.
A fallout of all this as detailed above apart from a certain inability to manage the railway bureaucracy saw Piyush Goel a high performer with a proven track record being replaced.
The think tanks, advisory boards etc. stated in 2020 that we needed an investment of 1.7-1.9 trillion to upgrade infra over the next decade. FM sanctioned 1.4 trillion. The increase in cost so far is probably inflation coupled with economic slowdown due to COVID.
What's new here ?
The system is corrupt. Politicians are products of that system. But at least they can be removed from power. What about the bureaucracy ? They are corrupt, incompetent & unaccountable. Politicians come & go, babus stay.
Let me share a personal note. This is what I have seen in Tripura's infra since 2014 :
We got piped natural gas & water at our home recently. Gas pipelines came during the NDA's 1st term, water came during the 1st lockdown. We are economically in a good enough place to not need either of those. We have purchased LPG cylinders for ages, we have water pumps/purifiers at home. Yet you cannot deny the convenience that piped utilities bring.
The quality of the road have greatly improved. They are very well maintained now unlike before. New paths have been carved & flyovers have been built leading to a cut in travel times. With the BharatNet project we finally have an option for high speed broadband internet, until now BSNL was the only broadband provider & their services have been awful for years. New railway lines are been built with Bangladesh. The state's gas output is going up. New airport terminal is about to open up. BCCI is building a big cricket stadium. Inland waterways are being developed, recently connected with Bangladesh. New solid waste treatment plant has come up, AMC just got a whole fleet of waste compactors. Talks are ongoing for setting up palm plantations in the state.
That's all great right ? Here is the bad part.
Most of the civil construction work has been given to people who are linked to politicians. This corruption & favoritism is most common in the road construction scene. Road construction has also seen the fastest implementation. The favoritism part is an open secret, everybody knows. But nobody really cares. In the last 7 or so years we have seen more infra development than in the last decade of CPM rule.
The question for us is would we have corruption/favoritism soaked progress or incorruptible stagnancy. I'd choose the former any day.
In many ways the template for the current business + politics model of economic progress coupled with cronyism was developed over a period of time in our country right since Independence. This wasn't peculiar to India. It's been observed across Asia & abroad as well but more true of certain places than others.
It received plenty of traction during Indira Gandhi's regime which saw the creation & in many ways an expansion too of an ecosystem which reaped the harvest whenever the Congress was in power mostly under PVNR or MMS as compared to these regimes there were peanuts on offer during IGs & RGs administration though it's on these peanuts that this ecosystem was born sustained & thrived on .
The opposition merely aped this template mostly in the states & whenever they got their shot at governing at the centre 1996-2004 & 2014 onwards.
Where this template started faltering was when you had massive corruption coupled with incompetent implementation, jobless growth, run away inflation, policy paralysis, economic stagnation, etc which was observed during UPA-2 which brought about their downfall.
Whether you see it as a whole process which culminated in 2014 bringing about the downfall of a complete ecosystem or you choose to see it in isolation as merely a series of events during UPA-2 is where we probably differ in our perspectives.
The top brass of the BJP isn't involved in personal corruption though I'd qualify this statement with a caveat that this remains true as of today & doesn't include all the top brass which could be said of PVNR & MMS too unlike their colleagues & other party men.
No details of this plan given, so we don't know what it overlaps with already (and being re-packaged essentially) and what is actually new in outlay...with niti aayog white paper to back it.
I feel Indian economy has to return to strong growth for a chunk of years before we see any serious new outlay in capital formation (govt or private)....otherwise most new outlay (esp. from govt) will simply be from taking debt.
Gati Shakti seems to be the name for the NIP.
Anyway, I believe the govt expects a mix of govt spending, private spending and foreign investment to take care of the budget.
Cheap foreign loans will be affordable, like the Japanese loan for the bullet train.
whats the difference between 2019 , 2020 and 2021 ? NIP is announced in 2020 and many projects are in pipeline but the 2019 annoncement is not done and 2021 we have to wait and see
We exported $35.5 Bn worth of goods in July.... I wanted to ask, is the PLI scheme helping, in any magnitude??
@Nilgiri, @randomradio ??
@Nilgiri, @randomradio ??
In this system, the govt provides benfits after companies deliver on their promises. So yeah, it definitely works on paper. But it's too early to tell since it began only last year.
It's rebound high. Let it stabilize before giving any takes.
It has some effect for sure, it needs some more time to see how much it is. Early signs are promising.
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