February 1

The government is seeking to raise productivity, accelerate economic growth and development by re-energising the infrastructure sector with the PM GatiShakti programme acting as the fulcrum.

Describing the plan as a “transformative approach for economic growth and sustainable development”, Finance Minister Nirmala Sitharaman said in her Budget speech to Parliament that the approach is driven by seven engines - Roads, Railways, Airports, Ports, Mass Transport, Waterways and Logistics Infrastructure.

“All seven engines will pull forward the economy in unison. These engines are supported by the complementary roles of Energy Transmission, IT Communication, Bulk Water and Sewerage and Social Infrastructure. Finally, the approach is powered by Clean Energy and Sabka Prayas – the efforts of the Central Government, state governments and the private sector together – leading to huge job and entrepreneurial opportunities for all, especially the youth,” she said.

The projects pertaining to these 7 engines in the National Infrastructure Pipeline will be aligned with PM GatiShakti framework.

Touchstone

“The touchstone of the Master Plan will be world-class modern infrastructure and logistics synergy among different modes of movement – both of people and goods – and location of projects. This will help raise productivity and accelerate economic growth and development,” she stated.

The data exchange among all mode of operations will be brought on a Unified Logistics Interface Platform (ULIP), designed for Application Programming Interface (API).

“This will provide for efficient movement of goods through different modes, reducing logistics cost and time, assisting just-in-time inventory management and in eliminating tedious documentation. Most importantly, this will provide real time information to all stakeholders and improve international competitiveness,” Sitharaman said.

Vishal Kotecha, Director, Head – Global Infrastructure Ratings, India Ratings and Research, said that the Budget reiterated the government’s thrust on infrastructure spending with nearly 35% increase in capex outlay to ₹7.5 trillion.

“With increased allocation, the budget has largely addressed the infrastructure spending needs, the focus on creating new infrastructure projects through the Gati Shakti Scheme will be the focus ,” he said.

The Capex for next fiscal is budgeted to rise 17% over this fiscal’s revised estimates (RE).

“Interestingly, the gross budgetary support (GBS) for this is up more – 39% on-year. That will reduce the reliance on funding from the government and external entities. For infrastructure sectors, capex is budgeted to rise 11% over this fiscal’s RE and GBS will rise faster at 30%,” said Isha Chaudhary, Director, CRISIL Research.

The capex for roads and highways for next fiscal, according to Chaudhary, is only 0.8% higher than this fiscal’s RE. But the key to note here is that the entire ₹1.88 lakh crore is via GBS next fiscal, which marks a 55% on-year increase. The internal and extra-budgetary resources, or IEBR, limit has been eliminated next fiscal, which reduces the dependence on NHAI borrowings. A 54% increase in asset monetisation target of ₹20,000 crore next fiscal also indicates a shift in funding mode. Asset monetisation is likely to account for 10% of funding requirements, Chaudhary said.

The right chord

The big Capex infusion and the macro push to key sectors like infrastructure has struck the right chord among the industry.

“The PM Gati Shakti, the umbrella scheme, will get more firepower with higher allocations across the board to propel all related sectors including logistics. The development of multimodal logistics parks will further spur economic growth,” said VS Parthasarathy, Vice-Chairman, Allcargo Logistics Ltd.

Gati Shakti will help lay the foundation for big private investments in infrastructure development, said Anshul Singhal, MD, Welspun One Logistics Parks.

“Overall, from a sectorial point of view, the next cycle looks even more promising not only for the Indian infrastructure but also for sectorial investments,” Singhal said.

“Budget 2022’s emphasis on logistics, specifically the Gati Shakti Plan, reiterates how the logistics sector is integral to the economic and trading activities of India, said Neeraj Bansal, COO – India Global and National Leader – Supply Chain Realignment, KPMG.

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