by Ojus Sharma
India’s potential, however high it may be, has for multiple reasons, not been realised. The delay in liberalisation, introducing reforms, and having a conscious growth focused public policy has caused the economy to be unable to reap the benefits of its young demographics, blessed geography, and socio-economic dynamics. Multiple schemes aim at changing that, with the flagship being the ‘Gati-Shakti’ master plan, focused on infrastructure development.
What is the Gati-Shakti Master Plan?
Prime Minister Narendra Modi unveiled the ‘Gati-Shakti Mater Plan’ in the independence day speech of 2021, in which he outlined the National Infrastructure Pipeline, set to usher a drastic transformation in India’s infrastructure, enhancing multi-modal connectivity through investment in road, rail, and water-way projects. This would act as an umbrella plan for various projects undertaken by the Cabinet Ministers, and State governments, such as Bharatmala, Sagarmala, etc.
The Need for Investment in Indian Infrastructure
India has, for far too long, suffered inefficient infrastructure and undesirable policies, that hinder growth and drive away foreign investments. At times, trading internationally is cheaper than inter-state trade, due to heavy duties and lack of connectivity. This is absurd since the competing markets can easily outpace India’s potential without being brought to fruition. Therefore, there needs to be an effective change and public policy attitudes in India both at the federal and state levels. The introduction of the Gati Shakti Master Plan is a positive sign of the country realising the need for large heavy investments in infrastructure both private and public. This is necessary for India to become the ‘Manufacturing Hub’ it desires to be with Make in India, by making sourcing local raw materials cheaper, and eventually end product costs competitive for domestic use and export.
Components of the National Infrastructure Pipeline
The National Infrastructure Pipeline (NIP) includes an ambitious package of projects worth USD 1.4 trillion. Some of its main components include the Industrial Corridor Development project, the Dedicated Freight Corridor development project, Bharatmala, Sagarmala, along with projects in Railway advancement and airport development:
- Industrial Corridor Development: The flagship project involves the creation of 11 Industrial Corridors across the country, in an attempt to establish new and give a push to existing indigenous industries, flourishing economic development along the ‘Golden Quadrilateral’ and its diagonals. The backbone of each corridor is a Dedicated Freight Corridor, which creates new rail freight lines to separate passenger and freight transportation, paving way for increasing speeds of passenger rail whose average speed is heavily weighted down by slow freight transportation. These freight corridors would also aid greatly in increasing the speed of freight itself, almost matching semi-high speed rail, with new rolling stock, WAG-12B e-locomotive, manufactured locally by Alstom, achieving 85% indigenisation; the government has ordered 800 such locomotives in a deal with 25,000 crore INR. These industrial corridors subsume several key projects overlapping with other schemes, such as the Delhi-Mumbai expressways being developed under Bharatmala. The project has a visionary approach of geographically allocating infrastructure and incentives for establishing production centers, acting as a catalyst for growth.
- Bharatmala: Majorly associated with building roads, national highways, and expressways, the Bharatmala project is a major component of the National infrastructure pipeline with an investment of over 130 billion USD. Bharatmala seeks to develop highways of 83,677 km in length, connected 500 district headquarters (currently 300), raising minimum 4-lane corridors to 50 (currently 6), and move 80% of freight traffic (currently 40%).
- Sagarmala: As the name suggests, this megaproject focuses on coastal development. It attempts to create 14 CEZ (Coastal Economic Zones), across Indian shores, to stir development in coastal communities, while also investing funds in port expansion. Ports are a great indicator of an economy’s capacity to export, and its role in maritime transport, which also contributes to strategic geopolitical leverage. Currently, only two (Mumbai and Kutch) of India’s ports rank in the 50 busiest globally, while China’s are 18. It is therefore important to expand capacity to handle maritime traffic, both by TEU (twenty-foot-equivalent) containers and tonnage.
- Railways: Perhaps the sector in desperate need of an overhaul, the Indian railways are set to get a huge upgrade, with multiple high speed, semi-high speed, conventional, and urban rapid transit lines planned across India. In addition to new systems, multiple projects, such as the recently sanctioned station redevelopment of New Delhi, Mumbai, and Ahmedabad, are crucial for the sector to be able to meet international standards and provide safe, accessible, and reliable transportation.
- High speed: Although late, India finally has a high speed rail project, set to create new lines across the country, to link major cities at the speed of 320 km/h. This is a promising new project that has the potential to change the trajectory of the country’s ageing railway system. The project, although is currently only limited to 14 corridors, there’s a lot of room for addition, and more lines are being proposed each year, giving hope for a comprehensive system, linking all cities and towns across India in a few decades, with what some like to refer to as the ‘Diamond Corridor’.
- Semi-High speed: Complementing the high speed rail corridors, the Indian Railways has begun converting existing tracks to ‘semi-high speed’, classified as 160 km/h or more. It is an important component of the modernization and future of the Indian Railways. Interestingly, the new ‘Vande Bharat’ rolling stock is the backbone of this attempt, built with indigenous technology and local manufacturing, helping aid the ‘Make in India’ initiative.
- Urban Rapid Transit: Among the most remarkable undertakings, is the establishment of multiple new rapid urban transit systems across India, making the country the largest operator of Metro systems in the world (including current and under construction). It is an extraordinary achievement, especially at a time when the country desperately needs new urban infrastructure to support its rapidly overpopulating cities due to rising urbanisation rates.
- UDAAN-RCS: Expansion of existing and construction of new greenfield airports, has picked up immense pace in India. Under the UDAAN-RCS which stands for ‘Ude Desh ka Aam Naagrik – Regional Connectivity Scheme’, the country has made great strides in making the aviation sector thrive, by incentivising and even subsidising costs for air travel, while also making infrastructure including 100 new airports across the country, revolutionising accessibility while also doing so sustainably, reducing congestion on the already brimming facilities.
The ‘Gati-Shakti’ master plan represents an extremely ambitious vision to transform India. It is important to note however, that not all the 1.4 trillion USD is new investment. The plan is an overlapping one, that supersedes the existing ones, advertising it as new. Having that said, it’s important to consider that the amount is still a lot, even by international standards. Unlike developed economies, in the words of Minister Nitin Gadkari, 70% of India is yet to be built. It is important that the country adopts an approach that does not create unsustainable infrastructure in the disguise of ‘supply-side economics’ like China, drowning in piles of debt. Mostly, this risk does not pose a major threat in India’s case, since most infrastructure projects are feasible and do not risk being constructed without demand. The most important challenge or risk is ensuring the quality of this newly built infrastructure. India is notorious for falling short of expectations while making bold promises. Despite scepticism, If all these risks are dealt well, in the coming few years, India’s goal of becoming a 5 trillion dollar economy is not too far off.
Ojus Sharma is the co-lead for the finance and economics cluster.