NEW DELHI: Despite the large build-up of connectivity infrastructure and energy-related assets, both sectors reported the need for corrections in the delay in land acquisition, and land-related clearances, said the Economic Survey of 2024 released on Monday. It added that while there has been a quantum jump in infrastructure build-up in the last five years, here are some areas for corrective and collective actions.
“Issues are also raised about slow on-boarding of digital land records. In the case of airport development, greenfield airport projects are time-intensive due to the need for appropriate site selection, land acquisition and necessary approvals. Addressing challenges related to land in physical infrastructure requires coordinated action at different tiers of the Government,” stated the survey.
The survey also sees lower participation of the private sector in infrastructure as a major challenge. “The addition to the stock of infrastructure in the last five years owed predominantly to public sector financing. Private sector participation is not forthcoming to the extent desired,” it noted.
Factors impeding private participation in infrastructure building are lumpy capital investment, long payback period and difficulty in mobilising large equity and debt at affordable cost.
Many novel public-private partnership (PPP) financing models like the hybrid annuity model, have been introduced to mitigate this constraint. But private sector participation through these modes has so far been limited to only certain sectors like roads and water.
The other issues are project structuring issues related to risk estimation, allocation and mitigation, delays in getting clearances and land acquisition, lack of an independent regulator for infrastructural sectors and contractual issues and inadequate arrangements for dispute resolution and arbitration, leading to prolonged litigation.
Infrastructure-creation efforts in India are predominantly public sector-led. As per the Infrastructure Monitor 2023 published by Global Infrastructure Hub and the World Bank, India’s investment in infrastructure was largely funded by the public sector -- which includes Government agencies and state-owned entities and banks.
Between fiscal year 2019 and 2023, the Central and State Governments contributed 49% and 29% of the total investments, respectively. Meanwhile, the private sector contributed 22%.
The Eco Survey said that for India to continue down the path of building quality infrastructure, a higher level of private sector financing and resource mobilisation from new sources will be crucial.
“Facilitating this would not only require policy and institutional support from the Central Government, but State and Local Governments would have to play an equally important role. International experience shows us how initiatives at the sub-national level can facilitate resource mobilisation for infrastructure development,” noted the survey.