Budget FY23: A massive push towards infrastructure and logistics under PM Gati Shakti
10 Feb 2022
The first of the four
priorities of the union budget FY23 was the PM Gati Shakti which focused and emphasized
on modernizing infrastructure and building digital infrastructure in India.
Within the seven engines for growth in Gati Shakti, the focus of budget FY23
has been on roads, railways, mass transport, and logistics.
Roads and railways
have received strong mention in the budget with National Highways Network to
add 25,000 km and introduce about 400 Vande Bharat trains in FY23. Mass urban
transit such as Metros has also been a key area with an increased focus on
transit-oriented development and town planning schemes to benefit the urban
population and reduce time to commute. Parvatmala (ropeway network) has
received a significant push in areas such as hilly and congested regions where
road public transportation is difficult. Launched on the back of Sagarmala (ports
network) and Bharatmala (road network), it is a considerable push towards
utilizing public transportation.
The energy sector has
received a significant mention on the renewable side with dedicated support for
solar manufacturing under the PLI scheme in highly efficient solar cells and modules.
Biomass pellets to be co-fired in thermal plants to reduce emissions and
support a carbon-neutral economy. Further, energy efficiency and energy audit
for large commercial buildings would be undertaken under the energy service
company (ESCO) model to build a focus on energy savings.
has received a strong thrust with 5G spectrum auctions planned in FY23 and an optical
fiber push to reach all villages via Bharat Net by 2025. Data centers and
energy storage systems including dense charging infrastructure and grid-scale
battery systems have been given infrastructure status.
On the logistics
front, data exchange among all mode operators is to be brought on a Unified
Logistics Interface Platform (ULIP) for improving efficiency and reducing
logistics costs. Further, four multi-modal logistics parks (MMLP) would be
awarded in FY23 in addition to the exiting MMLPs which are at various stages of
planning and construction.
The shift from roads
towards using railways as an efficient mode for logistics has been planned with
the integration of postal and rail networks for parcel movement. Along with the
railway’s plan to develop new products for small farmers and SMEs and the
concept of One-Station-One Product to help local businesses and supply chains.
Further, about 100 cargo terminals are being planned for multimodal logistics
over the next three years.
The focus for the
logistics sector is clearly towards efficiency, cost-effectiveness, and digitalization
across various modes.
Skill Development and Financing
This year’s budget has
also emphasized skill development within the infrastructure sector as well as
technical support in capacity building for infrastructure projects. On
financing, the National Bank for Financing Infrastructure and Development
(NaBFID) and National Asset Reconstruction Company (NARC) have commenced their
activities. Furthermore, as a part of the government’s overall market
borrowings in FY23, sovereign Green Bonds will be issued for mobilizing
resources for green infrastructure. This is a positive step in the overall
focus towards green and sustainable infrastructure.
Over the past 2-3
years, the government has been clear on its direction for the infrastructure
and logistics sector with the National Infrastructure Plan (NIP) and National
Monetization Plan (NMP), bringing in modern and digital frameworks and private
players via the PPP route to develop the entire ecosystem.
In our view, infrastructure
and logistics have again been at the forefront of the Union Budget FY23 under
the PM Gati Shakti master plan. The government has clearly articulated the need
for efficient, cost-optimized, and digital focus for the transportation of both
people and goods. Innovative business models and how to engage with private
players for implementation would be the real test of these identified focus
Senior Vice President, Infrastructure