Social and Impact
Spearheading the NIP: Capital inflows to boost social infrastructure sector
27 Jan 2022
National Infrastructure Pipeline (NIP) aims to
kick-start key greenfield and brownfield
projects for investments across all economic and social infrastructure sectors.
Projects have been systematically commissioned for their strategic use cases,
requirements, and merits. Projects executed are being spearheaded with the
support and participation of private sector enterprises who share financial
risk, bring on board relevant experience and strengthen infrastructure quality,
asset monetization, long term financing, thus forming a backbone to create a
robust ecosystem across India.
It is imperative to talk about the progress of NIP. So far,
9,144 projects across 34 sub-sectors with US$ 1,488B costs are commissioned.
Projects are executed across transport, power & energy, water sanitation,
social infrastructure, communication, and commercial infrastructure.
The below table gives a snapshot of
the scale of opportunities across sectors and sub-sectors.
As we see, the transport sector has the highest
opportunities planned that is valued at approximately US$ 800B including major projects like Delhi-Gurugram-SNB
Regional Rapid Transit System accounting for US$ 4.8B followed by the energy
sector with 687 opportunities, including projects like Solar Power Project
valuing US$ 63.5B across the country. Undoubtedly, the sector is poised for
growth and development. Significant investments are also pooled to create this
robust infrastructure ecosystem for the country. This ensures the smooth
movement of goods and services.
After the transport sector, most opportunities lie in social
infrastructure, the second most important sector with more than 1,700 opportunities across India. Social
Infrastructure includes education, affordable housing, health, and sports
infrastructure as sub-sectors and has been a prime focus for 2020-25 FY,
especially as the COVID-19 has been around since 2020.
As we see from the chart below, major investments
opportunities were in West Bengal, Madhya Pradesh, Uttar Pradesh, Tamil Nadu,
Andhra Pradesh, and Rajasthan.
As we analyze the need for opportunities and investments,
education requires a key focus as a sub-sector. The education infrastructure
sector has 1,251 opportunities worth
US$ 71.2B, with projects like Samagra Shiksha Development Project (US$ 3.17B)
and Centre of Excellence Project [Solan] (US$ 8.4M). The results of these
investments are yet to be assessed. However, there are clear investment
opportunities to build the sector on a longer-term basis.
The Education Infra sector projects under social infrastructure are classified
as below:
|
Education Infrastructure sector
|
NIP Projects
|
Non-NIP projects
|
Stressed Assets
|
|
Number of projects
|
1,009
|
216
|
26
|
|
Project Cost (US$ Billion)
|
70
|
1
|
-
|
Source:
indiainvestmentgrid.gov.in
Notes: IIG hosts investment opportunities in stressed assets
to allow the purchase of viable stressed assets with a potential to turnaround
Similarly, in the affordable housing infrastructure
sector, 234 opportunities worth US$
166B have been identified, including projects like Pradhan Mantri Awaas Yojana
Gramin worth US$ 59B and Credit Linked Subsidy Scheme Project in Maharashtra
worth US$ 7.5B, which are expected to be completed by March 2022.
The affordable housing sector projects under
social infrastructure are classified as below:
|
Affordable housing sector
|
NIP Projects
|
Non-NIP projects
|
Stressed Assets
|
|
Number of projects
|
157
|
76
|
1
|
|
Project Cost (Us$ Billion)
|
153
|
12
|
-
|
Source:
indiainvestmentgrid.gov.in
The initiatives and projects under NIP can enable the
monetization of operating public infrastructure assets as a key means for
sustainable infrastructure financing under the National Monetisation Pipeline
(NMP). Projects like Dholera Special Investment Region aiming to create
infrastructure opportunities to set up manufacturing units will help increase
the country's industrial output and create jobs for the gig economy, migrant
workers . There is an imperative need to
introduce and amend National Labor code bills for the industry sector.
Schemes under NIP like Smart City Mission, AMRUT, National
Solar Mission, Bharatmala, and so on act as a catalyst for boosting
development, job opportunities, and FDI investment, thereby increasing the
much-needed capital and talent pool in the country.
Adopting global standards backed with strong governance
models in these projects helps boost the quality of delivery and transparency.
Not only does it build confidence in the ease of doing business, but it also
opens opportunities for business growth. These steps create interest among the
global investment communities and partner nations and are well supported by
them . India's goal of a US$ 5 trillion economy by 2025 is certainly ambitious.
India is soaring high, backed by talent, market, capital, ecosystem, and open
culture. India’s global competitiveness is increasing, and there is a
significant rise in economic influence .
This can be seen through clearly, as India has the highest ever FDI inflow of
US$ 67.9B in 3 quarters of FY21. IMF
also projected an 11.5 percent GDP growth rate for India in 2021.
The introduced PLI scheme is also a push to make India an
emerging global production hub to become the world’s second most sought-after
manufacturing destination by 2030). Schemes under India Investment Grid (IIG)
will further need amendments through policy reforms to increase the investment
opportunities and attract capital in these NIP initiatives through a public-private
partnership. It is hopeful that budget FY 2022-23 judiciously paves the way for
sustainable capital finance inflows in the country.
Authored by:
Lokesh Bohra, Senior Vice President,
Social and Impact Advisory, Praxis Global Alliance