India needs massive investments estimated to be in excess of INR 50 trillion (US$ 775 billion) in Infrastructure to increase growth of GDP connect and integrate the nation with a network of roads, airports, railways, ports and inland waterways and to provide good quality services to our people.
The main theme of the budget was rural India, health and agricultural sector. The government still tried to increase the budget allocation towards infrastructure sector. Government of India gave priority to rail and road sectors with an all-time high allocation in the Union Budget 2018-19. It aims to increase spending on infrastructure project, which can support the economy. Further, the government is looking for larger private participation in coming years.
Budget Allocation in Key Scheme
WHAT ARE HITS?
The government has allocated major investments towards following sectors:
1. Smart Cities Mission aims at building 100 Smart Cities with state-of-the-art amenities and has selected 99 Cities in the Phase-I. The cities are investing in projects related to Smart Command and Control Centre (60 projects to be implemented in 60 cities), Smart Roads (115 projects to be implemented in 60 cities), Solar Rooftops, Intelligent Transport Systems, Smart Parks. The government has proposed total investment of INR 2.04 trillion (US$32 billion) in 2018-19.
2. The government has allocated highest investment towards railway sector as it has major impact on rural economy. The key focus is to strengthen the railway network and to enhance its carrying capacity. The government has proposed capital investment of INR 1.48 trillion (US$23.5 billion). A large part of the Capex is devoted to capacity creation.
Investment towards Railway Track (New Lines, Railway Track Doubling & Gauge Conversion and Electrification)
Investment towards Rolling Stock (Figures in numbers)
Further, redevelopment of 600 major railway stations is being taken up by IRSDC (Indian Railway Station Development Co. Ltd.). All stations with more than 25,000 footfalls will have escalators. All railway stations and trains will be progressively provided with WiFi. CCTVs will be provided at all stations and on trains to enhance security of passengers. The government is planning to improve Indian Railways operating ratio to 92.6% in 2018-19, compared to 96% in 2017-18.
3. The government has planned to construct Regional Rapid Transit System (RRTS) , connecting the national capital region (NCR) cities of Delhi, Alwar, Meerut and Panipat. National Capital Rail Transport Corporation (NCRTC) is constructing three corridors — Delhi-Meerut, Delhi-Alwar and Delhi-Panipat under Phase-I. Out of the three, Delhi – Ghaziabad – Meerut corridor will be the first one to be executed and pre-construction work has already been initiated. The government has allocated INR 6.59 billion (US$ 100 million) for Phase-I. The cost of Delhi-Meerut corridor is estimated at INR 320 billion (US$ 5 billion), of which 70% of the amount will be financed through loan and state governments (Delhi and UP) will share 15% costs each.
4. Suburban railway is a passenger rail transport service that primarily operates between a city centre and middle to outer suburbs beyond 15 km and commuter towns or other locations that draw large numbers of commuters—people who travel on a daily basis.
- Suburban Railways in Mumbai carries more than 5 million passengers every day. However, the system is facing major capacity issue. The government has planned to expand and augment by adding 90 kms of double line tracks at a cost of over INR 110 billion (US$ 1.75 billion). Further, it has planned 150 kms of additional suburban network at a cost of over INR 400 billion (US$6.35 billion), including elevated corridors on some sections.
- Similarly, a suburban network of approximately 160 kilometers is being planned to cater to the growth of the Bengaluru metropolis at an estimated cost of INR 170 billion (US$2.70 billion).
5. The government unveiled Metro Rail Policy 2017 to boost investment in Urban Rail sector. The government planned to streamline its contribution in equity and debt of the metro ventures floated by the State Governments. The government is keen to expand the metro network in different cities but looking for more external participation for such projects. It has allocated only INR 143.14 billion (US$2.20 billion) in 2018-19 for the expansion of Metro train project in the country, compared to INR 178.10 billion (US$2.74 billion) in 2017-18.
Approximately 190 km of Metro Rail Network is proposed to be commissioned for public during 2018-19. Further, the various works under civil, electrical, signaling etc. of 342 kms are in advance stage in Delhi, Chennai, Bangalore, Ahmedabad, Nagpur, Mumbai, Kochi and Lucknow.
Metro Network Expansion – New Lines(Figures in kms)
6. The government has allocated subsidy of INR 2.60 billion (US$42 million) towards Faster Adoption and Manufacturing of Electric (&Hybrid) Vehicles (FAME) scheme in 2018-19, compared to INR 2.35 billion (US$37 million) in 2017-18. The subsidy will be used to support market development for hybrid/ electric vehicles and manufacturing eco-system through provision of subsidy for purchase of e-vehicles, charging infrastructure and supporting R&D for indigenous development of key components of e-vehicles. Further, the government is planning to introduce over 1,000 electric vehicles with charging infrastructure in the public transport (buses, taxis, 3- wheelers) in 11 cities.
The budget has highlighted the priority of investment in infrastructure. However, there are many areas which are neglected in Union Budget 2018-19.
WHAT ARE MISSES?
Some of the key areas which need attention:
No investment for bus sector – The government discontinued its programme of National Urban Renewal Mission (NURM), providing funding for the purchase of new buses. There is no funding is provided for the bus sector, which is major backbone of the mobility in the country. There is need for the new program to improve public transport in cities. Further, there is need for more investment in Bus Rapid Transit (BRT) and Electric bus program.
Urban Green Mobility Scheme 2017 - Ministry of Housing and Urban Affairs (MoHUA) announced Urban Green Mobility Scheme 2017 in November 2017. However, there was no budget allocation made in the union budget 2018-19.
More allocation towards Regional and Suburban Railways – As cities are expanding in India, the government should make more investment in project like Ring Railways in Delhi and Suburban Railways in Chennai etc. These projects will help to decongest the cities and reduce the use of private vehicles.
Special assistance to cities to curb air pollution – India’s air pollution problem keeps getting worse. No Indian city passes the World Health Organisation’s guideline value for PM10 pollution of less than 20 micrograms per cubic meter. The government has announced very small measure to curb pollution in Delhi-NCR. There is need for special focus on public transport to reduce pollution level in Indian cities. There is direct link between air quality in the city and health of inhabitants.
Special measures for Road Safety – The number of fatal accidents on Indian roads are increasing, mainly due to driver fault, road design and poor vehicle quality. There is need for special scheme to reduce road accidents to tackle all key issues, including setting up computerized vehicle testing and pedestrian facility.