India is fast moving towards its goal of becoming the $5 Trillion economy in the world. This aim rides on the back of liberalised economic policies, which made it more market-oriented, allowing a greater role for private capital, and increasing its global competitiveness.
In the last 9 years, there has been a massive expansion of the Highway network in the country with Expressways coming up. The National Highways Network has increased by 60% to 1,45,240 km.
On the other hand, the national carrier Indian Railways has improved capacity and is bringing new trains such as Vande Bharat, Amrit Bharat, and Namo Bharat among others. Notably, the pace of railway track construction increased more than 3 times from 1,452 km/year to 5,243 km/year.
Air travel has also expanded over the years and is breaking records regularly. There has been a 100% growth in Airports from 74 to 148 in the last few years.
In the face of rapid growth, the Infrastructure sector is at the forefront of economic development in India. The Union government allocated 3.3% of the country’s GDP towards the infrastructure sector in FY24.
The government has set a massive target which includes the construction of a 2 lakh km national highway network by 2025, increasing the total number of airports in the country from 140 to 220 airports by 2025, higher railway construction speed of 19 km of new tracks every day in FY24., operationalising 23 waterways by 2030, and developing 35 Multi-Modal Logistics Parks (MMLPs), among others.
Building a new India with a massive road network
The transport sector has been a focal point for the government and it is also expected to receive significant investments going forward. The sector is expected to grow at approximately 4.5% compounded annual growth rate (CAGR) from 2022 to 2050.
As per the government’s India Investment Grid (IIG) database, around Rs 69 lakh crore worth of projects are currently at various stages of development as Roads and Highways account for the highest share, followed by Railways and Urban Public Transport.
Notably, the government has created various ambitious targets for the expansion of its transport sectors. Highway construction is already expanding at a rapid speed, increasing from 6,061 km in FY16 to 10,457 km of roads constructed in FY22.
Besides, private sector players have been awarded Build-Operate-Transfer (BOT) and Hybrid Annuity Mode (HAM) through Public–Private Partnership (PPP) and monetising their existing assets. The sector accounts for around 27% share in the National Monetization Pipeline (NMP) and place to raise Rs 45,000 crore through monetisation in FY24. Regarding greenfield highway projects, from FY24 onwards, nearly 75% of projects will be bid out on PPP mode
Connecting through skies
India’s aviation market is amongst the fastest-growing sectors globally. It is expected to witness a rise in the number of air passengers from 144 million in 2019-20 to 400 million in 2025- 26. |
The government has envisaged a Rs 98,000 crore investment for the construction of new airports and modernising existing ones by 2025. Over two-third of this investment ( around Rs 67,000 crore) will be made by the private sector on greenfield projects.
Besides, modernizing of existing airports in the country has also contributed to greater private-sector participation. The government also offers various incentives to investments, such as tax exemptions and reduced customs duties on inputs.
India’s rail network
During the last few years, Indian Railways has invested heavily in upgrading and expanding its network. This strategy helped railways in meeting up with the growing transport requirements. Railways’ capex which was only Rs 53,989 cr in FY14 saw a quantum jump to Rs 1,90,267cr in FY22 and FY23, a provision of Rs. 2,45,800 cr was made.
Importantly, India’s metro rail network has also grown remarkably since 2014. It started from a network spread across five cities and 229 km and has grown to 860 km across 20 cities in April 2023.
