Resetting the Infra Model

The need to attract investment into the states has never been greater. Some states have already got their act together, reformed their labour policies and are offering incentives for investments.

Uttar Pradesh, for one, went ahead and decided to tap private lenders for funding the 628-km Ganga Expressway project, which is estimated to cost over?Rs.360 billion. The mega project will be the world?s longest access-controlled expressway, when completed. The?Adityanath?government has sourced public-sector bank credit for its various ongoing and proposed expressway projects, including Ganga Expressway,?Purvanchal Expressway, Bundelkhand Expressway and Gorakhpur Link Expressway. The UP Expressway Industrial Development Authority (UPEIDA) Board has approved a proposal to raise?Rs.29 billion from HUDCO for land acquisition costs of the Ganga Expressway project, which entails the acquisition of 6,556 hectare. The UPEIDA Board has also cleared raising loans totalling?Rs.59 billion for Bundelkhand Expressway. Further, from just two operational airports to seven now, development work is being carried out at 17 airports in Uttar Pradesh over the past 42 months.

Uttarakhand has also lined up six mega projects to be launched under the?Namami Gange?Mission, which includes STPs and a museum, among others. Not to be left behind, the poll-going?Bihar?will also see a largesse of?Rs.160 billion worth of projects before the elections. A sewage treatment plant under the Namami Gange project, water supply schemes, riverfront development projects, a railway bridge electrification project, new railway lines and bridges and construction of highways and bridges are slated to be inaugurated.?Assam, too, has announced infrastructure projects worth nearly?Rs.120 billion, which include the construction of colleges, flyovers and road corridors across the state. Besides government funds, the state has 12 other road projects worth?Rs.?60 billion funded by the ADB and Asian Infrastructure Investment Bank to begin soon.?Odisha?has also cleared proposals worth?Rs.150 billion, which include investments in infrastructure, tourism, metals and cement.

As long as the SPVs created observe the discipline of land acquisition and project execution as scheduled, funds could be raised and repaid as construction risks get mitigated with the state government backing the projects. This is likely to be the infrastructure development model for coming years as states come into their own to build their future.

Meanwhile, the?National High-Speed Rail Corporation?has also announced plans for?seven new projects?at an expected cost of around?Rs.10 trillion. It has awarded tenders of?Rs.?200 billion to three bidders comprising seven Indian companies, including?AFCONS, IRCON and JMC Projects in one consortium and NCC,?Tata Projects?and J Kumar in another, while L&T has bid on its own. A tender for a 237-km corridor, part of the Gujarat section of the Mumbai-Ahmedabad project, is likely to consume 75 lakh million tonne (mt) of cement, 21 lakh mt of steel, and 1.4 lakh mt of structural steel during construction. Another tender for 28 steel bridges, which will consume 70,000 mt of steel, is underway; companies in the race include L&T, Tata Projects, Braithwaite, AFCONS, Bridge & Roof Co, NCC, JMC, Rahee Infra, ISGEC Heavy Engg and IHI Infrastructure Systems.

Given the potential of such projects to provide employment to 90,000-odd people, apart from the benefit of not affecting our liquidity and bringing in long-term Japanese debt for infrastructure building, our economy can be rebuilt expeditiously.