India's $1.2 Trillion Connectivity Plan Advances Amid Economic Slowdown Elsewhere

The “PM Gati Shakti” (strength of speed) plan was unveiled last October and seeks to improve connectivity by building "trustworthy infrastructure". It also looks to minimize cost overruns and project delays by ensuring better coordination between different government departments and private stakeholders.

A year into India’s ambitious $1.2 trillion plan to boost “multi-modal connectivity”, a senior Indian official told Sputnik that the government has identified “197 critical infrastructure gaps” that are driving up logistical costs.

As part of the plan, the Indian government constituted a Network Planning Group (NPG) to ensure better coordination among various government ministries and private stakeholders in facilitating infrastructure projects valued at over $61 million.

The NPG comprises the heads of the network planning divisions of eight infrastructure ministries in the realm of highways, ports, railways, civil aviation, food and fertilizers, steel, cement, and coal.

The inter-ministerial group is chaired by special secretary of the Logistics Division at the Department of Promotion of Industry and Internal Trade (DPIIT), Amrit Lal Meena.

“The NPG is not there for project approval, but the recommendations are highly considered. The recommendations act as an assurance that the projects have been duly considered and there will be integrated and synchronous implementation across sectors with minimum disruptions whatsoever,” Meena told Sputnik, adding that the group has examined 39 projects since April.

The official said that although projects valued above $61 million were a priority, the committee is also looking into lower-value projects when it is felt that those are important for ensuring “last mile connectivity”.

“The projects are identified, examined and prioritized in order to plug gaps in critical infrastructure, including connectivity. The projects are then monitored for time-bound implementation,” Meena remarked.

He said that the committee has already vetted the “port connectivity master plan” under which 80 ports across the country will be connected to major infrastructure nodes based on the principle of “last mile connectivity”.

Meena also informed that as a result of committee deliberations, Indian Railways upgraded its target on the development of the Gati Shakti Multi-Modal Cargo Terminal from 100 to 300 this month. More than a dozen of these terminals have already been commissioned under the Public Private Partnership (PPP) model.

He said that similar “connectivity plans” are also in place for other ministries, such as for steel, food, fertilizers, cement, and coal.

As part of the national plan, the government has also created a digital platform that brings together 16 government ministries in order to provide a one-stop solution to foreign investors as far as regulatory approvals and cost estimates are concerned.

Connectivity Plan to Lower Logistical Costs

Meena said that bringing down logistic costs and “minimizing disruptions” so that businesses find it easier to operate in India are the primary objectives of the reforms being undertaken.

India's logistics costs are one of the highest among the major G-20 economies and account for 16 percent of the Gross Domestic Product (GDP).

Significantly, the plan is taking shape amid risks of recession in the West caused by high energy and food prices resulting in inflationary pressure.

China, which has been a major draw of foreign investors among developing countries, is also experiencing global headwinds.

Several economic indicators including the performance of stocks and venture capital funding this year have testified to India's growing economic competitiveness vis-a-vis China.

According to Global Data, Chinese companies announced venture capital funding deals to the tune of $29.1 billion in the first half of 2022, which was a decrease of 4.1 percent compared to the same period last year. At the same time, India's venture capital funding growth has ranked among the best in the region.