Yogesh Kumar Misra, Chairman & Managing Director of the erstwhile Ircon International Ltd talks about how some of the mega infrastructure projects planned by the Modi government would contribute to India’s overall growth and spur the economy.
India: yesterday, today and tomorrow. Discuss how the India of today is different from that of the years gone by and what’s in store for the future. Why India must aim for sustainable development?
From a $300 billion economy in 1990, India’s economy has now crossed $2.5 trillion. By 2030, the Indian economy would also be larger than the largest Western European economies such as Germany, France and the UK. We are looking forward to sustainable growth with net zero carbon emission by 2070. According to estimates, our GDP would go up to $40 trillion by 2050. India has the potential to be the 3rd largest real economy in the world in the next few years. Moreover, the government has identified “comprehensive infrastructure development” as a vital tool for reviving the economy and accelerating growth by increasing employment and income levels. Rapid urbanisation and demographic changes among states will result from several policy-level efforts being implemented for infrastructure development in important industries. The government also intends to drive infrastructure development at pace with global standards in conjunction with the notions of “Atma Nirbhar Bharat” and “Make in India.”
What does India’s big infrastructural plan mean for the future and economy?
The infrastructure sector has grown from strength to strength throughout the disruption and uncertainty in the last year. Infrastructure is consistently innovating and developing. India is a major market with a growing need for more sophisticated and more sustainable structures. The government’s continued impetus on infrastructure development has been beneficial for the whole industry though headwinds arising out of rising cost pressure and inflationary impacts could have some volatilities. However, the scope for development across the sector is huge, given the substantial number of ongoing and proposed projects. Public-private partnerships (PPPs) can be a useful tool to maximise private sector efficiency and expertise, raise private capital by leveraging limited public funds, and rebuild better by providing people with high-quality, efficient services in light of the global pandemic’s strain on public resources.
Tell us about some of the mega projects the Indian government is undertaking and what are some of the key projects Ircon is executing.
The Government of India had launched Bharatmala Pariyojna, Dedicated Freight Corridor, Sagarmala project, High-Speed Rail Projects and Regional Rapid Transit System (RRTS) to improve and enhance transport infrastructure in India. Further, Government has also launched greenfield as well as brownfield projects for the development and widening of expressways and highways. The government has introduced Gati Shakti – National Master Plan for Multi-modal Connectivity, a digital platform, to bring 16 ministries including Railways and Roadways together for integrated planning and coordinated implementation of infrastructure connectivity projects. The multi-modal connectivity will provide integrated and seamless connectivity for the movement of people, goods and services from one mode of transport to another. It will facilitate the last mile connectivity of infrastructure and also reduce travel time for people.
Ircon is executing some key projects such as Udhampur Srinagar Rail Project, Sivok Rangpo Rail Project, High-Speed Rail projects, Chennai Metro Rail Project, Dedicated Freight Corridor, NCRTC Rail project etc. Apart from India, the company is also executing railway and highway projects in Algeria, Sri Lanka, Bangladesh, Nepal and Myanmar. Currently, we are executing 10 highway projects of which three are BOT projects and seven HAM projects. These projects are being executed through Special Purpose Vehicles (SPVs). We are also implementing a solar power project which will be completed by 2024.
We are looking forward to secure foreign projects through Line of Credit/ other project export funding arrangements of EXIM Bank of India and projects funded through multilateral funding agencies. Further, we are also looking forward to undertake important domestic projects in various sectors such as railways, highways, tunnels, bridges, etc. These include the Rail System of Eastern Dedicated Freight Corridor on Hybrid DBFOT mode, EPC tenders for tunnels, bridges and other works for various zonal railways, PMC Works for Indian Railway and many more.
Meanwhile, how these projects would benefit India’s overall economy?
Our goal in pursuing all the above initiatives is to help advance Indian railway technology and to promote the expansion and promising future of the country’s railway industry. For instance, the Udhampur Srinagar Baramulla Rail Link project will connect Kashmir valley with the rest of the country, the Rail System of Eastern Dedicated Freight Corridor aims to create a high-frequency goods transportation system, thereby improving India’s mobility and fostering local economic growth. We have won a 500 MW solar power plant project, it is aligned with the Government of India’s policies on the renewable energy sector and we believe that through this initiative we will bring further efficiency into the energy mix in India and will contribute to the government policy of reduction in fuel import. High logistics cost was proving a major problem for Indian exports. Our logistics cost is 16-18 per cent whereas it is 8-10 per cent in China and 12 per cent in Europe and the USA. That’s one of the problems with our exports since the costs are high. India is going to accept this challenge and reduce the logistics cost to 8-10 per cent.
Empirical evidence shows that infrastructure investments have the greatest impact on improving the quality of life of the citizens. Our various projects, for instance, will generate employment opportunities and economic activities, reduce production costs through improvements in transport and connectivity, provide better connectivity across markets and other economic facilities, and contribute to climate resiliency. Moreover, it is comparatively well known that infrastructure supports inclusive growth, which directly and indirectly lowers poverty.
According to your assessment which sectors (IT/Tech, manufacturing, infrastructure, education, healthcare, science and technology) will contribute in a big way?
The Government of India unveiled a vision to become a $5 trillion economy by 2025. Technology is expected to unlock a $500 billion opportunity for India’s GDP. Artificial Intelligence and Data together are expected to contribute a significant portion of that. IT and ITeS together are expected to create over 20 million jobs in India. The “Make in India” program is expected to create 100 million jobs in India and would take the contribution of the manufacturing sector to GDP to 25 per cent. We are poised to grow bigger in sectors like infrastructure, education, healthcare, science and technology. The employment generation in these fields is expected to spur growth further.
Catapulting India into the next stage of the growth cycle is the PM GatiShakti-NIP-NMP which connects all economic zones through a network of multimodal connectivity infrastructure. As a result, a logistical interface capability has been created, which lowers logistics costs and boosts competitiveness. The mapping of current and proposed infrastructure using GIS-based ERP has also been done on a digital platform. When it comes to technology, we are the largest exporter of IT and ITeS. It accounted for over 8 per cent of the Indian GDP. We have tremendous opportunities and a great future in digital technology if we utilise our brain power effectively along with proper infrastructure.
By Rahul Kamat