“It’s not our wealth that built our roads. It’s our roads that built our wealth.” A version of this famous saying by former US president John F. Kennedy is displayed on a wall in the visitors’ waiting room at the office of Nitin Gadkari, Union minister of road transport and highways. Gadkari aims to build a highway network that rivals the best in the world, significantly reducing travel time for goods and passengers, and enhancing the competitiveness of Indian industry. The highways sector receives over Rs 2 lakh crore annually for the construction, upgrade and maintenance of more than 10,000 km each year. Over the past decade, the network has expanded by around 60 per cent to approximately 1.4 lakh km. India is already reaping the benefits of improved infrastructure, with transit time for freight trucks decreasing by about 20 per cent over the past 10 years due to better highways, expressways and electronic tolling, according to government data. The greenfield Delhi-Mumbai Expressway is set to reduce the 48-hour journey between the two cities to just 12 hours. A similar transformation is occurring in the Railways. Over the past decade, the government has significantly increased funding for the country’s oldest transport utility. The annual outlay has risen from around Rs 53,000 crore in 2014-15 to Rs 2.5 lakh crore this year, with a 15 per cent year-on-year increase over the decade. The vision for 2047 is that it should take no more than 6-8 hours for trains or even trucks to travel between cities like Delhi and Kolkata, or Chennai and Mumbai.
Massive infra push
The Narendra Modi government, in its endeavour to create the world-class infrastructure India needs to become a global power, is willing to invest heavily across all key sectors. It charted a capital expenditure course of Rs 111 lakh crore for the five-year period between 2020 and 2025, aimed at propelling India towards its goal of becoming a $5 trillion (Rs 415 lakh crore) economy. This initiative, known as the National Infrastructure Pipeline, encompasses a range of social and economic infrastructure projects. A quarter of the amount has been pumped into creating a robust power infrastructure, covering generation, transmission and distribution. The initiative also aims to increase the share of non-fossil fuels in India’s energy mix from the current 42 per cent to around 64 per cent by 2030. Additionally, a third of the funds have gone into building roads and railways, enhancing connectivity between cities and towns for faster, smoother and safer transportation of men and material. In all, around 9,800 projects are receiving this concentrated spending, including in areas like urban infrastructure, airports, ports and telecommunications and so on. Already the impact is being witnessed. For example, the overall turnaround time for ships at Indian ports has decreased by nearly 50 per cent, from 94 hours to an average of about 48 hours. Also, the ports have doubled their cargo handling capacity to over 1,600 million tonnes.
All these efforts are building an ecosystem that aims to reduce India’s logistics costs from the current 13-14 per cent of GDP to a single-digit figure, in line with benchmarks set by developed countries. According to CRISIL Research, infrastructure investments will nearly double by 2030, with spending projected at Rs 142.9 lakh crore between FY24 and FY30. While the lion’s share of this investment will come from the government, the private sector is increasingly focusing on the energy and transportation sectors, it says. “Enhanced connectivity through modern roadways, railways, ports and airports will reduce transportation costs and improve trade efficiency,” says Nilachal Mishra, partner and head of government & public services, KPMG India. Such a huge outlay helps. “Investments in reliable utilities and digital infrastructure will boost industrial productivity and foster innovation. According to studies by the Reserve Bank of India and the National Institute of Public Finance and Policy, every rupee spent on infrastructure yields a 2.5 to 3.5 rupee gain in GDP,” he explains.
Thrust on smart mobility
In one of the first major decisions in its third term, the Modi government has allocated an additional Rs 50,000 crore to build eight new high-speed national highway corridors totalling 934 km. These include a swanky, access-controlled, four-lane Ayodhya Ring Road, a six-lane corridor between Agra and Gwalior and a four-lane Kanpur Ring Road, among others. The centrepiece of this initiative is an 80-km, eight-lane elevated corridor between Nashik Phata and Khed near Pune, designed to drastically ease logistics movement. Over the next two decades, the number of greenfield access-controlled high-speed expressways, like the Delhi-Mumbai Expressway, is expected to grow significantly, with over 50,000 km planned. Officials estimate a total capital expenditure of more than Rs 20 lakh crore for these projects.
The rail network expansion plan for the next decade includes multi-tracking the busiest routes and converting the Golden Quadrilateral routes connecting all major metro cities into semi-high-speed corridors. Today, the Railways operates over 50 pairs of its latest offering, the Vande Bharat Express trains, India’s version of world-class train travel. The country has not only electrified nearly its entire rail network but has also expanded it by approximately 25,000 km through new lines and multi-tracking—almost double the achievement of the previous decade. Additionally, the Metro network is now operational in 20 cities across the country. “We see world-class mass mobility as a key catalyst in taking India’s dynamic economy forward,” says Olivier Loison, head of multinational rolling-stock major Alstom India. Loison thinks India’s investment in future-ready mobility solutions also boosts local economies and communities by bridging the gap between people and opportunities, businesses and talent. “It’s clear that robust infrastructure development is the cornerstone of resilient, inclusive and sustainable cities.”
In the mobility space, aviation is experiencing an unprecedented boom post-Covid. More Indians are flying now than ever before, and the number is set to grow further as more airports and airlines are in expansion mode. This surge has propelled India to become the third-largest domestic aviation market in the world, with 15.5 million seats, surpassing Brazil, which now ranks fourth. The US and China remain the top two. Indian airlines such as Air India, IndiGo and others have placed orders for over 1,000 new aircraft, the largest order value for any country. IndiGo, which aims to double its fleet size by 2030, anticipates that India’s aviation sector will contribute even more to the GDP in the coming years. The future of India’s aviation infrastructure will include multiple aviation hubs, says Girish Nair, partner and aviation sector lead, KPMG India. “India has a tremendous potential to create multiple hubs by strengthening our aviation ecosystem to funnel the huge domestic and foreign traffic, thereby emerging as a global aviation hub,” he explains.
Building resilience
Along with scaling up its infrastructure, India has also actively joined the global conversation on keeping future assets resilient to climate disasters. “Disasters are increasing in frequency and severity,” says Amit Prothi, director general, Coalition for Disaster Resilient Infrastructure (CDRI), an India-headquartered inter-governmental body. The CDRI estimates India’s potential loss of infrastructure due to disasters related to natural hazards and climate change at $31.6 billion (Rs 2.6 lakh crore) a year, with floods alone accounting for $28 billion (Rs 2.3 lakh crore). “By embedding resilience into infrastructure developmentâæ [India] will avoid infrastructure being destroyed or damaged, reduce service disruption, ensure more reliable public services, social development and accelerate economic growth.”
In the elite club of developed nations and major economies, undertaking large-scale projects to construct and expand public assets is par for the course. China began this process long ago and is now reaping the benefits. Over the past 20 years, it has focused on massive infrastructure spending to establish itself as a global economic superpower. This includes building the world’s largest high-speed rail network, spanning over 40,000 km, the Three Gorges hydroelectric dam—the largest on the planet—and the advanced Beijing Daxing International Airport. China’s urbanisation efforts and extensive 5G network development have also been pivotal, boosting economic growth and enhancing global connectivity.
India’s global position
Where does India stand? According to the World Bank, the country spent around 29 per cent of its GDP on gross fixed capital formation in 2022, while China spent nearly 42 per cent. In contrast, developed countries like the UK, France, Germany, Japan and the US kept this figure within the range of 18-26 per cent of their GDP. In other words, it will take a while before India can scale down its infrastructure spending. This reflects the government’s unwavering faith in the critical role of infrastructure in shaping India’s growth story, given its multiplier effect on the economy, says Anup Sahay, head of corporate strategy and special initiatives at Larsen & Toubro. “A comprehensive and committed approach to infrastructure will enhance connectivity, create jobs, ensure holistic development, and improve living standards,” he adds. The likes of Gadkari may be right—India’s journey to joining the ranks of developed nations by 2047 may well be paved by the roads, trains and bridges being built today.
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