Logistics cost is considered to be 13% to 14% of India's GDP which is higher than countries such as the U.S., China and many others, according to Union Minister for Ports, Shipping and Waterways Sarbananda Sonowal, the chief guest at Fortune India's The Next 500: Breaking New Frontiers event.
The PM Gati Shakti project is an attempt to reduce India's logistics costs and improve trade competitiveness, Sonowal says, adding that the national master plan for multi-modal connectivity is a platform to bring 16 ministries including railways, ports and roadways together for integrated planning and coordinated implementation of infrastructure connectivity projects.
The multi-modal connectivity will provide integrated and seamless connectivity for movement of people, goods and services, Sonowal adds.
Efficient transport infrastructure holds the key towards promoting sustainable development, the Union minister says, adding that the vision of the prime minister is to transform through transportation.
"Infrastructure sector is a key driver for the Indian economy. The sector plays a crucial role to propel new India's growth trajectory. Our government, under the leadership of prime minister Narendra Modi, is implementing policies that would enable time-bound creation of world-class infrastructure in the country. To power the vision of India becoming a $5 trillion economy by 2025, infrastructure development and upgrade will play a better role," he adds.
While talking about the National Infrastructure Pipeline (NIP) programme launched by PM Modi during his Independence Day speech in 2019, Sonowal says the objective of this policy is to act as an enabler towards infusion of funds for infrastructure development by 2030. "To this effect, an outlay of ₹111 lakh crore has been announced for the period between 2019 and 2025. The NIP will enable more infrastructure projects, power business and job creation, improve ease of living and provide access to infrastructure for all, thereby making growth more inclusive," he says.
"The Union Budget for the current fiscal aims to strengthen the infrastructure... For this the Budget has allocated a total of ₹7.5 lakh crore towards capital expenditure. Without capex, we cannot develop infrastructure. There's a 35% increase in the allocation of funds with an aim to propel infrastructure in the country. The government's intent towards creating world-class infrastructure emanates from the fact that about 4.1% of GDP, i.e. ₹10.68 lakh crore under effective capital expenditure. The idea is to put the economy on a higher growth trajectory with the multiplier effect of infra investment boost in the economy," Sonowal adds.
"Various ministries are ensuring fast track implementation of infra projects. The spend on infrastructure is a huge business opportunity for the companies to become partners with the government through contract and bagging of orders within the next three to four years. This will result in steady cash flow, revenue generation, production, asset creation and facilitating job creation in the country. The trickle-down effect will also empower ancillary sectors. Ultimately, this will also boost the consumption economy," the Union minister says.