Infrastructure Finance Update- May, 2024

The end of one financial year ( FY 2023-2024) and the beginning of another ( FY 2024-2025)  has been marked by a flurry of activities. It saw a string of project inaugurations and new scheme launches, signaling a busy period ahead in tune with the ongoing general elections in the country. The months of March and April unfolded a series of noteworthy events in India, revealing both strides and challenges in the nation’s journey toward development. The months of March and April saw infrastructure projects around expanding the span of national highways, advancements in the Gati Shakti National master plan, upgrading roads, fostering robust partnerships between India and Mauritius, increasing focus on renewable energy and electricity generation capacity, promoting region-specific development in Assam and Orissa, boosting railway connectivity, addressing cost overruns in project expenditures and real estate development across the country. These developments underscore the complexities and contradictions inherent in India’s pursuit of growth and sustainability.

Roads, Highways and Bridges 

On the 1st of March, at the International Road Federation’s Conference, Mr Anurag Jain, Secretary, Ministry of Road Transport and Highways (MoRTH), announced the completion of approximately 92,000 Kilometers of national highways over the past nine and a half years, with the goal of reaching 95,000 kilometres by March 2024. He also emphasised that the construction of high-speed access-controlled highways is strategically designed to alleviate congestion and accommodate population growth for the next fifty years.

On March 12, the 67th meeting of the Network Planning Group (NPG) convened in New Delhi, focusing on evaluating three projects from the Ministry of Road Transport and Highways (MoRTH) and two projects from the Ministry of Railways (MoR). Led by Additional Secretary Rajeev Singh Thakur from the Department for Promotion of Industry and Internal Trade (DPIIT), the meeting aimed at advancing regional socio-economic development in line with PM GatiShakti principles. MoRTH, under PM Gati Shakti National Master Plan, proposed a Multi Modal Logistics Park (MMLP) in Maharashtra, which is slated for development across a 150-acre expanse under the Public-Private Partnership model, with an estimated expenditure of Rs. 673 crore.  Additionally, highway projects in Uttar Pradesh, Haryana, and Bihar, including NH-334D widening and a 4-lane elevated corridor, were discussed to enhance freight movement efficiency and connectivity.

On March 14th, the Road Ministry approved a budget of Rs 1,385.60 crore to bolster and upgrade 295 road development initiatives, covering a cumulative distance of 2,055.62 km across diverse districts in Karnataka. The MoRTH also allocated Rs 850 crore to expand and fortify 31 state road schemes, covering a total length of 435.29 km in Telangana.

While the present administration depicts roadways as a technological solution for fostering prosperity and development, the swift construction of roadways/highways poses the danger of exacerbating prevailing inequalities on a much larger scale and in terms of polarity (see here).

On the 10th of April, IBEF noted in the fiscal year 2024 that the Ministry of Road Transport and Highways (MoRTH) completed the construction of 12,349 kilometers of highways across India, the second highest in the nation’s history. This accomplishment follows the record-setting construction of 13,327 kilometers in 2020-21. During the same period, the ministry also awarded contracts for 8,581 national highway projects.


The Ministry of Railways (MoR) introduced plans for a New Broad Gauge (BG) line linking Assam and Arunachal Pradesh to bolster regional connectivity. Additionally, the doubling of the Narkatiaganj-Raxaul-Sitamarhi-Darbhanga and Sitamarhi-Muzaffarpur railway section under the East Central Railway is expected to increase section capacity and offer an alternative route from Delhi to Guwahati, potentially easing congestion and enhancing transportation efficiency. The New Broad Gauge (BG) Line project emerges as a Greenfield venture, spanning 218 kilometres from Dumduma in Assam to Pasighat in Arunachal Pradesh via Parasuramkund.  According to the Ministry of Commerce and Industry, this initiative bears significant strategic relevance as it will bolster regional connectivity by linking the north and south banks of the Brahmaputra River.

India and Mauritius 

As we shift our focus to foreign relations, India and Mauritius tightened their grip on the Agaléga Islands by inaugurating a new airstrip on February 29th. Prime Ministers Modi and Jugnauth touted the move as a sign of their “robust and enduring partnership,” but some analysts question its true purpose. The co-located community projects may be more about bolstering Indian influence than improving life for Agaléga residents. The strategically situated Agalega Island has sparked speculation about India potentially deploying its Boeing P-8I maritime patrol aircraft to enhance its surveillance capabilities in the region.

While Mauritius’s adoption of India’s Jan Aushadhi scheme and the February launch of UPI and RuPay services signals expanding collaboration, deeper strategic considerations linger. India’s growing presence near strategically important waterways like the Indian Ocean cannot be ignored.

Renewable Energy

In March, the cabinet approved PM Surya Ghar Muft Bijli Yojna within the energy sector.  This US$ 9.1 billion (Rs. 75,021cr) initiative subsidises rooftop solar panel installation for one crore Indian households. Subsidies range from ₹30,000 for 1 kW systems to ₹78,000 for larger systems. Homeowners can apply online, select their installer, and get low-interest loans to cover the remaining costs.

As reported on the 15th of April, India’s renewable energy capacity addition increased in 2023-24 by 18.48 GW. This represents a 21% growth compared to the previous year. To meet the target of 500 GW of renewables by 2030, industry experts have emphasised the need for continued efforts, suggesting an annual addition of at least 50 GW over the next six years. As of March 31, 2024, India’s installed renewable energy capacity stands at 143.64 GW, excluding large  47 GWs of hydropower projects.

Within India’s renewable energy capacity, solar leads the way with a total installed capacity of 81.81 GW. This is followed by wind energy at about 46 GW, biomass cogeneration at 9.43 GW, and small hydro at 5 GW.

Moreover, Mahindra Susten is undertaking a significant hybrid renewable energy project in Maharashtra, India. The project combines 101 MW of wind and 52 MW of solar power generation capacity. With a targeted completion within two years, this initiative aims to produce 460 million kWh of clean energy and reduce carbon dioxide emissions by 420,000 tonnes. The project is supposed to cost Rs 1200 crore. It has been projected that the park will reduce carbon emissions by 42000 tons.

Another update on the frontiers of renewable energy is the Indian Renewable Energy Development Agency Ltd. (IREDA), which has opened a new office in GIFT City, Gandhinagar. This office specialises in offering debt options denominated in foreign currency. These options aim to notably cut down financing expenses linked to Green Hydrogen and Renewable Energy Manufacturing projects. They enable natural hedging, thereby speeding up the nation’s transition towards a more sustainable future.

Social, housing and refineries infrastructures 

 Prime Minister Narendra Modi unveiled an array of state and central government sanctioned projects totaling approximately Rs 18,000 crore during his two-day visit to Assam starting March 7, 2024. The projects primarily involved the inauguration of residential housing, as well as social infrastructure such as medical colleges and cancer treatment centers.

Furthermore, expansion projects of refineries in Digboi and Guwahati, along with various infrastructure ventures such as the Betkuchi terminal expansion, gas pipeline inauguration, and railway projects for track doubling inauguration, were also on the agenda during the visit.

On the 8th of March 2024, The Odisha Government approved seven significant projects with a combined investment of Rs 80,125 crore across various sectors. These projects were greenlit at a High-Level Clearance Authority (HLCA) meeting presided over by Chief Minister Naveen Patnaik. The investments are anticipated across sectors like steel, green energy, pharmaceuticals, and chemicals sectors.

Cost overruns

While a string of projects around infrastructure is being sanctioned, an official report from the Ministry of Statistics and Programme Implementation revealed that out of 1,902 infrastructure projects with an investment of Rs 150 crore or more, 443 projects experienced cost overruns totalling more than Rs 4.92 lakh crore. Initially estimated at Rs 27,08,030.44 crore, these projects are now anticipated to cost Rs 32,00,507.55 crore upon completion. Additionally, 764 projects faced delays, with the total expenditure reaching Rs 16,76,739 crore, equivalent to 52.39% of the expected project cost. The report also highlighted that 568 projects were delayed based on the latest completion schedule.  The reasons cited for delays were issues such as land acquisition, environmental clearances, and infrastructure support, along with disruptions caused by the COVID-19 lockdowns imposed in 2020 and 2021.

Real Estate 

With the aim of becoming a trillion-dollar state by 2027, the Uttar Pradesh government has scaled up its acquisition of land banks across 75 districts. As noted by IBEF on the 23rd of April, it acquired 25000 acres worth of land. Recently, the UP State Industrial Development Authority (UPSIDA) earmarked 1,470 acres in Lalitpur district for a bulk drug park, aiming to position the state as a prominent pharmaceutical hub in South Asia.

Uttar Pradesh plans to establish mini-industrial clusters in rural areas and incentivise establishing 25,000 units with 100% stamp duty waivers to further economic expansion. The state aims to transfer Gram Sabha land to the industrial department for allocation at local circle rates, encouraging proposals from local village committees to utilize uncultivable land for industrial purposes.

In other news, in the four years leading up to Fy 2019-20 to March 2024, Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) have accumulated a total of US$ 15.60 billion (Rs. 1.3 lakh crore), according to an article on the State of the Economy published by RBI Bulletin. The Article in RBI Bulletin has given SEBI the due credit for this. The article highlighted that SEBI, the market regulator, has gradually decreased the minimum investment requirement and trading lot size, thereby encouraging increased involvement of retail investors in these hybrid instruments. In a bid to further cultivate this domain, the market regulator issued regulations for small and medium REITs on March 8, 2024.

As reported on the 3rd of April, during the first quarter of 2024, India’s real estate sector witnessed a notable surge in domestic investment, nearly doubling from the preceding year to constitute 45% of total investments, compared to 24% in the same period. This upswing reflects heightened investor confidence propelled by favourable policy reforms, economic advancements, and robust demand for real estate assets. While foreign investments retained prominence, domestic investments also experienced a 15% year-on-year increase. Key domestic funds are eager to deploy substantial capital. There has been a pronounced uptick in the participation of domestic investors, particularly in office and residential assets, accounting for 66% of domestic institutional investments. Despite a downturn in overall fund inflows compared to the previous year, the sector demonstrated resilience with a 21% quarter-on-quarter escalation, signalling promising prospects for long-term growth and sustained investor interest.

The spurt of domestic investments in the real estate sector, and an increase in the sanctioning of highway projects are in a way complementary. As Nitin Bathla notes, highway corridors blur traditional urban and rural distinctions set by master planning boundaries, enabling the enclosure and speculation of vast agricultural lands. Parastatal institutions like the NHAI facilitate land acquisition, legitimizing what is essentially a large-scale privatization endeavour. Following acquisition, the value of agricultural land along these urban corridors can skyrocket, benefiting local elites and international investors rather than local communities. This surge in ground rents fuels speculative real estate ventures, amplifying pre-existing inequalities.

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