National Infrastructure Pipeline

The Task Force on NIP recently submitted its final report, a path to make India USD 5 trillion economy by 2025.

The Task Force on National Infrastructure Pipeline (NIP) submitted its final report on NIP for FY 2019–25 to the Union Minister for Finance & Corporate Affairs on April 29, 2020.Infrastructure is an enabler for growth. We expect India’s GDP to recover in the five years beginning fiscal 2021 (2020-21 to 2024-25). One of the aspects in the Infrastructure Vision 2025 is meeting aspirations, propelling growth, and improving ease of living is digital services access for all. These goals would eventually contribute to the SDG 2030 agenda, to which India is a signatory.

NIP is a first-of-its-kind, whole-of-government exercise to provide world-class infrastructure across the country, and improve the quality of life for all citizens. It aims to improve project preparation, attract investments (both domestic and foreign) into infrastructure, and will be crucial for target of becoming a USD 5 trillion economy by FY 2025.

Historically, digital sector investments were largely driven by the private sector and amounted to `6.84 lakh crore during 2013–2019.

Reform imperatives to improve the performance of BharatNet

The BharatNet project is being implemented in a phased manner to provide broadband connectivity to all the gram panchayats (~250,000) in the country. The project is under implementation, and the infrastructure being created is a national asset, accessible on a non-discriminatory manner for provision of services. The project envisages providing affordable broadband services in rural and remote areas to help realize the vision of Digital India. To overcome the challenges in implementation of BharatNet project, the recommendations of the high-powered committee may be followed, which has suggested an implementation approach across the BharatNet to assign the work of creating, maintaining, and utilizing the network to a single entity in the public-partnership (PPP) model through private sector partners (PSPs).

Reforms to improve the health of the digital infrastructure sector

The government had come out with a National Digital Communication Policy (NDCP) 2018 for telecom, a sector with high technology churn and increased capital costs of operations. The key objectives of the policy include providing broadband to all, achieving digital empowerment, and improving the well-being of the people. This is in line with the government initiatives such as Digital India. A healthy and vibrant telecom sector is extremely important for the success of these schemes. However, the industry is reeling under a debt of `7 lakh crore, which is reflective of the players’ financial stress. Recently, the government has provided a moratorium of two years in payment of spectrum charges by the private sector to improve their financial health.

Pricing of spectrum

For the upcoming auction of 5G airwaves, the Department of Telecom (DoT) has suggested a base price of `492 crore per MHz. This is very high compared with the base price in countries where 5G is already deployed. The high price comes at a time when the demand for spectrum is likely to be subdued as consolidation has reduced the number of players in the sector to effectively only four. However, providing inclusive and affordable 5G services to all sections of the population in the country is important to achieve the NDCP goals. For this, participation of private players in the 5G auction should be robust. In order to enable this, the authorities should rationalize all elements of spectrum pricing for the auction, including base price, period of payment of charges, and interest rates

Creation of a collaborative institutional mechanism

With continued increase in demand for data, additional telecom towers need to be installed so as to increase the coverage in rural and non-metro cities, and to expand capacity in metros. Additional towers take time to be installed, mainly due to delay in getting permission from local authorities and other procedural issues. As per industry estimates, an additional 10 lakh towers need to be established and 30 lakh km of optical fiber cable (OFC) need to be laid by 2025. Typically, about `50 lakh is the required investment for setting up a tower. Around 30 percent of the telecom towers in India are fiberized. In order to quicken the process of giving RoW permissions, adoption of India Telegraph RoW Rules 2016 by state/union territory governments and central agencies is required. There is an imminent need to develop innovative implementation models for RoW and to work with states/UTs for having consistent policies pertaining to expansion of digital infrastructure.

The sizeable corpus of the Universal Service Obligations (USO) Fund can be utilized more efficiently. The excess funds can be redeployed to boost schemes such as BharatNet, which will facilitate sectoral growth and increase the penetration of broadband connectivity in the country.

Enabling environment for developing data center infrastructure

Growth of the data center services market is hindered by regulations and complex processes at present. A number of permissions and clearances are required from multiple government departments and agencies, which delays setting up of a data center.

Tax incentives or exemptions on select equipment may be provided to help increase investments in data centers. At present, there are one-time and recurring taxes that have a significant impact on costs and viability. The data centers are capital-intensive and attract relatively high sales taxes and property taxes. Further, electricity tariff, import duties on equipment sourced from outside lndia, and multi-jurisdiction tax implications impact data center costs.

Setting up super computer infrastructure

Investment in supercomputing is needed if India truly wants to become a knowledge-driven, USD 5-trillion economy in the next five years that can support cutting-edge science and consequently benefit its economy and the businesses.

High-performance computing is important if India wants to make significant progress in areas such as weather forecasting, drug discovery, astrophysics, and bioinformatics. India can learn from China where a number of super computers are already deployed to carry out a range of tasks;

As setting up of super computer involves many stakeholders, it should be promoted as a nationally coordinated collaborative program, involving developers and users of supercomputing systems and academic and research institutions.

NIP project summaries and marquee projects

Overall capital expenditure of `309,672 crore would be incurred by both the Center and the states from fiscals 2020–25. For the projects executed by the Center, about 14 identified projects will be implemented in the period 2020–25. The capital expenditure for these projects is estimated at `304,692 crore.

Projects

The projects include CapEx done by BSNL and MTNL to start 4G services, expenditure incurred toward spectrum on a pan-India basis, private players’ CapEx, connecting gram panchayats through BharatNet, and providing telecom and internet connectivity in border and remote areas.

Marquee project BharatNet

Bharat Broadband Network Limited is currently implementing the BharatNet Project, which aims to connect 250,000 gram panchayats in India through broadband. using optimal mix of underground fiber and fiber over power lines, radio, and satellite media network, and provide 100 Mbps of speed to all gram panchayats. The project is being done at a cost of `17,145 crore and is estimated to be completed by fiscal 2022. Capital expenditure of `13,000 crore would be incurred over fiscals 2020–2022 on this project.

Extracted from Report of the Task Force, Department of Economic Affairs, Ministry of Finance, Govt of India