National Infrastructure Pipeline (NIP): Significance, Benefits, Challenges

By K Balaji|Updated : July 4th, 2022

The National Infrastructure Plan (NIP) is a program that will build world-class infrastructure across the country to improve the overall quality of life for all residents. The NIP will address all of the crucial factors that will assist India in attaining its goal of being a $5 trillion economy by 2025. It will include projects in both economic and social infrastructure.

To draw up the NIP, a High-Level Task Force was constituted under the chairmanship of the Secretary, Department of Economic Affairs (DEA), Ministry of Finance. The Final Report on National Infrastructure Pipeline for FY 20-25 of the Task Force was released by the Union Minister for Finance & Corporate Affairs in 2020. The Final Report of the NIP Task Force is in three volumes.

The National Infrastructure Plan or the NIP is important from the perspective of the UPSC Exam as it is recently covered in news. Students must go through the article to develop an understanding of the National Pipeline Infrastructure, its significance, and the key benefits for the upcoming exams.

Table of Content

What is the National Infrastructure Pipeline?

The National Infrastructure Pipeline (NIP) for FY 2019-25 is a first-of-its-kind, whole-of-government exercise to provide world-class infrastructure to citizens and improve their quality of life. It aims to improve project preparation and attract investments into infrastructure. The NIP will address all of the crucial factors that will assist India in attaining its goal of being a $5 trillion economy by 2025. It will include projects in both economic and social infrastructure.

The Prime Minister, in his Independence Day speech of 2019 declared that ₹100 lakh crore would be invested in infrastructure over the next 5 years. The prime focus areas would be on ease of living: safe drinking water, access to clean and affordable energy, healthcare for all, modern railway stations, airports, bus terminals, and world-class educational institutes. NIP, in a way, will create jobs, improve ease of living, and provide equitable access to infrastructure for all, thereby making growth more inclusive.

During the fiscals 2020 to 2025, sectors such as Energy (24%), Roads (19%), Urban (16%), and Railways (13%) amount to around 70% of the projected capital expenditure on infrastructure in India.

Significance of NIP

In India, the government is increasingly looking to the private sector for forging partnerships via effective models for co-working between the public and private sectors. The National Infrastructure Pipeline is a step in that direction. The National Infrastructure Pipeline is of great significance to India.

  • India is working at a fast pace to be a USD 5 trillion economy by 2025, NIP is contributing to this.
  • It will improve agricultural and rural infrastructure and would improve India's connectivity, particularly in rural areas.
  • A well-planned NIP will allow for more inclusive growth, as it will generate jobs, provide better living conditions, equitable access to infrastructure, etc.
  • NIP will boost economic activities, and free up fiscal space by increasing the government's tax base.
  • It will provide a clearer picture of project supply, more time to prepare for project bidding, less aggressive bids/project failures, and improved access to capital sources as a result of higher investor trust.
  • The national infrastructure pipeline hopes to build investor confidence by actively monitoring projects, bringing needed reforms and resolving any potential issues. More institutional funding will also give the government bandwidth to invest more in other areas essential for economic growth.

National Infrastructure Pipeline: Mission

The National Infrastructure Pipeline has the primary mission to look after the following points:

  • Create a five-year strategy for India's infrastructure development in important industries.
  • Assist in the design, delivery, and maintenance of public infrastructure in accordance with international standards.
  • Facilitate broad and sectoral reforms in the regulation and administration of public infrastructure services in accordance with international best practices.
  • Objectives Improve India's public infrastructure ranks globally.

Benefits of the National Infrastructure Pipeline

As India pursues COVID-19 policies, it must concentrate not just on short-term alleviation but also on long-term measures that would help the country become successful and self-sufficient. By establishing an enabling environment of stability and order, as well as ensuring planning and investment in critical prioritized infrastructure projects, the nation will be able to propel the Indian economy ahead. The benefits included in the National Infrastructure Pipeline can be counted as in:

  • More infrastructure projects will be enabled by a well-planned NIP, which will power businesses, create jobs, enhance living conditions, and give equitable access to infrastructure for all, making growth more inclusive.
  • Infrastructure that is well-developed boosts economic activity, frees up budgetary space by increasing the government's tax base, and guarantees that government spending is concentrated on productive areas.
  • Increases investor confidence since selected projects are better equipped, and exposures are less likely to experience stress due to active project monitoring by competent authorities, resulting in higher returns.
  • As a result of greater investor confidence, projects are better prepared, aggressive bids/project failures are reduced, and increased access to sources of finance is ensured.

NIP Task Force

The NIP Task Force was set up after the Prime Minister, in his Independence Day speech of 2019, promised to roll out an infrastructure push worth ₹100 trillion over five years to make India a $5 trillion economy. The NIP is headed by Atanu Chakraborty, the Economic Affairs Secretary.

The NIP Task Force submitted its final report to the Finance Minister, in April, 2020. The task force forecasted an investment need of ₹111 lakh crore over the next five years (2020-2025) to build infrastructure projects and drive economic growth. Energy, roads, railways and urban projects are estimated to account for 70% of the projects. Out of the total expected capital expenditure of ₹111 lakh crore:

  • Projects worth ₹33 lakh crore (30 % of NIP) are at the conceptual stage
  • Projects worth ₹22 lakh crore (20 % of NIP) are under development.
    Projects worth ₹44 lakh crore (40 % of NIP) are under implementation.

Challenges of National Infrastructure Pipeline

Lack of infrastructure is the primary growth concern that India faces today. Timescales associated with infrastructure development imply that decisions made now will impact the world of tomorrow. Challenges associated with the National Infrastructure Pipeline are:

  • The role of the private sector is important for providing finance and expertise. But, effective models for co-working between the public and private sectors need to be evolved.
  • Before the speed and severity of climate change are fully understood, governments and businesses must make critical strategic decisions and promote behavioral changes.
  • An increase in natural disasters or unexpected events will place the infrastructure to the test, not only in terms of reconstruction but as well as in terms of supply chain disruptions.
  • Infrastructure development needs to keep pace with technological development like the internet of things and other emerging technologies.
  • Financing the infrastructure of the needed scale is the issue for which solutions would have to be found.

NIP UPSC

The National Infrastructure Pipeline is an important topic in the UPSC Syllabus. To learn more about the National Infrastructure Pipeline and Economy, one can go through the NCERT Books for UPSC and the UPSC Books. NIP is an important topic from the perspective of both, UPSC Prelims and UPSC Mains.

Aspirants who are appearing for the IAS Exam this year can go through the Economics Books for UPSC and Economy Notes for UPSC to cover the topic of NIP well. Once the books and notes are completed, the candidates should solve the UPSC Previous Year’s Question Papers and see the UPSC Study Material, so that they do not miss any important sources.

Sample Question on NIP - National Infrastructure Pipeline

Question: Given below are two statements one is Assertion (A) and the other is labeled as Reason

Assertion (A): Government has launched the National Infrastructure Pipeline for a period of 2020-30.

Reason(R): The objective of NIP is to provide equitable access to infrastructure to all.

Select the correct answer using the codes given below.

  1. Both (A) and (R) are true and ( R) is the correct explanation of (A).
  2. Both (A) and (R) are true but ( R) is not the correct explanation of (A).
  3. (A) is false but (R) is true.
  4. (A) is true but (R) is false.

Answer: Option C

National Infrastructure Pipeline UPSC Notes PDF

The National Infrastructure Pipeline is relevant for the IAS Exam and a candidate must be fully aware of all the aspects pertaining to the topic. Through the PDF, we have tried to compile every necessary sub-topic that should be read along with the National Infrastructure Pipeline.

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FAQs on National Infrastructure Pipeline (NIP)

  • The National Infrastructure Pipeline has been drawn up for each of the years of FY 2019-20 and FY 2024-25.

  • The National Infrastructure Plan (NIP) is a program that will build world-class infrastructure across India to improve the overall quality of life for all residents. This scheme was brought in so as to improve project preparation and attract investments into infrastructure. It covers both economic and social infrastructure projects.

  • National Monetisation Pipeline is part of disinvestment policy whereas the National infrastructure pipeline is a plan that identifies technically feasible and financially and economically viable projects.

  • Energy, roads, railways, and urban projects are estimated to account for the bulk of projects (around 70%).

  • The chairman of the National Infrastructure Pipeline is Atanu Chakraborty, the finance ministry's economic affairs secretary. In May 2022, he gave the final report to the Finance Minister on the National Infrastructure Pipeline task group.

  • The total capital expenditure in infrastructure sectors in India from fiscal 2020 to 2025 is projected at ₹111 lakh crore.

  • Sectors such as energy, roads, and urban and railways are among the key sectors of the projected infrastructure investments in India.

  • The National Infrastructure Pipeline (NIP), which was launched with 6,835 projects, has been expanded to 9,335 projects with total envisaged investments of almost `108 trillion between FY20 and FY25.

  • The Project Monitoring Division and Programme Implementation Wing in the Ministry of Statistics and Programme Implementation (MOS&PI) Ministry takes stock of the performance of 11 key infrastructure sectors which include Power, Coal, Steel, Railways, Shipping and Ports, Fertilizers, Petroleum and Natural Gas, Civil Aviation and Roads, Telecommunication.

  • To download the National Infrastructure Pipeline UPSC Notes PDF, click here.

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