Date: 16/03/2023

Relevance: GS-3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment

Key Phrases: PM Gati Shakti, The National Logistics Policy, Two Policy Pillars of Domestic Manufacturing for Atmanirbhar Bharat, Green Growth, Increasing Transport Efficiency, Cost-Of-Doing-Business

Why in News?

• The country’s two policy pillars of domestic manufacturing for Atmanirbhar Bharat and green growth rest on an important third pillar of creating ease of movement.
• This third pillar, therefore, entails creating infrastructure that will bring down the cost of logistics while also increasing transport efficiency in India.

Key Highlights:

• The focus in India is now not only on the ease-of-doing-business, but also on the cost-of-doing-business, with sustainability as a common imperative.
• A reduction in the cost of logistics will ensure India becomes more competitive internationally.
• Recent changes in the world have further brought India to global attention, not only as a market, but also a destination of choice for global supply chains.
• Infrastructure has rightly been emphasised by the government as the first and most important necessity for India so to become a part of these value chains.
• The fact that the domestic market is still expanding implies that now is the ideal time for India to serve as a global sourcing hub.
• Additionally, it presents a rare chance to serve as a logistics and supply chain hub for the region. This has become a perfect confluence of positive developments.

Government Efforts Towards Expanding Infrastructure and Logistics:

• Increased Capital Expenditure:
  • The government has committed its largest ever capex outlay of ₹10 trillion in the budget for 2023-24.
  • In 2021-22, the spend was ₹6.03 trillion and in 2022-23, the revised estimate of the expenditure is ₹7.3 trillion.
  • The government has rightly recognised the need to make the best possible use of its capital expenditures, and that it would be beneficial to have different ministries monitor project planning and execution.
• Digital Solutions:
  • The PM Gati Shakti initiative has made India perhaps the first country to digitize and make visible those processes across all ministries.
  • The implementation of digital solutions like FastTag for road traffic has brought about an estimated reduction in carbon dioxide emissions of nearly 1 million tonnes.
• Launch of New Infrastructure Projects:
  • India’s latest budget has focused on 100 crucial infrastructure projects with ₹75,000 crore of total investments.
  • Multimodal connectivity, digital connectivity and green solutions can all be implemented and showcased in these projects.
    • They will not only reduce the cost of doing business but also make carbon-reduction gains across the country.
  • Private investment will follow as the projects underway will support further reductions of India’s carbon footprint, which is a core focus for private-sector investments too.
• Boosting Collaborative Federalism:
  • The government has rightly recognized the need for Indian states to align with the Centre’s infrastructure plan and also its logistics policy.
  • The budget provides for concessional funding to states i.e, loans on easy terms which have to be invested in 2023-24 itself to implement crucial projects and achieve their objectives.
• Efforts Towards Balanced Regional Growth:
  • The government aims to ensure that development is spread across various regions of India.
  • The increased capital expenditure is expected to create a virtuous cycle of supporting domestic demand while positioning India even more sharply as a global manufacturing hub.

Way Ahead:

• Infrastructure planning will need a sustained dialogue with users and private players so that bottlenecks are removed.
• This can be made more efficient by ensuring data integration through the Unified Logistics Interface Platform (ULIP).
• The utilization of Indian infrastructure in an optimal manner. By comparing each asset to its best-in-class equivalents and implementing digital solutions, India may considerably reduce its overall capex requirements and get ready for the future.
• Key components of end-to-end logistics management will include:
  • Demand aggregation or pooling
  • Data on available capacity
  • Real-time tracking, and analytics
• Other efficiency-boosting strategies that will be implemented more frequently include cloud-based IT systems, integration and coordination across Indian logistical service suppliers, and the hiring of small service providers.
• PM Gati Shakti should become even more significant and environmentally friendly as a result of task outsourcing to (and the maturation of) third- and fourth-party service providers in India.

Conclusion:

• Initiatives like PM Gati Shakti and the National Logistics Policy lay a foundation for India to seize its opportunity to become an integral part of global supply chains.
• Logistical efficiency will reduce the cost of doing business and also make India an even more attractive destination.
• The pillars of manufacturing and green growth will deliver benefits as the third pillar of efficient logistics infrastructure, as catalysed by PM Gati Shakti, continues to emerge.
• Therefore, this focus is a key element of a robust strategy to achieve fast economic growth.
• In time to come, rapid growth enabled by policy initiatives should help deliver Amrit Kaal dividends to 1.4 billion plus Indians.

Source: Live Mint

Mains Question:

Q. How can Infrastructure help India to serve as a logistics and supply chain hub for the region considering the fact that the recent changes in the world have further brought India to global attention, not only as a market, but also a destination of choice for global supply chains. (250 words).