GatiShakti master plan– the pathway to a $5 trillion economy

India Narrative, October 19, 2021

By Bipul Chatterjee and Yatika Agrawal

The foundation of a country’s economic progress depends on effective, efficient, safe, and accessible logistics. For India, it is essential to focus on the logistics sector to propel its economic growth for achieving its aspiration to become a $ 5 trillion economy over the next few years. There is a strong need to formalise, standardise, modernise, and democratise the logistics sector to achieve better results.

With the GatiShakti National Master Plan launched on October 13, 2021, by Prime Minister Narendra Modi, India’s slowing economic growth will find renewed momentum (Gati) through major infrastructure upgrades that will reduce logistics costs, increase cargo handling capacity, reduce the turnaround time, and raise the overall efficiency.

In India, transportation accounts for nearly half of the logistics costs, thereby, that should be the key focus on reducing the logistics costs. This reduction in transportation cost can be achieved by reducing the unit cost of transportation through efficiency maximisation in individual transportation modes and by choosing the right modal mix.

The National Master Plan is a holistic approach that aims to bridge the gap between macro planning and micro implementation and avoids working in silos that hampered construction and inefficient use of budget. It includes 11 industrial corridors, achieving a Rs 1.7 lakh crore turnover in defence production, 38 electronics manufacturing clusters, and 109 pharma clusters by 2025.

This Policy outlines national priorities for the logistics sector and provides a unified policy environment. It serves as a significant groundwork for ‘Aatmanirbhar Bharat’ vision as it brings connectivity between economic zones such as pharmaceutical clusters, defence corridors, industrial corridors, fishing clusters, and agri-zones that will improve and make Indian businesses more competitive, efficient and boost the economy’s growth in every aspect.

‘PM GatiShakti – National Master Plan’ is based on  six pillars of foundation that includes comprehensiveness (all the existing and planned initiatives of various ministries and departments with one centralised portal), prioritisation (enables different ministers to set priorities after cross-sectional interactions), optimisation (in planning for modification and expansion of projects), synchronisation (brings coordination in planning and implementation of projects by different departments), analytical (provide entire data with GIS-based spatial planning and analytical tools at one place), and dynamics (dynamism to identify infrastructural interventions for enhancing and updating the master plan).

The plan provides a centralised portal to unite the infrastructural initiatives taken by 16 central ministries and departments from Railways to Roads, Aviation to Agriculture and others, so that all the concerned departments have visibility of each other’s activities, especially the ones which have multi-sectoral and multi-regional reach. 

Even though the centralised approach of the plan tends to bring efficiency and optimisation in the implementation of planned and existing projects, however, engagement of local and state authorities is essential as they are well acquainted with the problems and requirements of the grass-root level. Additionally, states also have a crucial role to play as the key elements of a plan such as port linkages and land availability for railways, highways, industrial clusters and corridors depend on political consensus and active partnership.

Furthermore, it is important to remember that the ongoing COVID-19 pandemic has adversely affected the economy in terms of job loss, depressed wages, and reduced consumption. Therefore, the scheme planners are positively looking forward to infrastructure projects for a new deal outcome that will boost jobs and demand for goods and commodities, apart from attracting major investments.

In addition to this, the scheme is expected to benefit the micro, small and medium sized sectors in gaining high-speed growth. It will not only ensure a widespread reach of basic amenities to the remotest areas but will also significantly enhance business opportunities for inclusive growth. Thus, the scheme tends to create a closely knit high-speed growth environment for all its citizens leading towards comprehensive growth and also helps in achieving Sustainable Development Goals (SDGs) to some extent.

Thus, the plan is expected to transform India’s infrastructure sector and provide integrated, seamless, and timely delivery of projects within the budget without any delays and will further motivate private companies to associate with government projects and boost the Indian economy.

This plan is anticipated to be efficacious as it promotes seamless and multi-modal connectivity with a whole-of-government approach. It will not only facilitate linkages and growth of the economic sectors but will also provide a sustainable income source, economic and social benefits to the local communities who are directly or indirectly associated with logistics and other sectors.

In this context, it is important to highlight the need for understanding the political economy aspects of multi-modal connectivity. In the recent past, CUTS International has undertaken one such project covering India along with its immediate neighbours in eastern South Asia, viz. Bangladesh, Bhutan and Nepal. It aims to identify the gaps in infrastructure policy and regulations, which can pose hurdles to multi-modal connectivity and identify possible livelihood generation opportunities that can be gained through the development of regional/sub-regional/bilateral value chains and their facilitation through multi-modal connectivity.

These types of projects are essential to analyse the on-field situation and perception of the stakeholders associated with multi-modal connectivity so that better implementation of plans is executed through a regular, two-way awareness generation process.

(Bipul Chatterjee is Executive Director, CUTS International and Yatika Agrawal is a Research Associate at CUTS International, a global public policy think- and action-tank on trade, regulation and governance.  Views expressed are personal)

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