Discom modernization is critical, says KPMG India

KPMG in India has released a new report highlighting how India can achieve the National Infrastructure Pipeline (NIP) task force’s investment target. Modernisation of power distribution companies is one of the key recommendations within the energy sector.

The report suggests that the government should revise its project priorities under NIP and focus on ensuring effective domestic resource utilization.

The report, titled “Catalysing the National Infrastructure Pipeline – Project India”, proposes actions and policy recommendations to mitigate the impact of COVID-19 on India’s Infrastructure Vision 2025. Noting that the COVID-19 crisis has necessitated creative solutions to bridge the investment gaps in infrastructure, the report suggests that the government should revise its project priorities under NIP and focus on ensuring effective domestic resource utilization, gaining outcome-focused financing support from international financial institutions and harnessing capital from private stakeholders.

Arun Kumar, Chairman and CEO, KPMG in India said, “As India faces one of its most challenging times since Independence, infrastructure spending can help spur economic activity and the involuntarily unemployed through job creation. Given the magnitude of the COVID-19 pandemic and consequent pressure on resources, it is imperative that stakeholders reassess the priority of sectors and projects outlined in Infrastructure Vision 2025. Typically, infrastructure projects are characterized by high capital intensity and long gestation periods, often leading to a funding gap. Public investment is key to filling this gap.  A prerequisite to this is an enabling governance and policy framework that fosters business growth and investor confidence while rethinking innovative investment and funding models to encourage private sector participation.”

Link to download report: https://social.kpmg/NIP

As far as the energy sector goes, the report observes that investments in strengthening distribution and the sub-transmission grid along with discom modernisation and their digital support will be critical. COVID-19 has created uncertainty in power demand and has put additional financial pressure on distribution. Accordingly, the report has made the following observations:

1. Enactment of Electricity Amendment Bill 2020 and National Renewable Energy Policy will be crucial
2. Internet of Things (IoT) needs to be leveraged for increased efficiency

Apart from energy, the comprehensive report address several areas like healthcare, transport and logistics, digital infrastructure, energy, agriculture and irrigation, education and skilling, urban and rural infrastructure, digital infrastructure, etc.

Featured photograph, courtesy Siemens, is for illustration only.