Infrastructure News

Higher capex for infrastructure likely with green focus, ET Infra

The upcoming interim budget is likely to see higher capital expenditure on infrastructure, in line with the past three years, with a focus on green investment to meet the demand for earlier committed projects, and give a push to growth, create jobs, attract private investments and offset the impact of global uncertainty, said experts.

“The interim budget is a working document and I don’t expect a great radical shift in policy. This means that the government will continue to maximise public expenditure on infrastructure, both core and social,” said Vinayak Chatterjee, founder, The Infravision Foundation.

He said the government needs to continue higher spending on infrastructure if it aspires for gross capital formation on infrastructure to be 8-9% of GDP.

According to the Confederation of Indian Industry, rationalisation of subsidies, revenue augmentation and simplification of taxes could allow the government to increase the capex by 20% to ₹12 lakh crore.

“While this will be a moderation from growth in the last two years, it compares well with 12% growth in the pre-pandemic period (2015-16 to 2019-20),” it said. The PM GatiShakti plan is also expected to remain in focus. The government has evaluated more than 300 central and state projects worth ₹11.58 lakh crore in two years since the launch of the PM GatiShakti National Master Plan for multi-modal connectivity.

“While the government is expected to continue with capex on infrastructure, with a major chunk going to roads and railways, I foresee asset monetisation substantially enhancing the funding for new projects, especially roads,” said Jagannarayan Padmanabhan, global head-transport, mobility and logistics at CRISIL Market Intelligence and Analytics.

According to Padmanabhan, the ability to take market risks and the willingness of the banks to fund infrastructure projects are the key challenges ahead.

“India is at an important inflexion point and given the current global developments and associated headwinds, the government should continue to lay major thrust on public capex (on physical, social and digital infrastructure) in the forthcoming budget,” said the Federation of Indian Chamber of Commerce and Industry. The government provided a budgetary allocation of ₹10 lakh crore in 2023-24, ₹7.5 lakh crore in 2022-23 and₹ 5.54 lakh crore in 2021-22. India aims to become a $5 trillion economy by 2025.

  • Published On Jan 27, 2024 at 08:29 AM IST

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