Need to spend $1.4trn on infra to achieve $5trn GDP by FY25

Kolkatta: There is a clear thrust on infrastructure in so far as the government's economic policy prescription is concerned. The Economic Survey 2021-22, which was tabled in Parliament on Monday by Finance Minister Nirmala Sitharaman, said to achieve the GDP of $5 trillion by 2024-25, India needs to spend about $1.4 trillion over these years on infrastructure. During FY 2008-17, India invested about $1.1 trillion on infrastructure, it said, adding that though the challenge is to step up infrastructure investment substantially.

Interestingly, the ambitious National Infrastructure Pipeline was launched with projected infrastructure investment of around Rs 111 lakh crore ($1.5 trillion) during FY 2020-2025 to provide world-class infrastructure across the country.

"Keeping this objective in view, National Infrastructure Pipeline (NIP) was launched with projected infrastructure investment of around Rs 111 lakh crore ($1.5 trillion) during FY 2020-2025 to provide world-class infrastructure across the country, and improve the quality of life for all citizens," said the Union Finance Minister.

The Economic Survey, on its parts, said that it had envisaged to improve project preparation and attract investment, both domestic and foreign in infrastructure.

"NIP was launched with 6,835 projects, which has expanded to over 9,000 projects covering 34 infrastructure sub-sectors," the survey said.

During the fiscals 2020 to 2025, sectors such as energy (24 per cent), roads (19 per cent), urban (16 per cent), and railways (13per cent) amounted to around 70 per cent of the projected capital expenditure in infrastructure in India.

The survey said that the NIP has involved all the stakeholders for a coordinated approach to infrastructure creation in India to boost short-term as well as the potential GDP growth.

The moves have gone down well among the sector analysts. "The survey is optimistic on the medium-term prospects due to infrastructure capex focus of the government and supply-side reforms. We also believe that with a nudge from government's infrastructure investments and the PLI scheme, private investments will also revive gradually," said Dharmakirti Joshi, Chief Economist, CRISIL Research.

Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers, on his parts, said, "The Survey spells out that rising capital expenditure by the government on infrastructure and an uptick in the housing cycle has been responsible for reviving the construction sector. This has resulted in the consumption and production of steel and cement consumption to reach pre-Covid levels. We expect Budget 2022-2023 to announce reforms and incentives that will continue to boost consumer spending and thus aid in the overall revival of the real estate sector."