Infra receives Rs 11.1L-cr boost

Infra Gets Top Priority:

• PMGSY 4.0 to provide all-weather connectivity to 25,000 rural villages

• Rs 11,500 crore for irrigation projects including Kosi-Mechi link

• Budget proposes strong fiscal support for infra over next 5 years

• Govt to promote private investment in infra through VGF mechanism

Infrastructure being one of the nine top priorities of the Modi 3.0 government, the Union Finance Minister Nirmala Sitharaman on Tuesday presented the Union Budget 2024 in the Lok Sabha, proposing a slew of measures for boosting the infrastructure.

Overall, the FM said that capital expenditure on infrastructure will be Rs 11.1 lakh crore, that’s almost 3.4 per cent of the country’s Gross Domestic Product (GDP), as announced in the interim budget in February.

The Centre has made Rs 1.5 lakh crore provision for long-term interest-free loans to support infrastructure investment by state governments. Pradhan Mantri Gram Sadak Yojana, being one of them, under phase-4 of central government’s flagship road connectivity programme, it will provide all-weather connectivity to 25,000 rural habitations across the country.

Under the accelerated irrigation benefit programme, the Centre will offer support of Rs 11,500 crore for projects such as Kosi-Mechi intra-state link.

“This Budget envisages sustained efforts on the nine priorities for generating ample opportunities for all. This year’s budget will focus on aspirations of all citizens irrespective of religion, caste, gender and age,” said the Union Finance Minister.

Sitharaman outlined priorities for the infrastructure sector. These include strong fiscal support for infrastructure over the next 5 years. Private investment in infrastructure needs to be promoted through the Viability Gap Funding (VGF) mechanism. The launch of PMGSY 4.0 aims to establish 25,000 new rural habitations.

There are plans to build flood control structures with financial support of Rs 11,500 crore, which will also address Kosi-related flood mitigation. Assistance will be provided for flood management in Assam, and for reconstruction in flood-affected areas of Himachal Pradesh. Support will also extend to infrastructure development in Uttarakhand and Sikkim.

In the tourism sector, initiatives include the construction of the Vishnupath temple in Gaya and the Mahabodhi temple in Bodhgaya, similar to the Kashi Vishwanath corridor. Additional projects include the preservation of hot springs in Rajgir and the development of Nalanda.

The budget will also support the development of Odisha’s temples, scenic beauties, natural landscapes and pristine beaches. She said, “Significant investment the Central Government has made over the years in building and improving infrastructure has had a strong multiplier effect on the economy. We will endeavour to maintain strong fiscal support for infrastructure over the next five years, in conjunction with imperatives of other priorities and fiscal consolidation.”

Sitharaman also said the government will encourage states to provide similar scale of support for infrastructure and a provision of Rs 1.5 lakh crore for long-term interest free loans has been made this year to support the states in their resource allocation. Budget also proposed to promote investment in infrastructure by private sector through viability gap funding and enabling policies and regulations. A market-based financing framework will be brought out, Sitharaman said.

Interestingly however, the jump in capex target for this fiscal year sharply lags that of 37 per cent spike for the previous fiscal year as the government has restricted growth in public spending to stick to fiscal consolidation, even as a big push in capex is crucial for India’s growth dreams to become the third largest economy in the world and create ample jobs. However, the increase in capex is still sizable since it comes on a high base. India’s capex in FY21 and FY22 stood at Rs 4.1 lakh crore and Rs 5.9 lakh crore, respectively.

Capital expenditure means spending on infrastructure such as roads and railways. For the last fiscal year, India had set a record capex target of Rs 10 lakh crore, a 37.4 per cent increase from the revised budget estimate of Rs 7.28 lakh crore for FY23, which was almost three times of Rs 3.11 lakh crore capital expenditure in FY20 when Modi had returned to power for a second term with a massive victory in Lok Sabha elections.

“The Union Budget’s comprehensive focus on infrastructure development is a transformative step for our nation’s future. The substantial capital expenditure allocation, along with provisions for long-term interest-free loans to states, showcases a visionary approach that will drive economic growth and innovation. Encouraging private sector participation through viability gap funding and market-based financing frameworks will foster a dynamic environment for infrastructure advancements. These initiatives are poised to significantly improve connectivity, boost productivity, and create numerous job opportunities across various sectors. By prioritizing sustainable development and leveraging both public and private investments, this budget positions India on a robust path to becoming a global leader in infrastructure excellence. Finance Minister Nirmala Sitharaman’s emphasis on public-private partnerships is a transformative step for the infrastructure sector,” said Vivek Lohia, Managing Director, Jupiter Wagons Limited.