Budget earmarks Rs 11.11 lakh crore for big infra projects, floats sweetener for states to pitch in

New Delhi:  The Budget has allocated a massive Rs 11.11 lakh crore for the infrastructure sector comprising highways, ports, railways and power plants, and plans to continue with this plan for the next five years to accelerate growth and create more jobs.

Finance Minister Nirmala Sitharaman said: “The 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 5 years, in conjunction with imperatives of other priorities and fiscal consolidation. This year, I have provided Rs 11,11,111 crore for capital expenditure. This would be 3.4 per cent of our GDP.”

However, the Centre is keen that the states and the private sector or also contribute to this effort in order to speed up development.

The Finance Minister said: “We will encourage states to provide support of similar scale for infrastructure, subject to their development priorities. A provision of 1.5 lakh crore for long-term interest free loans has been made this year also to support the states in their resource allocation.

“Similarly, investment in infrastructure by private sector will be promoted through viability gap funding and enabling policies and regulations. A market based financing framework will be brought out,” she added.

The Economic Survey released on Monday also highlighted that buoyant public sector investment by the Centre has played a pivotal role in funding large-scale infrastructure projects in recent years in the highways, seaports, railways and airports sectors, but the state governments and the private sector need to pitch in to accelerate development.

It highlights that National Highways construction increased by 3 times from 11.7 km per day in FY14 to 34 km per day by FY24 while capital expenditure on Railways has increased by 77 per cent in the last five years, with significant investments in the construction of new lines, gauge conversion and doubling.

Similarly, in FY24, new terminal buildings at 21 airports have been operationalised which has led to an overall increase in passenger handling capacity by approximately 62 million passengers per annum.

Besides, India’s rank in the International Shipments category in the World Bank Logistics Performance Index has improved to 22nd in 2023 from 44th in 2014.

“Given that infrastructure-creation efforts in India are currently predominantly public sector-led, a higher level of private sector financing and resource mobilisation from new sources will be crucial for India to continue down the path of building quality infrastructure. Facilitating this would not only require policy and institutional support from the Central government but state and local governments would have to play an equally important role,” the survey stated.

The Finance Minister also said that Phase IV of PMGSY will be launched to provide all-weather connectivity to 25,000 rural habitations which have become eligible in view of their population increase.

Irrigation and flood mitigation measures have been announced for Bihar and Assam.

“Bihar has frequently suffered from floods, many of them originating outside the country. Plans to build flood control structures in Nepal are yet to progress. Our government, through the Accelerated Irrigation Benefit Programme and other sources, will provide financial support for projects with an estimated cost of Rs 11,500 crore, such as the Kosi-Mechi intra-state link and other ongoing and new schemes including barrages, river pollution abatement and irrigation projects. In addition, survey and investigation of Kosi related flood mitigation and irrigation projects will be undertaken,” Nirmala Sitharaman said.

–IANS