Finance minister Arun Jaitley has set aside Rs 5.97 lakh crore for infrastructure spends in his fifth, and the Narendra Modi government’s last, budget, presented on Thursday. Last year, he had allocated Rs 4.94 lakh crore.
In his speech, Jaitley said that while his government will spend Rs 2.04 lakh crore for the smart cities project, covering 99 Indian cities, Rs 1.48 lakh crore will go towards capital expenditure spends on the railways.
“We have made an all-time high allocation to rail and road sectors. We are committed to further enhance public investment.” The finance minister also said that the infrastructure sector was the “growth driver of the economy”, and the country requires “massive investments estimated to be in excess of Rs 50 lakh crore in infrastructure”.
The economic survey, released earlier this week, had said that by 2040, India faces an infrastructure investment gap of $526 billion, which it must make good.
Jaitley also said that projects worth Rs 9.46 lakh crore have been facilitated and fast tracked using PRAGATI, the government’s online project monitoring system.
While he did not outline a clear roadmap on how the government will raise such a huge amount, the finance ministry is expected to ask state-owned lender, India Infrastructure Finance Corp. Ltd, to
finance major projects “including investments in educational and health infrastructure, on strategic and larger societal benefit considerations”.
Elaborating on the government’s ambitious road projects, Jaitley said that to fund the ambitious Rs 5.35 lakh crore Bharatmala Pariyojana, the National Highways Authority of India will be asked to consider floating special purpose vehicles to “raise equity from the market for its mature road assets”.
On railways, he said that the Rs 1.48 lakh crore capex would go primarily for doubling “18,000 kilometres of third and fourth line works and 5,000 kilometres of gauge conversion” and “would eliminate capacity constraints and transform almost the entire network into broad gauge”. The railway budget was merged with the union budget last year.
Interestingly, while the finance minister did not announce any new big-ticket infrastructure schemes in the budget, he did say that the Reserve Bank of India has “issued guidelines to nudge corporates (to) access (the) bond market”, and market regulator, Securities and Exchange Board of India, “will also consider mandating, beginning with large corporates, to meet about one-fourth of their financing needs from the bond market”.