Finance Minister Nirmala Sitharaman accelerated the government’s thrust on the crucial infrastructure sector in her seventh successive Budget presentation and the first of PM Modi’s third term.
A massive expansion in urban housing at an investment of ₹10 lakh crore, a rural roads programme worth ₹26,000 crore are among the major features of the big infrastructure push. The capex budget for FY25 has been retained at ₹11.1 lakh crore, or 3.4% of GDP.
Apart from this, the FM also announced a brand new power plant for Bihar on top of investments in expressways, medical colleges, airports and new tourist circuits in the state. AP will get a brand new capital with central assistance of ₹15,000 crore in the first year and the development of industrial corridors connecting Chennai- Vizag and Bengaluru- Hyderabad.
The Indian economy’s stunning revival from COVID and its emergence as the world’s fastest-growing major economy is partially attributed to an infrastructure revival spurred by government spending in the past few years.
This has had a multiplier effect across industries while at the same time improving productivity, connectivity and ease of travel.
It is heartening to see the government’s focus on sustaining the infrastructure build-up. Priorities tend to shift sometimes but this government has not swerved from its task of ushering in world-class infrastructure. Spending on infrastructure has doubled in the past three years from 1.7% of GDP to 3.4% now.
The budgetary measures provide a great opportunity to India Inc. to participate in this nation building exercise. We should remember that better infrastructure improves quality of life, ease of living. Along with higher economic growth and rising incomes, it is one of the essential prerequisites for a developed economy.
As the country targets $5 trillion GDP by end of this decade and seeks to transform itself into a developed economy by 2047, the private sector in the country is faced with a once-in-a-lifetime opportunity.
So far, the private sector, especially the large business groups, have stepped up to the challenge and have proposed multi-billion dollar investments in various infrastructure projects. This is a heartening trend, and it is quite possible that smaller companies and groups will also take the plunge in the coming months and years. The buoyant state of capital markets and the healthy balance sheets of banks make financing of large projects a relatively less cumbersome exercise though a lot can be done to improve access to capital.
India’s answer to the COVID-induced slowdown was to step on the gas on infrastructure and Tuesday’s budget shows that the government is keen to expand and build upon the progress achieved.
Budget 2024 signals the clear intent of the government to focus on the long-term and set the foundation for a Developed India by 2047. The journey for which has well and truly begun.
(The writer is Chairman, Aditya Birla Group)
