Is infrastructure the holy grail from which Indian economy can revive itself? Experts believe a thrust on infra expenditure, coupled with tax rationalisation, could be the way forward to boost consumption and hope for the graph to start a northward ascent.
In the last budget, the government had unveiled its ambitious plan to ramp up infrastructure by allocating Rs 100 lakh crore over five years. Ambitious spending of money to improve rail and road networks were also announced. The story, by all possible indications, is likely to shift into top gear this budget.
With revival of growth depending on government spending, infrastructure could be the biggest beneficiary. Any major infra project, be it highways or ports, power distribution systems, metro rail and even affordable housing projects, not only help in boosting the nation's infrastructure facilities, urbanisation and help business, but also helps in percolating money down the value chain. For instance, one highway project itself could give jobs to thousands of people, right from contract companies, engineers down to labourers, as well as ancillary industries like minerals, metals and cement.
But the important thing to look out for would be how the government will go about garnering funds, beyond central outlay, for infrastructure developement. One way to bring in funds, experts believe, could be through infrastructure bonds, which provide tax exemption for those who invest in it. This was something the UPA government had tried back in 2011, and an improvised version of it could be a way out not just for funds, but to make private money work for public benefit.
Second phase and further release of funds for Bharatmala scheme is also expected. Total estimate for this project, till 2022, is Rs 5.35 lakh crore. Another measure could be sanctioning more highways under public-private partnership, such as on a Toll-Operate-Transfer model.
Affordable housing as well as focus on rural roads was a focal point of the last budget, something that could get a leg up this time, too, considering that 1.25 lakh kilometres of rural roads have been the target set for Prime Minister's Gram Sadak Yojana, within five years.
also read
- Bond yields rise as higher than expected fiscal deficit estimate surprises bond markets
- Govt committed to farmers’ welfare, says FM; agri credit target hiked to Rs 16.5 lakh crore
- Union Budget: Finance minister ‘deceived’ people of India, says Chidambaram
- India’s commitment to Chabahar stands; budget allocates Rs 100 crore to the port
Allocation to improve and modernise Indian Railways could also go up, as Rs 50 lakh crore is the estimate of its requirements till 2030. Capital expenditure allocation for the Railways was raised 14 per cent this financial year; it could well go up for the next year, too.
Interestingly, allocation for the infrastructure sector in the last budget, at Rs 4.56 lakh crore was lesser than the previous year's. Experts call for a massive increase this time around, at least by 30 per cent.
