Union Finance Minister Nirmala Sitharaman has outlined plans to invest more than ₹102 lakh crore on infrastructure projects by 2024-25, with the Centre, States and the private sector to share the capital expenditure in a 39:39:22 formula.
This would be a significant increase over the last six years, when the Centre and States together spent ₹51 lakh crore on infrastructure.
The announcement came on the same day that the government released data showing that the output of eight core infrastructure industries shrank by 1.5% in November 2019, the fourth straight month of negative growth. In November 2018, these sectors had expanded by 3.3%. According to the official data, the country’s production of coal, crude oil, natural gas, steel and electricity shrank in comparison to last November, while cement production growth slowed.
On Independence Day, Prime Minister Narendra Modi had announced plans to invest ₹100 lakh crore on modern infrastructure. This is the expenditure needed to achieve a $5 trillion economy by 2024-25, according to an official statement.
Task force
A task force of senior bureaucrats chaired by Economic Affairs Secretary Atanu Chakraborty then identified ₹102 lakh crore projects in 18 States as part of a National Infrastructure Pipeline. Another ₹3 lakh crore worth of projects are likely to be added soon, Ms. Sitharaman told journalists on Tuesday, adding that the idea was not to exclude any State, but rather that certain States are yet to put forward their pipelines. Large States yet to provide adequate data are Gujarat, West Bengal, Rajasthan and Bihar, said the task force report.
The investment is phased over a six-year period, including the current financial year.
The plan calls for a ₹13.6 lakh crore investment in 2019-20, a big ask considering that 2018-19 investment in infrastructure by the Centre, States and the private sector was only ₹10 lakh crore, a slight drop from the previous year’s investment of ₹10.2 lakh crore.
The funds would come from budgetary and extra-budgetary resources, as well as funds raised from the market and internal accruals of the relevant state-owned companies, said Mr. Chakraborty.
Almost a quarter of the capital expenditure is going to the energy sector, with ₹24.5 lakh crore expected to be invested in power, renewable energy, atomic energy and petroleum and natural gas. This is also the sector where the private sector has expressed the most interest, said Ms. Sitharaman.
Focus areas
The other major focus areas are roads (19%) and railways (13%), urban (16%) and rural (8%) infrastructure, and irrigation (8%). Social infrastructure, including health and education, will get 3% of the capital expenditure, with digital communication and industrial expenditure each getting the same amount as well. Agriculture and food processing infrastructure will get one per cent of the planned capital expenditure.
Going forward, the task force will continue to monitor progress and will also have the flexibility to change course, with the power to drop selected projects and pick up new ones, “so we are not left with laggards,” said Ms. Sitharaman.
(With PTI inputs)
