The State government expects private sector investment in infrastructure to treble over the next decade while its own investment in infrastructure will come down by half.
Defining its overall fiscal strategy, Vision 2023 envisages an expenditure of Rs 15 lakh crore over 11 years on physical infrastructure at an average of Rs 1.35 lakh crore per annum. To achieve the target, the government has decided to seek different avenues of funding, including foreign direct investment, domestic investments, bank fundings and projects under public private participation (PPP). In 2023, the private sector contribution to investment in infrastructure is expected to go up to 42 per cent of the total funding estimated at Rs 2.37 lakh crore. In 2010, the private sector's funding was only 15 per cent of the Rs. 25,000 crore invested in infrastructure projects in the State. Incidentally, the government will carry out “sectoral reform as appropriate to make the infrastructure services self-financing and sustainable by ensuring suitable cost recovery”. Of the required funding for infrastructure over the next 11 years, energy (Rs. 4.50 lakh crore) tops the list followed by transport (Rs. 3.70 crore) and urban infrastructure (Rs 2.75 crore).
During the same period, the State government has decided to gradually cut down its funding by half in percentage terms. In 2010, the State's share was 60 per cent of the investment in infrastructure. By 2023, the plan is to more than halve it to 28 per cent.
This decision has to be understood in the context of fiscal tightening called for under the Fiscal Responsibility and Budget Management Act (FRBM), which stipulates the elimination of revenue deficit by fiscal year 2012 by which time the fiscal deficit shall not exceed three per cent of the GSDP. Moreover, the State has to divide its funding between infrastructure and welfare, subsidies and other transfer payments.
In line with the XII Five Year Plan, Vision 2023 seeks to increase the annual infrastructure spend in the State to 10 per cent of the GSDP by 2015 and further to 12 per cent from 2021 onwards.
At present, the annual infrastructure spend stands at five per cent of GSDP. The plan forecasts the GSDP to be 19.80 lakh crore in 2022-23 of which the investment in infrastructure is pegged at Rs.2.37 lakh crore.
