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Eye on slowdown, Modi govt revs up infra spending with Rs 1.7 lakh crore outlay

Within the infra sector, the allocation for highways got the biggest boost over last year — going up 10% to Rs 91,823.22 crore

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New Delhi: The infrastructure sector — especially highways, railways, ports and aviation — got a big push in Union Budget 2020-21 as the Modi government looks to tackle the ongoing economic slowdown, which has seen India’s growth shrink for six consecutive quarters

The government has set aside an allocation of Rs 1.7 lakh crore for the sector, up 8.3 per cent over Rs 1.57 lakh crore in 2019-20. 

Apart from its expected impact on checking the slowdown, investment in infrastructure is also expected to create jobs, which will address another major grievance from the Modi government’s tenure since 2014. 

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Within the sector, the allocation for highways got the biggest boost over last year — going up 10 per cent to Rs 91,823.22 crore from Rs 83,015.97 in 2019-20.

In her budget speech, which lasted two hours and 40 minutes, Finance Minister Nirmala Sitharaman said the government will undertake “accelerated development of highways”. 

The projects planned include the development of 2,500 km of access-control highways [where access is restricted to toll-paying vehicles], 9,000 km of economic corridors, 2,000 km of coastal and port-connectivity roads, and 2,000 km of strategic highways.

“The Delhi-Mumbai Expressway and two other packages will be completed by 2023… The Chennai-Bengaluru Expressway would also be started,” Sitharaman added.

The railways, meanwhile, saw an increase of 6.1 per cent in its allocation — it stands at Rs 72,215 crore for 2020-21, up from Rs 68,018 crore in 2019-20.

Sitharaman also suggested an active push for the proposed Mumbai-Ahmedabad high-speed train project. However, the allocation for the National High Speed Railway Corporation, which is implementing the high-speed train project, stayed the same as last year at Rs 5,600 crore.

The outlay for civil aviation suffered a fall. The 2019-20 budget estimate was revised downwards from Rs 4,500 crore to Rs 3,700 crore. The allocation for 2020-21 is around the same at Rs 3,797 crore.

The finance ministry has also given infrastructure ministries the go-ahead to raise more funds from the market.

For instance, the National Highways Authority of India (NHAI) has been allowed to raise Rs 65,000 crore from internal and extra resources over and above the budgetary allocation of Rs 42,500 crore for 2020-21.

Second year of growth

In the last budget, too, the infrastructure sector saw an increase in allocation. 

Major initiatives announced included Phase III of the Pradhan Mantri Gram Sadak Yojana, aimed at upgrading 1.25 lakh kilometres of rural roads at an estimated cost of Rs 80,250 crore. 

The highways sector also got a big boost with an allocation of Rs 83,016 crore. 


Also Read: Before Modi govt can hope to fix India’s economy, it should fix how it manages Budget


Infra key priority

Revving up infrastructure is one of the key priorities of the Modi government in the second term. And the government has already unveiled its vision for the sector.

In December, Finance Minister Nirmala Sitharaman announced the Rs 103 lakh crore National Infrastructure Pipeline (NIP) to bolster investment in the sector. Under the NIP, Rs 16 lakh crore has been allocated for infrastructure and mobility projects. Another Rs 2.5 lakh crore has been allocated for port and airport projects, and Rs 3.2 lakh crore for digital infrastructure projects.

In her speech Saturday, Sitharaman said about Rs 22,000 crore has already been provided as support to NIP. “This would cater for equity support to infrastructure finance companies such as the IIFCL and a subsidiary of NIIF. They would leverage it, as permissible, to create financing pipeline of more than Rs 1 lakh crore.This would create a major source of long-term debt for infrastructure projects and fulfil a long-awaited requirement,” she said.


Also Read: Polls won but Modi govt won’t stop pushing its rural schemes, now plans to raise the pitch


 

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