New Delhi: The Modi government’s infrastructure focus continued in the interim budget 2024 – the last before the Lok Sabha elections – with finance minister Nirmala Sitharaman announcing an outlay of Rs 11.1 lakh crore for infrastructure development, which would be 3.4 percent of the GDP.
The finance minister also announced that three major economic railway corridor programmes — energy, mineral and cement corridors, port connectivity corridors, and high traffic density corridors — will be implemented for enabling multi-modal connectivity.
However, the outlay for infrastructure capital expenditure (capex) is the lowest increase in the last three years. While the outlay for infra capex was Rs 5 lakh crore in 2021-22, it was increased to 7.5 lakh crore in 2022-23 and Rs 10 lakh crore in 2023-24.
But, industry watchers said that it’s a carry on budget for next three months and that they are hopeful that the infra push will come in the full budget in June-July.
Vinayak Chatterjee, founder and managing trustee of think tank Infravision Foundation, told ThePrint that the expectation from the industry was that this year too, outlay for infra capex will see a minimum 30 percent increase but what the finance minister announced is 11.1 percent, which is far below our expectation in term of what the infra sector needs and what the economy needs in terms of growth.
“From Rs 5 lakh crore two years back, the infra outlay went to Rs 7.5 lakh crore and last year, it went to Rs 10 lakh crore. But the feeling is that it’s just a three-month kind of a carry on budget. Our view is that when the final budget is formulated infra will come back to about 30 percent,” Chatterjee said.
He said that the budget pushes some new buttons on roof top solar as a tool for poverty alleviation. “It also pushes PPP format for agricultural storage, it announces three dedicated railway corridors for energy, minerals and cement and it provides a VGF option for offshore wind and coal gasification,” he said.
Subhomoy Bhattacharjee, consulting editor with Business Standard, said that though the infrastructure focus continues, it is obvious the interim budget figures was determined by not doing any fireworks when it is not necessary because “you know that you cannot allocate the money to anything”.
“The government’s view is that it might as well show fiscal prudence. That’s the big message the finance minister wanted to give before the government comes back in July. The finance minister’s intention was not to show capex numbers but the fiscal numbers. By showing a 5.1 (fiscal deficit) intended for next year, the government makes its interest very clear,” Bhattacharjee, who is also an adjunct faculty teaching economics at OP Jindal Global University, said.
Also Read: ‘Walked the path of fiscal prudence’ — what economists say about interim budget 2024’s fiscal maths
Sectoral hike for railways, highways, shipping marginal
Though Sitharaman announced implementation of three major economic railway corridor programmes and conversion of 40,000 normal rail bogies to the Vande Bharat standards for enhancing safety, convenience and comfort of passengers, the overall allocation for the railway ministry saw only a marginal increase in the interim budget as compared to the 2023-24 revised estimate.
While the allocation for the railway ministry was Rs 2.43 lakh crore in 2023-24 revised estimate, it was slightly increased to Rs 2.5 lakh crore in the 2024-25 interim budget
On the three economic railway corridors, Sitharaman said that the projects have been identified under the PM Gati Shakti for enabling multi-modal connectivity. “They will improve logistics efficiency and reduce cost.”
“Together with dedicated freight corridors, these three economic corridor programmes will accelerate our GDP growth and reduce logistic costs,” she said.
The highways sector also saw a marginal hike — from Rs 2.73 lakh crore in the 2023-24 revised estimates to Rs 2.78 lakh crore in the interim budget. The ports and shipping ministry saw a dip in allocation — from Rs 2,395 crore in the 2023-24 revised estimates to Rs 2,345 crore in the 2024-25 interim budget.
The Jal Shakti Ministry, which runs the Jal Jeevan Mission, saw a marginal increase in allocation from Rs 96,548 crore in the 2023-24 revised estimates to Rs 98,418 crore in 2024-25. The government’s flagship Har Ghar Jal scheme to provide potable drinking water to every rural household comes under this mission.
Jagannarayan Padmanabhan, Senior Director & Global Head, Transport, Mobility and Logistics, Consulting, CRISIL Market Intelligence and Analytics, told ThePrint that after two years of high double-digit capex allocation for the infrastructure sector, the pause button seems to have been pressed.
“Nevertheless, roads and railways continue to garner a lion’s share of the proposed expenditure this year. The government has also indirectly signalled the need for greater private sector participation to support growth in these core sectors. That could mean asset monetisation could gather pace in the coming months,” he said.
(Edited by Tony Rai)
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