Budget 2023 recognises infrastructure as nation’s growth engine

We welcome Budget 2023 which continues to lay focus on infrastructure development as being the growth engine of the Indian economy. It is indeed unassailable and laudable when it comes to the infrastructure sector. Last year, the government had taken a bold step by increasing capital investment outlay to Rs 7.5 lakh crores. This Budget, the government has doubled down on its strategy by increasing it by a further 33 percent to Rs 10 lakh crores.

Increased outlay for Railways, airports

To begin with, Sitharaman has allotted Rs 2.4 lakh crore for capital expenditures on Indian Railways this year, which is nine times more than the sum for the fiscal year 2013–14. The funding will mostly be used for track construction, the purchase of new coaches, electrification, and the improvement of station facilities.

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Efforts are being made to revive 50 more airports, heliports, water aerodromes, and advanced landing grounds in order to enhance regional aviation connectivity. According to the economic report published on January 31, the civil aviation industry has enormous potential due to increased demand from the middle class, a rise in population and tourism, better disposable incomes, favourable demographics, and greater penetration of aviation infrastructure. Owing to this potential, the finance minister has also given the civil aviation ministry a budget of Rs 3,113.36 crore for this year.

The government’s strategy to promote regional air connectivity through its flagship program, UDAN, which emphasises on connectivity between Tier-2 and Tier-3 cities, is likewise in line with that.

Boosting private consumption

Increased government expenditure leads to job creation in addition to boosting private consumption and investment spending, which is a benefit that is quite straightforward, especially while the global economy faces an acute recession.

The outlays, along with enhanced support to state governments for capital investment, would go a long way in strengthening the infrastructure backbone of the country. Despite the geopolitical turmoil that continues to reverberate from the Russia-Ukraine war, increases in logistics and commodity prices and several other macroeconomic issues have had little to no effect on the demand for the infrastructure sector.

Leg-up to urban development

Urban development in India has always lagged on account of capacity and financial wherewithal. The budgetary proposal for Urban Infrastructure Development Fund and plans to deepen the municipal bonds market is a welcome step. The prodigious investment in the infrastructure sector is bound to improve the quality of living. The increased outlay for Railways, and attempt to prioritise the 100 critical transport infrastructure projects and regional connectivity is also quite commendable.

This investment along with PM Gati Shakti launched last year to provide multimodal connectivity infrastructure to all economic zones of India would help reduce the logistics cost in India. In order to improve connectivity for the ports, coal, steel, fertiliser, and food grains sectors, the government has already selected one hundred important transport infrastructure projects.

PLI for manufacturing to boost industry

This Budget will enable India to be in a position where its activities pertaining to manufacturing can be undertaken at notably lower prices. The production-linked incentive, which would reduce global dependency on a single-source country, will facilitate exporting goods at competitive prices.

In earlier years, the real estate sector used to be the focal point, but in the last couple of years, the infrastructure sector has become the cynosure of the Budget. This phenomenon is attributable to the growing demand of homebuyers for infrastructural amenities to be near their residences. With a view to rectifying the situation, the finance minister has adhered to Prime Minister Narendra Modi’s tried-and-tested formula of increasing investment in the nation’s crucial infrastructure sector, including roads, railroads, and airports.

Lastly, various proposals for energy transition, energy storage, green credit program, etc., are exceptional steps toward net zero target for India. The journey towards net zero is expected to usher significant green industrial and infrastructure investments globally. Overall, the Budget is a heartening continuation of the government’s push toward improving India’s infrastructure.

The writer is Chief Strategy and Growth Officer, Tata Projects. Views expressed are personal. 

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