New Delhi: Grappling with a protracted economic slowdown, the NDA government has pushed the pedal on infrastructure with a clear focus on big ticket projects that will propel growth and lift Asia’s third largest economy. The Prime Minister had made the announcement of a Rs 100 lakh crore infra investment in five years at his Independence Day speech this year, setting the tone for policy direction (including faster approvals and possibly single-window clearance). This proposed investment will be in all-round infra development- from highway construction to building additional capacity in ports, railways and airports. Of course, ambitious projects, including Bharatmala and Sagarmala, will be given renewed push under Prime Minister Modi’s second term which comes even as second quarter GDP numbers reflect that the government will have to do most of the heavy-lifting since India Inc is struggling on various fronts.
Infrastructure has a cascading impact on the economy with allied sectors including cement, steel, power, coal, and mining all getting a boost and leading to large-scale creation of jobs. “Pump-priming” plays a pivotal role at a time when either the private sector doesn’t have enough funds or is holding onto cash; the reason why North Block babus are front-loading a lot of the proposed expenditure on infrastructure. Union Cabinet has already approved additional projects worth Rs 8,000 crore and the Prime Minister is expected to take stock of ongoing projects to ensure delays on account of funds and execution are addressed.
For any investment of this nature, funding plays a key role. While the National Investment and Infrastructure Fund (NIIF) is a step in the right direction, most experts believe the government will look to tap additional source of funds to meet the additional fund requirement. From creating “bad banks” to setting up another wealth fund, to creating large entities to tap into global funds, expectation is Budget 2020 will see a lot more emphasis on infra financing.