“In July, our government will present a detailed roadmap for our pursuit of Viksit Bharat,” said the Finance Minister during the presentation of the Interim Budget. The last budget was a vote on account owing to the Lok Sabha elections, but nevertheless, the policy announcement showed some glimpses of the larger intent of the government to continue its focus on infrastructure development.
This allocation constituted 3.4 per cent of India’s projected GDP for 2024-25, up from 3.3 per cent in the previous year.
The Centre has already boarded the train which is on the way to the ‘Viksit Bharat @2047’ station as it has started outlining its near, medium and long term goals with its target to become a developed economy by 2047, with a focus on electric mobility, digitisation of payments infrastructure and high-speed expressways, officials said to ET.
Potholes that Modi and Co faces in its journey to being a developed nation by 2047
Increase the pace of construction:
With current emphasis on infrastructure development, it is essential to improve the pace of construction in the country. Pace of road construction in India is expected to witness a 7-10 per cent decline in 2024-25 with the daily construction estimated at 31 km per day as against 34 km per day in 2023-24 due to heightened challenges in execution, the CareEdge Ratings said in a recent report. This will result in the national highways construction to slow down to 11,100 km to 11,500 km in this financial year as against 12,350 km in FY 24.
“As project complexities rise and timelines elongate, it is imperative to swiftly address bottlenecks thus ensuring seamless infrastructure development,” Maulesh Desai, director, CareEdge Ratings said.
Fast-track asset monetisation:
Recently, a rating agency ICRA said state-owned NHAI’s targeted asset monetisation of road assets could fetch the government up to Rs 60,000 crore in the current fiscal year. In April 2024, the National Highways Authority of India (NHAI) had released an indicative list of 33 road assets it plans to monetise in FY2025, through a mix of toll-operate-transfer (TOT) and sale to the NHAI’s Infrastructure Investment Trust (InvIT).These assets are spread across 12 states, cumulatively spanning nearly 2,750 km and with an annual toll collection of Rs 4,931 crore.
The Ministry of Road Transport and Highways (MoRTH) has raised Rs 40,314 crore through various modes of asset monetisation in financial year 2023-24, against the target of Rs 28,968 crore, a senior government official said on Tuesday. The ministry had raised Rs 15,968 crore through monetisation of 4 toll-operate-transfer (TOT) bundles, Rs 15,700 crore through Infrastructure Investment Trust (InvIT) and Rs 8,646 crore through securitisation, the official told news agency PTI.
Reduce road accidents and fatalities:
Road transport minister Nitin Gadkari has reiterated that road safety is top-most priority of the government. The aim is to reduce accident deaths by 50 per cent by 2030, as an increase in the number of road accidents and deaths results in socio-economic loss of 3.14 per cent to GDP.
Move to greener alternatives for road construction:
Road making companies should switch to using alternative fuel power construction equipment and save costs, according to Minister for Road Transport and Highways, Nitin Gadkari.
How can the Budget help in achieving the ambitious dream?
Enhance capex for infrastructure creation:
For a country with a population of 1.4 billion, there is a requirement of pushing for a higher boost in the upcoming Budget. Industry lobby body Confederation of Indian Industry (CII) President Sanjiv Puri is looking at more hikes in India’s planned capex spending in the upcoming Budget for this fiscal year with at least an increase of 25 per cent in Budget from the previous fiscal year, as it will boost the economy and strengthen competition.
Talking on the same lines, another industry body Federation of Indian Chambers of Commerce & Industry (FICCI) has urged the Finance Minister to continue its thrust on capex for physical, social and digital infrastructure in the upcoming Union Budget.
“The capital expenditure outlay for FY25 should be increased by 25 percent over RE for FY24 to Rs 11.8 lakh crore,” said FICCI.
Open up avenues for alternate financing:
The government is exploring policy mechanisms to capture the increase in land value resulting from road projects, including auctioning exits at greenfield expressways and ‘betterment’ levy, as it looks to ramp up funding for infrastructure creation, a senior official told ET.
In this regard, the roads ministry is studying global best practices on innovative ways of infrastructure financing, the official said, adding that a decision on which mechanism will be used will be taken after the new government takes charge.
Apart from hiking capex and finding other alternate solutions to fund financing, the Finance Minister can take measures to increase the participation of the private sector and subsidise green technology to reduce dependence on fossil fuels.
A peek into companies who are set to win from Budget’s capex push:
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