New Delhi: India needs more private participation in building infrastructure, along with more data about investments and assets in the sector, instead of relying primarily on public expenditure as the country seeks to become a developed nation by 2047, the Economic Survey 2023-24 said.
“With increased public investment over the last five years, India has witnessed significant expansion in physical and digital connectivity and social infrastructure including sanitation and water supply helping to improve quality of life of the people. At the same time, given the fiscal compulsions and consolidation plans of the Union and the State Governments, it is important that viable projects on the public-private participation mode emerge and get executed,” the Economic Survey said.
The Economic Survey is an annual overview of the Indian economy over the past fiscal year. It is released one day before the finance minister presents the Union budget in parliament.
The need for more public-private partnerships (PPPs) comes as private sector spending on infrastructure has been lacklustre compared with government spending, according to the survey.
“Recent infrastructure thrust in India, especially the surge in connectivity projects, has banked predominantly on public expenditure,” the Economic Survey noted.Â
Infrastructure funding from private sources through bank credit was about ₹79,000 crore, much less than the government’s spending on roads and railways, the survey said.
The infrastructure sector has seen an inflow of external commercial borrowing worth $32.7 billion from FY20 to FY24. Of this, almost 28% came in FY24, marking a surge in investment in the sector over the last fiscal year.
Government expenditure
Resource mobilisation by infrastructure sectors through debt and equity in the capital market was just over ₹1 trillion during FY24. Real estate investment trusts (REITs) raised ₹18,840 crore and infrastructure investment trusts (InvITs) raised a total of ₹1.11 trillion in the past five years (2019-2024), the Economic Survey said.
India’s push for infrastructure has led to an “unprecedented increase” in the government’s capital expenditure, the survey noted. The share of connectivity-related public sector enterprises – Indian Railways and National Highways Authority of India – has risen to 42.9% in FY24 from 36.4% in FY21 within the Union government’s burgeoning capital expenditure, as per the survey.
The support of the Union government towards state government capital expenditure increased by 31.6% between FY21 and FY24, the survey said. There is, however, a lack of consolidated data that prevents the analysis of state government spending on public service enterprises.
Regular collection of sector-wise, source-wise information on infrastructure investment, bottom-up studies and aggregation of the requirements of infrastructure and periodic assessment of utilisation of assets created will help making mid-course corrections on the country’s developmental path, the document said.