The Interim Budget 2024-25 had allocated an impressive ₹11.1 lakh crore for capital investment in infrastructure, which was a 11 % increase over the previous year’s budget. This allocation constituted 3.4% of India’s projected GDP for 2024-25, up from 3.3% in the previous year. However the growth rate was lower compared to the previous year’s 34% increase. Yet considering the fiscal challenges that the Government faces, this did demonstrate its commitment to infrastructure spend.
The Government continues to face similar challenges going ahead as well and we can expect a lot of emphasis on measures in the upcoming July 2024 that increase the bang for the buck.
In this context, some suggestions keeping this philosophy under consideration are the following:
- It is imperative to expedite implementation of ongoing projects. A lot more focus would be on project monitoring and tracking the progress of key projects and ensure timely completion. The Government would do well to provide incentives to Project authorities and executing companies to complete their projects within the scheduled timelines.
- Bring in private sector investment is really going to be critical considering the limited fiscal space the Government has in increasing its own capital spend. Therefore we can expect more attractive viability gap funding and other incentives to attract private investment in infrastructure projects, Modifications in the viability gap guidelines and changes to PPP approval guidelines may be considered.
- With the increasing impact of climate change, a lot more focus on sustainable and climate resilient infrastructure can be expected. I would expect allocation of specific funds for development of green corridors, and circular economy projects etc to promote sustainable infrastructure, We could also see specific tax incentives and subsidies for the adoption of energy-efficient technologies and renewable energy solutions in infrastructure projects.
- While the Government of India has been focusing on simplifying regulations, a focused initiative to support the implementation of regulatory reforms and address bottlenecks may be considered. This has been deliberated with the Government as well.
- It is imperative to allocate funds for the development of digital infrastructure, to support the integration of emerging technologies like artificial intelligence (AI) and the Internet of Things (IoT) in infrastructure projects, There could be specific grants and incentives for the adoption of AI led solutions in infrastructure planning, construction, and maintenance to improve efficiency and reduce costs,
In addition to the above, I would like to see more focus in the budget on sectors and areas that need greater thrust going forward.
BUDGET 2024 EXPECTATIONS
- Tourism is one of the sectors that has significant linkages to various economic sectors. Investing in tourism infrastructure can have significant benefits to the local economy and enhances employment opportunities amongst others. The benefits also reach the remotest parts of the country. It would be very helpful to enhance the budgets for various tourism programs like Swadesh Darshan and enhance the scope and scale significantly.
- Water continues to be one of the significant challenges that the country will face considering the significant variability in availability due to climate change and declining quality. Continued investments both in irrigation, and drinking water as well as industrial water is necessary. Water is a complicated area and there are significant investment needs across the value chain. Bringing in climate resilient source sustainability, focus on water quality, improvement in operational efficiency would need to be encouraged in this budget.
- Safety continues to be an important focus in both railways and highways. We can expect focused allocation on these critical aspects especially in the light of recent tragic incidents.
(Sudeep Kumar Sinha, Partner, Deloitte India)