Govt Sticks to Infra Push, Sees Multiplier Effect

The Modi government has once again reiterated its resolve to spend more on infrastructure to generate jobs, anticipating that its plans in this area will have a multiplier effect and stir up the economy. It came as no surprise, therefore, that Union Finance Minister Nirmala Sitharaman, in her first Budget speech under Modi 3.0, stuck to the expectations that she would continue with the spending plan announced in February’s interim Budget ahead of the General Election.

Under attack over slowing job creation earlier, the Centre had some years ago doubled its infrastructure spend to 3.4 per cent of GDP. Along expected lines, the Union Budget announced a capital expenditure of ₹11.11 lakh crore to support the development of infrastructure over the next five years.

Sitharaman proposed a transit-oriented development plan for 14 large cities with a population of over 30 lakh and laid thrust on creative redevelopment of cities and growth hubs. The finance minister said in her speech, “Our government will facilitate the development of investment-ready ‘plug and play’ industrial parks with complete infrastructure in or near 100 cities, in partnership with the states and private sector, by better using town planning schemes. Twelve industrial parks under the National Industrial Corridor Development Programme also will be sanctioned.”

She went on, “This will be achieved through economic and transit planning and orderly development of peri-urban areas utilising town planning schemes.” The Budget also said that it would create Digital Public Infrastructure (DPI) in agriculture, power projects, ports, airports, and so on. The Centre will also spend ₹10 lakh crore to house people. In her Budget speech, Sitharaman said she has also made a provision of ₹2.66 lakh crore for rural development, including rural infrastructure.

Talking of other plans, she said that the ownership, leasing, and flagging of reforms will be implemented to improve the share of the Indian shipping industry. She added, outlining more proposals, “We will set up a Critical Mineral Mission for domestic production, recycling of critical minerals, and overseas acquisition of critical mineral assets. Its mandate will include technology development, skilled workforce, extended producer responsibility framework, and a suitable financing mechanism.”

Sitharaman also said she would promote investment in infrastructure by private sector players through viability-gap funding and enabling policies and regulations. “A market-based financing framework will be brought out,” she said in her speech on July 23.

Talking specifically about digital public infrastructure applications, the minister added, “I propose the development of DPI applications at population scale for productivity gains, business opportunities, and innovation by the private sector. These are planned in the areas of credit, e-commerce, education, health, law and justice, logistics, MSME, services delivery, and urban governance.”

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