TFP Bureau, New Delhi; July 23,b2024: Union Finance Minister Nirmala Sitharaman presented the Union Budget 2024-25 in Parliament today, outlining a vision of economic growth through substantial infrastructure investments. This budget emphasizes nine key priorities: Productivity and Resilience in Agriculture, Employment & Skilling, Inclusive Human Resource Development and Social Justice, Manufacturing & Services, Urban Development, Energy Security, Infrastructure, Innovation, Research & Development, and Next Generation Reforms. Significant announcements were made regarding the infrastructure sector, underlining the government’s commitment to long-term economic progress.
Infrastructure Development
The Finance Minister highlighted the government’s substantial investment in infrastructure, which has significantly impacted economic growth. An allocation of ₹11,11,111 crore for capital expenditure, representing 3.4% of GDP, underscores this commitment. Additionally, the government has allocated ₹1.5 lakh crore for long-term interest-free loans to support state-level infrastructure projects. Private sector investment will be encouraged through viability gap funding, supportive policies, and a market-based financing framework.
Capital expenditure by the Union and state governments has seen a significant increase from FY21 to FY24, with a 2.2 times rise in Union Government expenditure and a 2.1 times rise in State Government expenditure. Despite financial innovations in infrastructure financing, government expenditure remains central to funding large-scale projects. The net flow of funds to infrastructure sectors through bank credit between March 2023 and March 2024 was ₹79,000 crore, with credit growth recovering to 6.5% in FY24.
External commercial borrowings for infrastructure rose to USD 9.05 billion in FY24, while resource mobilization through debt and equity issuances in the capital market exceeded ₹1,00,000 crore. Real estate investment trusts (REITs) raised ₹18,840 crore from 2019 to 2024, and infrastructure investment trusts (InvITs) raised ₹1,11,294 crore in the same period.
Public-Private Partnership (PPP) Mechanisms
Several mechanisms support PPP projects:
Public Private Partnership Appraisal Committee (PPPAC): The apex body for central sector PPP project appraisal, recommending 77 projects worth ₹2.4 lakh crore from FY15 to FY24.
Viability Gap Funding (VGF): Assisting financially unviable but desirable PPP projects, approving 57 projects worth ₹64,926.1 crore in-principle and 27 projects worth ₹25,263.8 crore finally from FY15 to FY24, with total VGF approval of ₹5,813.6 crore.
India Infrastructure Project Development Fund Scheme: Providing financial support for PPP project development, with 28 proposals approved since its notification in November 2022.
National Monetisation Pipeline (NMP): Announced in August 2021, targeting ₹6.0 lakh crore in monetization potential through core government assets from FY22 to FY25.
Pradhan Mantri Gram Sadak Yojana (PMGSY)
The Finance Minister announced the launch of Phase IV of PMGSY to provide all-weather connectivity to 25,000 rural habitations. Since its launch on 25th December 2000, the scheme has sanctioned 8,10,083 km of roads, with 7,65,530 km completed and ₹3,24,177 crore spent.
Irrigation and Flood Mitigation
The budget allocates ₹11,500 crore for irrigation and flood mitigation projects in Bihar, including the Kosi-Mechi intra-state link and other schemes. Additional support is provided for flood management and related projects in Assam, Himachal Pradesh, Uttarakhand, and Sikkim.
Conclusion
The Union Budget 2024-25 underscores the government’s focus on infrastructure as a catalyst for economic growth. With substantial investments, strategic initiatives, and public-private partnerships, India is poised for significant progress and development, aligning with the vision of a ‘Viksit Bharat.’
