It is said that if the backbone is strong you can easily walk an extra mile. Similarly, Infrastructure is the backbone of any economy for its growth and development and hence it is essential for infrastructure to be strengthened in a proper and adequate manner as it is significantly responsible for propelling India’s overall development. The Infrastructure sector is the key driver of the Indian economy. The sector has received intense focus from the government for initiating policies that would ensure time bound creation of world-class infrastructure in the country.
The promising Union Budget 2019 – 2020 is unequivocal in emphasizing the government’s focus on infrastructure, with the massive push and impetus given to the infrastructure sector through some great initiatives and announcements. This Budget can also be seen as the first step by the government, towards the impressive goal of doubling the Indian Economy to 5 trillion dollars within the next 5 years. The path to be undertaken for achieving the set desirable goal is also on the correct lines. The announcement and coverage of development, as proposed in the Union Budget 2020, shall prove to be a holistic, sustainable and impactful development to the infrastructure sector.
The Indian economy witnessed a slowdown in consumption growth and investment over the past year. In such conditions, the boost given to infrastructure through these investments will help the economy in coming out of the low consumption and investment trap. The multiplier effect of infrastructure spending on growth is extensive and a timely completion of infrastructure projects can bring back economic competitiveness and reduce logistical costs. The government has proposed an ambitious target of investing a massive amount of Rs 100 lakh crores in the investment sector over the next five years. This can help change the face of infrastructure sector in the economy and the benefit of this investment will be felt not by one, but various sectors in the economy.
Various announcements in this sector are targeted towards improving physical connectivity. The Budget 2019-20 has proposed to make an investment of Rs 50 lakh crores during 2018-2030 in the Indian Railways. Use of Public-Private Partnership in Railways, has also been proposed to unleash faster development and completion of tracks, rolling stock manufacturing and delivery of passenger freight services. The government will also launch a station modernization program, later this year. The increase in the budgetary support and capital expenditure will lead to progressive and faster development of the sector and improve the performance of various industries which rely heavily on the railways network. Under Phase-III of the Pradhan Mantri Gram Sadak Yojana (PMGSY), Rs 80,000 crores have been allocated for the upgradation of 1.25 lakh km of rural roads, which will improve the living conditions for the large rural population of our country. For the current year, a target of 7000-km roads has been set up, out of which 3000-km roads will be built using green technology. The National Highway Program will be restructured to ensure development of a National Highway Grid, using a financeable model. Road corridor project Bharatmala, port-linked industrialization plan Sagarmala, industrial corridors, and regional airport development scheme UDAN (Ude Desh ke Aam Nagrik) will improve transport infrastructure, thereby helping to increase competitiveness, enhance connectivity and bridge the urban-rural gap. While industrial corridors can help to improve infrastructure availability for greater industrial investment, the dedicated freight corridors would mitigate the congestion of railway networks, benefitting the common man. Improvement in waterways will also be beneficial to the common man as they are a cheap mode of transportation. Policy interventions are to be made for the development of Maintenance, Repair and Overhaul (MRO) to achieve self-reliance in aviation segment.
It has also been proposed that the navigational capacity of Ganga be enhanced via multi modal terminals at Sahibganj and Haldia, and a navigational lock at Farakka by 2019-20, under the Jal Marg Vikas Project. A target has also been set to increase four times, the estimated cargo volume on Ganga, which will enable cheaper freight and passenger movement.
The Phase-II of Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme has received an approved outlay of Rs 10,000 crores for three years until 2022. The government will also offer incentives for electric buses, three-wheelers and four wheelers to be used for commercial purposes. Upfront incentives have been proposed on purchase and charging infrastructure, to encourage faster adoption of Electric Vehicles. This will help make significant contributions to clean and green environment mission.
After transportation and connectivity, the focus in the infrastructure sector shifts to housing. Affordable Housing has been one area which received attention from the government in the past few years. Continuing with the progress made until now, Pradhan Mantri Awas Yojana Gramin (PMAY-G) has targeted “Housing for all” by 2022. A target has been set to build 1.95 crore households in the Phase-II of PMAY-G. Under the Pradhan Mantri Awas Yojana Urban (PMAY-Urban), over 81 lakh houses and an investment of about Rs 4.83 lakh crores has been sanctioned, of which construction has started in 47 lakh houses. In the Union Budget 2019-20, the government announced additional deductions up to 1.5 lakhs for interest paid on loans until 31st March 2020, for purchase of house valued up to 45 lakhs and an overall benefit of up to 7 lakhs over loan period of 15 years. This will give a fillip to demand by making houses more affordable.
The Jal Jeevan Mission was announced, with the motto of ‘Har Ghar Jal’ and a special focus on local infrastructure for water sustainability. It aims to provide portable water to every rural household by 2024. The Budget also proposed a plan of ‘One Grid, One Nation’ to focus on India’s power sector situation. The focus is to bring the much needed power reforms and provide affordable power to states. The government is going to work with the state governments to remove the barriers in the implementation of the UDAY scheme. The Budget 2019 also talks of improving the performance of gas-fuelled power projects that have been performing at lower efficiency levels due to limited availability of natural gas in the country. It is expected that the government will work actively towards retiring old coal-based thermal plants and a dispensation for better utilization of 24 GW of under-utilized gas based power plants, thereby helping India reduce its carbon footprint.
The Governments’ agenda of developing 17 iconic Tourism Sites into world class tourist destinations will to serve as a model for other tourism sites. The development of these state of art tourist destinations will not only act as a further booster to the tourism infrastructure development but will also enhance the visitor experiences which will further lead to increase the number of domestic and international tourists into these destinations.
The support to infrastructure sector also comes through various other budget announcements and allocations. Through various financial schemes regional airport development scheme, the government has attempted to reduce the liquidity crunch in the economy which had reduced investments and severely impacted infrastructural development. The various Budget announcements have laid out the road for a prosperous industrial and infrastructure sector and a fast growing Indian economy.
The government has presented a very balanced and inclusive budget for the financial year 2019-20 and has given special attention to infrastructure. This Budget aims to lay a strong foundation for New India. The Budget has covered the various facets and spheres of infrastructure and has provided something to each of them. Building physical and social infrastructure is one of the ’10-point Vision for the decade’ highlighted in this budget. Infrastructural development will give the much required boost to the economy to move on the higher growth trajectory and will be a key sector for enabling India to become a five trillion dollar economy. This is evident as the big, required push to investment has come from infrastructure to take the Indian economy forward.