Union Budget 2023: Finance Minister Nirmala Sitharaman in a big boost to infrastructure and logistics projects has announced capital expenditure of Rs 10 lakh crore for development projects for 2023-24 i.e. 3.3 per cent of the Gross Domestic Product (GDP). This is a significant 33 per cent hike from last year’s capital inlay.
In her budget speech, the finance minister said that the establishment of a new infrastructure finance division would help attract more private investment. Moreover, an expert committee will make the infrastructure classification and financing framework suitable for Ámrit Kaal.
Moreover, the government will be spending Rs 10 thousand crore per year on the Urban Infrastructure Development Fund. The fund will be managed by the National Housing Bank. It will be used by the public agencies for the development of urban infrastructure projects in tier-2 and 3 cities to increase residential and commercial demand in these cities, the FM announced.
Industry reaction to infra capital outlay
Industry experts have welcomed the finance minister’s big push to infrastructure projects saying that it will propel employment and manufacturing in the country. The industry also awaits more opportunities for private investment in infrastructure.
Sushil Pasricha, Partner at Bain & Company said “This push for infrastructure development will have a cascading impact on industrial sectors including Electrical & Electronics, Automotive, Industrial Machines, Pharma, Chemicals, Textiles and Apparels. This would further propel employment and assist in manufacturing taking center stage in the Indian economy”
Vishnu Sudarsan, Partner, JSA, said: “The Union Budget for FY 2022-23 envisaged a capital expenditure of INR 7.9 lakh crore across infrastructure sectors such as roads, airports, and ports. The Union Budget for FY 2023-24 builds upon this by announcing INR 10 lakh crore of capital investment in the infrastructure sector, a number that is 3.5% of India’s GDP. However, the focus and initiative to spur private investment in infrastructure still waits to be seen – there is a need for innovative models and true-blue public-private partnerships to be revived and brought into play. Nevertheless, this increased expenditure is sensible as it entails meaningful investment in infrastructure development and nation-building, with monetisation following thereafter.”
Debashish Biswas, Partner Deloitte India said, Infrastructure capital expenditure increased by 33% over last year – continued focus on infrastructure development will enable economic growth as well as create more employment. Huge capital expenditure in infrastructure will create a great multiplier effect for the economy.”
In October last year, Prime Minister Modi launched the Gati Shakti National Master Plan, which is aimed at creating an integrated logistics framework. Under the project, various connectivity and logistics projects were routed through the Network Planning Group (NPG), constituted under the PM Gati Shakti initiative.
Meanwhile, shares of infrastructure firms such as L&T gained 4 per cent and Siemens Ltd stock jumped 4 per cent on the BSE and IRB Infrastructure Developers gained 0.05 per cent after FM listed infrastructure as one of the seven priorities in the Budget speech.
