Economy

Government bets big on infrastructure

Mumbai | Updated on February 01, 2021

It hopes to revive the economy and create jobs

The Centre has embarked on a slew of infrastructure projects as part of its plan to kick-start spending for economic revival and creating more jobs. This includes the highest ever capital allocation for the Ministry of Road Transport and Highways at ₹1,08,230 crore for FY22, a new scheme at a cost of ₹18,000 crore to support augmentation of urban public bus transport services, new technologies for metro systems and projects worth more than ₹2,000 crore to be offered by the Major Ports on Public-Private Partnership.

The government has budgeted a capital expenditure of ₹5.54 lakh crore for FY22 in infrastructure which is 26 per cent more than the revised estimates of ₹4.39 lakh crore for FY21.

The Budget has provided an enhanced outlay of ₹1,18,101 lakh crore for the Ministry of Road Transport and Highways, of which ₹1,08,230 crore is for capital, the highest ever.

“The government has done well to bite the bullet on enhanced spending for economic revival,” said Sameer Bhatia, President, CRISIL Infrastructure Advisory.

“This Budget has set the tone on infrastructure growth for the next 3-4 years. Implementation is all-crucial now, and is probably the elephant in the room,” Bhatia added.

By March 2022, the government plans to award 8,500 km of roads.

To further augment road infrastructure, more economic corridors are also being planned in four poll-bound States. This includes 3,500 km of National Highway works in Tamil Nadu with an investment of ₹1.03 lakh crore comprising the Madurai-Kollam corridor and the Chittoor-Thatchur corridor.

The share of public transport in urban areas will be increased through expansion of metro rail network and augmentation of city bus service. A new scheme will be launched at a cost of ₹18,000 crore to support augmentation of public bus transport services. The scheme will facilitate deployment of innovative PPP models to enable private sector players to finance, acquire, operate and maintain over 20,000 buses.

Two new technologies — ‘MetroLite’ and ‘MetroNeo’ — will be deployed to provide metro rail systems at much lesser cost with same experience, convenience and safety in Tier-2 cities and peripheral areas of Tier-1 cities.

The Central will extend counterpart funding to phase 2 of Kochi Metro, Chennai Metro, Nagpur Metro, Bengaluru Metro Phase 2A and 2B and Nashik Metro.

The increased outlay for capital expenditure, focus on investment in healthcare, encouragement to the infrastructure sector and no increased personal and corporate taxes are key highlights which will help sustain the gathering momentum in the economy. There is a lot of global money waiting to come in and this Budget along with the sequentially improving economic indicators will mean significant FDI and fund flows, said Vikram Hosangady, Partner and Head of Clients and Markets, KPMG India.

Published on February 01, 2021

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