Through the budget, the central government has set in motion a virtuous cycle, starting from private investment, crowded in by public capital investment, for the next 25 years. With infrastructure taking centre stage, the budget focuses on economic revival and sustainable development. The expansion of national highways by 25,000 km in 2022-23, development of multimodal logistics parks, manufacture of 400 Vande Bharat trains in the next three years, and completion of 8 million houses during 2022-23 under the PM Awas Yojana are some of the budget highlights. Innovative financing mechanisms will be looked at to underpin growth. The government has enhanced the outlay for capital expenditure sharply by 35.4 per cent, from Rs 5.54 trillion in the current year to Rs 7.5 trillion in 2022-23. Going forward, green energy and clean mobility will contribute significantly towards sustainable development. An allocation of Rs 195 billion under the production-linked incentive (PLI) scheme for solar will help create the much-needed manufacturing ecosystem.
PM Gati Shakti, the National Master Plan for Multimodal Connectivity launched in October 2021, encompasses roads, railways, airports, ports, mass transport, waterways and logistics infrastructure for economic transformation. As a part of the plan, 16 ministries will work together for integrated infrastructure development, including railways, roads, oil and gas, power, telecom, shipping and aviation. The capital expenditure for key infrastructure sectors, especially highways, has got a big boost in this year’s budget. The total allocation for the highways sector has increased to Rs 1.99 trillion from Rs 1.18 trillion in 2021-22. Besides, Rs 200 billion will be mobilised to complement public resources. The national highways network will be expanded by 25,000 km in 2022-23.
Under Atmanirbhar Bharat, 2,000 km of the rail network will be brought under Kavach during 2022-23. Kavach is an indigenously built anti-collision device to prevent accidents. Besides, 400 Vande Bharat trains will be manufactured during the next three years. The concept of “One Station-One Product” will be popularised to help local businesses and supply chains. Multimodal connectivity between urban mass transit and railways will be facilitated on priority.
As a preferred ecologically sustainable alternative to conventional roads in difficult terrains, a National Ropeways Development Programme will be taken up in public-private partnership (PPP) mode. Contracts for eight ropeway projects with a length of 60 km will be awarded in 2022-23. Meanwhile, contracts for the implementation of multimodal logistics parks at four locations through PPP mode will be awarded in 2022-23. Further, 100 cargo terminals for multimodal logistics facilities will be developed during the next three years.
The data exchange among various transport mode operators will be brought under a Unified Logistics Interface Platform (ULIP). This will ensure efficient movement of goods through different modes, reduce logistics costs and time, assist just-in-time inventory management, and eliminate tedious documentation. Most importantly, this will provide real-time information to all stakeholders and improve international competitiveness. Open-source mobility stack for organising seamless travel of passengers will also be facilitated.
Housing is a crucial sector and the government has allocated Rs 480 billion for the PM Awas Yojana. A total of 8 million houses will be completed during 2022-23 for the identified beneficiaries under the scheme in rural and urban areas. A new scheme, Prime Minis-ter’s Development Initiative for Northeast, PM-DevINE, will be implemented through the North-Eastern Council. It will fund infrastructure, in the spirit of the PM Gati Shakti, and social development projects based on felt needs of the Northeast. The allocation of Rs 600 billion towards the “Har Ghar Nal Se Jal” initiative to connect 38 million households with tap water connections is commendable and will also improve the country’s water infrastructure. While nearly half of the country’s population is residing in urban areas, the focus on sustainable measures for megacities must also include sustainable management of water and wastewater to prevent loss of water, efforts to improve recycling and a reduction in destruction from natural calamities such as floods and droughts.
Sunrise sectors and energy transition
Artificial intelligence, geospatial systems and drones, semiconductors and their ecosystem, space economy, genomics and pharmaceuticals, green energy and clean mobility systems have immense potential to assist sustainable development at scale and modernise the country. For research and development in these sectors, government contribution will be provided.
The government also batted for inclusive development, energy transition and climate action. The harmonised list of infrastructure will include data centres and energy storage technologies such as dense charging infrastructure and grid-scale battery systems. This will make credit for digital infrastructure and clean energy storage more accessible.
The PLI scheme in 14 sectors for achieving the vision of Atmanirbhar Bharat has been well received. To meet the target of 280 GW of installed solar capacity by 2030, an additional Rs 195 billion has been allocated for the PLI scheme for domestic manufacture of high efficiency modules, with priority given to fully integrated manufacturing units spanning the polysilicon to solar PV module value chain. Telecommunications, in general, and 5G technology, in particular, can enable growth and offer job opportunities. The required spectrum auctions will be conducted in 2022 to facilitate the roll-out of 5G mobile services during 2022-23 by private telecom providers. A scheme for design-led manufacturing will be launched to build a strong ecosystem for 5G as part of the PLI scheme.
Government-backed National Investment and Infrastructure Fund (NIIF) and SIDBI Fund of Funds have provided scale capital creating a multiplier effect. To stimulate important sunrise sectors such as climate action, deep technology, digital economy, pharmaceuticals and agri-tech, the government will promote thematic funds for blended finance, with the government holding no more than 20 per cent and the funds being managed by private fund managers. Scaling up private equity and venture capital investment requires a holistic examination of regulatory and other frictions. An expert committee will be set up to examine and suggest appropriate measures.
To assist the government’s borrowing programme in 2022-23, it is proposed to issue sovereign green bonds to help mobilise resources. Issuing sovereign green bonds will aid in reducing carbon intensity.
For 2022-23, allocation of Rs 1 trillion is announced to aid the states in catalysing overall investments in economy. These 50-year interest-free loans are over and above the standard borrowings granted to states. This money would be utilised for the PM Gati Shakti-related and other productive capital investments of states. States will be allowed a fiscal deficit of 4 per cent of gross state domestic product (GSDP) for 2022-23 of which 0.5 per cent will be tied to power sector reforms.
To finance infrastructure demands, a considerable increase in public investment will need to be matched by significant private investments. With technical and information assistance from multilateral agencies, measures will be implemented to improve the financial viability of projects, particularly PPPs. Enhancing financial viability will also need the adoption of global best practices, novel financing methods and a balanced risk allocation strategy.
The budget has laid the foundation for economic growth through public investment. A slew of measures for the infrastructure sector will provide the much-needed impetus to the construction material market. The introduction of the PLI scheme intends to encourage the scaling up of industries that are strategic in nature or are technology intensive. The government’s emphasis on fiscal relief and ease of doing business, it is an indicator of good things to come and promises a golden period for domestic manufacturing. It is encouraging to see the budget’s wide range of coverage focusing on infrastructure, climate change, healthcare, domestic manufacturing, digitalisation and inclusive growth to build a sustainable India.