In the Union Budget 2020 presented today, FM Nirmala Sitharaman announced a host of measures to help the infrastructure sector beat the current downturn.
She made a number of announcements to be implemented under the Rs 1.03 lakh crore National Infra Pipeline scheme that was announced some time back
The main announcements were:
— 6,500 new projects under NIP across sectors — housing, safe drinking water, healthcare, clean energy, logistics, irrigation etc.
— NIP envisions improving the ease of living for every Indian. Will bring in generic reform for every sector.
— Infra focussed skills to be boosted under NIP
— A project preparation facility for infra — young engineers, MBAs and economists from top universities.
— A national logistics policy to be released soon.
— A single window e-logistics market with focus on MSMEs.
— Development of 2,500 km access-controlled highways and 2,000 km of strategic highways
— 12 lots of highway bundles spread over 6,000 km will be monetised before 2024.
Modi govt was expected to raise spending on infrastructure in the Budget in view of investments failing to pick up even after cuts in corporate tax and monetary easing by the RBI.
FM Sitharaman was expected to outline a plan to invest Rs 1.05 lakh crore ($1.48 trillion) in infrastructure over the next five years — by which time Modi govt is seeking to make India a $5 trillion economy from $2.8 trillion at present.
It comes at a time when India is mired in its worst slowdown in a decade. GDP growth fell to 4.5% in July-September. According to economists, a budgetary fiscal stimulus and more spending on roads, railways and rural welfare could revive growth.
Before the Budget, more than a few economists had said that the govt may be left with no option but to announce a fiscal stimulus to bring back consumer demand and investment
There were a lot of pre-Budget talk on how Modi govt might push infra spending, particularly in areas earmarked for the National Infrastructure Pipeline (NIP). These include roads, power, railways, affordable housing, etc. These sectors have the ability to boost the core sectors by tackling existing infra bottleneck, thereby creating a multiplier effect on the economy. Besides, they can also boost job generation at a time India is hard pressed to provide work to millions of youth entering the workforce every year.
The combined investment in NIP for FY21 by the Centre, state govts and private sector was originally estimated at Rs. 19.5 lakh crore. Of this, Rs. 4.6 lakh crore was envisaged to come from the govt by way of capital outlay, of which the budgetary support from the Centre was meant to be limited to Rs. 1.9 lakh crore.