While the government is heavy lifting the current infrastructure spending, the private sector needs to step up as the country is looking at doubling infrastructure spending to Rs 140 trillion by 2030, said M Nagaraju, secretary, Department of Financial Services (DFS), Ministry of Finance.
India needs to spend 8-10 per cent of Gross Domestic Product (GDP) on infrastructure for sustaining high single-digit growth rates over the next couple of decades. “Achieving this will require more than just budgetary outlays,” he said.
“So far, three-fourths of infrastructure spending is borne by the government. This must change, and there should be greater participation by the private sector. For whatever is required to invest, the government is ready to build that ecosystem,” Nagaraju said, addressing the Infrastructure Conclave organised by the National Bank for Financing Infrastructure and Development (NabFID).
He said the government has made significant efforts to make infrastructure a safer asset class, made changes in concession agreements, created stronger counterparties, and set up institutional arrangements like the Insolvency and Bankruptcy Code.
The government has supported the setting up of the National Asset Reconstruction Company Ltd and specialised development financial institutions like NabFID. These efforts are supported by other initiatives like multi-modal connectivity for the movement of goods and people, and the national monetisation plan, which seeks to unlock the value of older assets for new asset creation. There is also a scheme for states providing long-term interest-free loans for creating durable assets, the secretary added.
“The country is home to the largest entrepreneurial ecosystem with millions of micro, small and medium enterprises that are aspiring to grow bigger and better. Most importantly, we are building infrastructure at an unprecedented pace, and the investment rate has risen with enhanced budgetary focus on increasing capital expenditure. Infrastructure assumes paramount importance, given its high multiplier impact,” he said.
The rapid pace of urbanisation is underway, giving a lot of opportunities for investment and development. By 2036, approximately 40 per cent of the population of India will reside in towns and cities, contributing nearly 70 per cent of India’s GDP, he added.
First Published: Sep 12 2024 | 5:39 PM IST
