Centre’s push on infra is transforming India

By investing heavily in capex, the Central government is providing people with their basic needs such as roads, electricity, and water.

In less than a decade, “Modinomics” has revolutionised India’s capital expenditure (capex) landscape. This isn’t merely a tale of pouring funds from the national coffers; it’s a strategy of directing investments to beef up India’s infrastructure.

Iconic undertakings like the Statue of Unity, the Chenab Bridge, and the Atal Tunnel are emblematic of the government’s dedication to building infrastructure. (PTI)

Research by the National Institute of Public Finance and Policy underscores this: Every rupee channelled into capex magnifies our economy by ₹4.8, while revenue expenditure yields a mere 0.96 multiplier. The FY24 Budget showcased a notable increase of 33.3% in capital allocation year-on-year, elevating the proportion of capital expenditure from 12.3% in FY18 to a commendable 22.4% in FY24 (BE). Adding to this perspective, Morgan Stanley’s forecast suggests a promising 5% rise in the combined influence of manufacturing and capex on India’s Gross Domestic Product (GDP) by 2031, heralding the emergence of a new manufacturing era.

The Gross Fixed Capital Formation (GFCF), a barometer of tangible asset investments, soared to an impressive 34% in FY23, its pinnacle since FY14. This robust GFCF has been a bulwark for India’s GDP, especially amidst global economic turbulence. The government’s steadfast emphasis on capex is palpable, with its proportion in total expenditure leaping from 12.3% in FY18 to 22.4% in FY24. This trajectory suggests an anticipated 11% CAGR for infrastructure capex between FY23 and FY27.

Further evidence for this commitment to infrastructure development can be found in the capital expenditure of states, which surged by 74.4% during Q1:2023-24, supported by the Union government’s “Scheme for Special Assistance to States for Capital Investment”. By July 25, 2023, a staggering ₹84,884 crore had been approved under this scheme, with ₹29,518 crore already disbursed to the states. Major central public sector enterprises are also aligning their sails with the prevailing winds, amplifying their capex endeavours. Recognising the potency of private investment, the Modi government has rolled out catalysts like the Production-Linked Incentive (PLI) scheme, targeting 14 pivotal sectors. This initiative, bolstered by PM Gati Shakti, envisions an investment of ₹100 lakh crore. CRISIL’s analysis indicates a 7% CAGR in private industrial investments from FY18 to FY22. The National Accounts Statistics 2021-22 corroborates this narrative. GFCF by the private sector swelled from ₹17.4 lakh crore in FY18 to ₹23.7 lakh crore in FY22. The CMIE Capex database further accentuates this trend, revealing an 11.6% spike in new private sector investment projects in Q1 of FY24, the highest in 14 years!

India’s manufacturing sector, buoyed by three consecutive growth quarters, is also on an upward trajectory. Bank credits to infrastructure, especially cargo ports and airports, have surged. In recent years, the government has unfurled a set of initiatives that have turbocharged the Indian economy. From the Insolvency and Bankruptcy Code (IBC) and Goods and Services Tax reform to the Make in India and Start-up India strategies, the policy landscape has been vibrant. The Union Budget 2023-24 further amplified this momentum, earmarking a 33% increase in capital investment outlay, amounting to ₹10 lakh crore (3.3% of GDP).

But the Modi government’s capex narrative transcends statistics. The once arduous highways are now seamless, rural roads bridge the remotest hamlets, and the railways have undergone a modern renaissance with the Vande Bharat Express as its crowning jewel. Air travel is now accessible to the masses, courtesy of the UDAN scheme. The metro network is expanding its embrace, streamlining daily commutes. The PRAGATI platform ensures that projects transition from blueprint to reality. This commitment to execution marks a departure from erstwhile regimes where projects languished in limbo. Iconic undertakings like the Statue of Unity, the Chenab Bridge, and the Atal Tunnel are emblematic of the government’s dedication to building infrastructure. They’re not mere constructions but symbols of a resurgent India.

This isn’t just about erecting structures; it’s about enhancing the quality of life of every Indian. The ripple effects manifest in job creation, surge in manufacturing, and heightened economic activity. By investing heavily in capex, the Modi government is providing people with their basic needs such as roads, electricity, and water. It embodies the ethos of “Sabka Saath, Sabka Vishwas, with Sabka Prayas” in its truest essence.

Shehzad Poonawalla is national spokesperson of the BJP. The views expressed are personal