Amitabh Kant anticipates surge in private sector infra investments after LS polls

Kant anticipates more significant policy announcements in the full budget in July.

Former NITI Aayog CEO, Amitabh Kant, shared his perspective on the Interim Budget for 2024 exclusively with CNBC-TV18. Kant discussed key aspects such as private sector investments in boosting infrastructure, government's commitment to fiscal discipline,  divestment, asset monetization, and the theme of inclusive growth.

Private sector encouragement

Highlighting the importance of government's fiscal discipline, Kant anticipated that it would lead to lower interest rates. He emphasised the potential for increased private sector access to resources at lower interest rates, fostering a conducive environment for significant private sector investments. He urged the need to put in private sector investments, particularly in infrastructure development.

"This would really mean that the government will borrow less, interest rates should come down, and the private sector should be able to access resources at a much lower rate of interest. We should be able to kick-start private sector investment in a much bigger way," Kant said.

Speaking about bringing in private sector in infrastructure, he said, "The government has done its bit in terms of capex spend, and my view is that we should now crowd in private sector investment into infrastructure as well. If you want productive efficiency in the economy, good private-public partnership, good operation, good design, good execution, you need to bring in the private sector in a big way."

Anticipating private sector boost post-election

Looking ahead, Kant predicted a surge in private sector participation in infrastructure spending after Lok Sabha polls this year. "If you have to look at a 2047 Vision, it's very clear that the private sector will have to play a far more critical role," Kant said on private sector's critical role in 2047 Vision.

Confidence in Government's fiscal discipline

Kant expressed confidence in the government's approach, emphasising it is committed to fiscal discipline. He commended the road map laid out in the interim budget, targeting a reduction in the fiscal deficit from 5.1 percent in the upcoming fiscal year to achieve 4.5 percent by 2025-26.

"I think it's a budget by a government which is demonstrating confidence that it will come back and also it's a budget by government which believes in fiscal discipline," said Kant.

Focus on reforms

Kant commended the government's focus on states and its push for reforms. He praised the allocation of Rs 75,000 crore linked to reforms, incentivising states to undertake infrastructural improvements. He said this approach could kick-start substantial infrastructure development.

"If you want the country to grow at rapid rates, then you need the states to improve, and a lot of reforms now need to be driven by the states. Putting in Rs 75,000 crore linked to reforms and giving money for infrastructure creation, if reforms are carried out, is a big message," Kant said.

He said this move could help boosting infrastructure in eastern India.

Speaking on R&D and mobile manufacturing, Kant said, "The focus on the Rs 1 lakh crore for R&D for the private sector will be critical. The finance ministry reducing the duties on items used for mobile manufacturing will make India very competitive in the global value chain."

Divestment and asset monetisation

Advocating for divestment and asset monetisation, Kant saw it as crucial for improving productive efficiency. He emphasised that the government should leverage the current favourable conditions to collect funds, projecting increased efficiency in the long term.

He said a lot more disinvestment should kick in the coming years and it is the best time to get the right values.

On government's role and disinvestment, Kant said, "The Prime Minister has been advocating that it's not the government's job to be in businesses except a few areas. Government should disinvest, government should do asset monetisation in a bigger way."

"I'm a believer that the private sector brings in greater productive efficiency in the long run. In the period of the last three to four years, the government has created a lot of infrastructure, but it should, in a transparent competitive manner, put it out for the private sector to bid and do operation and maintenance," Kant said on private sector participation for greater productive efficiency.

Also Read: FM Sitharaman bets on infra to spur growth, with eyes firmly on fiscal math

Infrastructure-led growth

The creation of roads, electric buses, rural houses, solar rooftop projects, and water connections, according to Kant, will naturally drive consumer demand in rural areas.

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Inclusive growth

Kant commended the government for its inclusive growth approach. He highlighted the success of schemes implemented at the grassroots level, leveraging the power of digitisation to minimise leakages and maximise the impact on citizens' lives.

"I've worked with this government for a very long time and this government actually believes in inclusive growth. It believes in cutting across all segments. I did the aspirational district programme with this government. It doesn't look at any particular section, it doesn't look at caste, it doesn't look at religion, it doesn't look at creed. It believes in saturating a scheme at at the grassroots level. So, if you're saturating all schemes at grassroots level you're making a dent on poverty. That's why the multi-dimensional poverty index shows that 25 crore people have been lifted above poverty line because you've actually taken all the government schemes and actually saturated them at grassroots level so the level of implementation has just been enormous," said Kant.

Kant added, "I mean it's been phenomenal level of execution on ground, at the grassroot level of all the central schemes and that has made a difference to the lives of citizens and I think we should continue to just do that have schemes which get fully implemented and the power of digitization has really helped us. The benefit of that has been just enormous in terms of a better quality implementation on ground because the leakages have been very few now. I mean there's just no leakage everything is reaching the actual beneficiary."