Govt should boost private sector financing in infrastructure for continuous growth says Economic Survey 2024

It would also be of use to policymakers if the consolidated statistics are recorded with the public and private sector bifurcation, the Economic Survey said.

The Economic Survey of 2023-24 tabled on July 22 highlighted that the central government needs to come up with a new way to increase private sector financing in the infrastructure segment in India and also tap new avenues to mobilise resources.

"For India to continue down the path of building quality infrastructure, a higher level of private sector financing and resource mobilisation from new sources will be crucial," the survey said.

India has invested a total of Rs 53.9 lakh crore trillion on infrastructure between fiscal years 2020-2024, the survey highlighted.

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The Economic Survey stated that in 2023-24, the capital expenditure has grown by 12 percent year-on-year to Rs 15.8 lakh crore with a focus in infrastructure-intensive sectors like roads and highways, railways, and housing and urban affairs.

“This increase is particularly substantial given the high year-on-year growth in capital expenditure registered during the corresponding period of the previous year as well,” the survey said.

The survey infrastructure-creation efforts in India are predominantly public sector-led.

"Between the fiscal year 2019 and 2023, the Central and State Governments contributed to 49 percent and 29 percent of the total investments, respectively, while the private sector contributed 22 percent," the survey said.

The survey said that not only will the central government need to come up with policy interventions to boost private capital expenditure but will also need support from the state government.

"Facilitating this would not only require policy and institutional support from the Central Government, but State and Local Governments would have to play an equally important role," the survey said.

The survey said that initiatives like pooled financing mechanisms for municipal projects, specialised municipal intermediaries, asset recycling programs, tax increment financing and land sales and development rights, have been successful in international markets.

The Economic Survey said there is a need to improve data capture and reporting mechanisms for investments in infrastructure across instruments and sectors as well as its composition across different projects on a granular level.

"Major strides have been made since then (The Rangarajan Commission Report on Infrastructure Statistics (2001 ) to collect data on policy direction, institutional strength, project performance and monitoring. However, data gaps persist in some key areas," the Economic Survey said.

The survey said that existing databases fall short on assessing the demand for infrastructure and tracking the utilisation of facilities built in the sub-sectors.

It added that current databases include the National Infrastructure Pipeline, the PPP India Portal, heads of budget accounts and reports of the respective infrastructure-focused ministries, fund flows of Central and State Public Sector Enterprises and financial flows to the infrastructure sector from Non-Governmental institutions such as Banks, NBFCs and the Capital Markets.

"However, when attempting to assess infrastructure spending and development across time based on the Harmonized List (HML) classifications for a macro-level overview, these databases fall short due to the lack of consistency in the frequency of data collection, lack of uniformity in the methodology followed and cross fund flows between institutions which can lead to double counting," the survey.

This also makes comparing data from different sources difficult the survey said.