Budget 2022 | Infrastructure spending key to economic recovery, says Grant Thornton Bharat's Padma Priya J

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To revive the Indian economy, which is reeling under the impact of COVID-19, the central government has been announcing a spate of initiatives in the infrastructure sector throughout the past year. In the upcoming Union Budget 2022-23, the government is expected to increase the capital outlay for the sector to provide impetus to the economy, says Padma Priya J, Partner and Infra Expert, Government, Grant Thornton Bharat.

"Given the current gradual recovery from the second wave, the economic growth forecast for our country is being cut to 8.5 percent in FY2022-23. Uncertainties about the economic outlook seem elevated. Considering the lower expenditure during the year compared to the budgeted estimates, it is natural to consider possibilities of lower budgetary allocations for the ministries," Padma Priya noted.

"However, the need to accelerate economic growth would drive the government to increase the capital outlays especially in the infrastructure sector as this sector is an engine for economic growth," she observed.

Prime Minister Narendra Modi, in his Independence Day 2021 speech, announced the Rs 100 lakh crore 'Pradhan Mantri Gatishakti National Master Plan' initiative to bring employment opportunities for the youth and to help in holistic infrastructure growth.

Gatishakti will help local manufacturers turn globally competitive and also develop new economic zones. India imported mobile phones worth USD 8 billion seven years ago and is now exporting USD 3 billion worth of mobile phones, the prime minister said.

"We expect the government to bring in more mechanisms to nudge the state governments to increase their spend on the creation of infrastructure. Also, mechanisms or guidelines and more details are required to be announced for the new scheme announced that supports public bus transportation services with a funding of Rs 18,000 crore," Padma Priya stated.

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"To move towards a 100 percent electrification of broad gauge routes, it is expected that the outlay towards this will increase. With the thrust on urban transportation, there could be more metro rails added to the list where counter-part funding would be provided, " she added.

Currently, the total Broad Gauge network for electrification is 64,689 RKM, out of which more than 42,600 RKM has already been completed i.e. more than 66 percent of railway lines are already electrified. By March 22, major resource earning states for Railways like Odisha, Madhya Pradesh, Chhattisgarh, Jharkhand, Himachal Pradesh, Haryana and Bihar is expected to be fully electrified, says a report.

In recent years, there has been a renewed focus on transforming railways to make them a desirable option for long-distance transport as well as urban public mobility, wherein Railway electrification has a big role to play, adds the report.

In the Union Budget 2021-22, Indian Railways received a record outlay of Rs 1,10,055 crore, of which Rs 1,07,100 crore is for capital expenditure.