Budget should go beyond the hard buildout

The budgetary outlay has increased almost six times in the past six years.

Flash back to 2022, when India was still trying to find its feet after the pandemic. It may have seemed ambitious then, but the budget for that fiscal set the tone for ushering the economy towards the $10 trillion mark in the coming decade.

Subsequent budgets have continued to pump-prime the economy through increased capital outlay for infrastructure, to ensure the country attains this milestone.

The trend is expected to continue this time as well. While higher capex will be the larger theme, new focus areas are expected to emerge.

The intense focus on hard infrastructure buildout in railways and roads should continue. These twin transportation modes have garnered ~50% of the total outlay in the past and we foresee a similar trend this year.

One significant announcement we can expect is an enhanced Bharatmala Pariyojana. Phase 1 was completed recently. The government has not only allocated funds but also spent much of the Phase 1 allocation of Rs 5.35 lakh crore.

Given this success, we could probably see a larger and more ambitious programme being rolled out, which encompasses a spectrum of heads as detailed below.

Ensuring safety and convenience

The buildout of roads has progressed at a healthy pace, with 30-35 km being constructed daily. However, the number of accidents and resultant fatalities have only increased.

The government may create a separate fund with specific targets on these aspects of road construction, with focus on passenger amenities at regular intervals, rest spaces for truckers, quick-response medical assistance, etc.

There will be similar focus on Railways, which is expected to garner higher allocation than roads.

The underlying focus would be on enhancing safety and security of passengers. While the budgetary outlay has increased almost six times in the past six years, focus on safety has gained traction only in the past couple. Hence, we could see expedited deployment of the collision avoidance system with an eye on improving safety.

Augmenting rural infrastructure

Over the past five years, the focus has been on enhancing connectivity, mainly through augmentation of national highways. While this is expected to continue, the government needs to spread the road network further by looking at increased regional development and buildout.

Follow Budget 2024 Expectations LIVE 

As a thumb rule, contribution to GDP swells 3x for every rupee spent on infrastructure.

Developing infrastructure in rural areas will lead to job creation, which is probably at the top of the government’s agenda. Hence, while creation of hard infrastructure such as roads in the rural areas will continue, we could see a sharper focus on support infrastructure such as warehouses, storage facilities for agricultural produce and cold chains, among others.

Given the fiscal headroom, social infrastructure such as hospitals, schools and colleges could also come under the spotlight.

Enabling green infrastructure buildout

In 2023, CRISIL had stated that of the total projected infrastructure spend between fiscals 2024 and 2030, ~Rs 36.6 lakh crore was expected to be disbursed towards green investments, a 5x rise over fiscal 2017-2023.

Integration will likely happen across the value chain – from incorporating sustainability-related aspects within the project design to adopting best practices for ensuring a safe work environment at sites to establishing responsible sourcing of materials. A dedicated fund in this budget will go a long way in moving the needle on this theme.

The momentum on increased outlay is expected to continue; it may even accelerate. Inclusion of services and softer aspects of infrastructure coupled with safety are expected to be highlighted, with incentives for institutions that can demonstrate results in these important areas.

Creation of green and climate-resilient infrastructure has also become a necessity rather than a mere feel-good factor.

Beyond these three themes, some notable mentions would be asset monetisation across all infrastructure sectors, call for greater private sector participation in creating greenfield infrastructure and continued focus on Gati Shakti programme aimed at faster and quicker infra creation.

By focusing on hard and soft infrastructure, especially in rural areas, the government would be able to once again accelerate the virtuous cycle of growth and employment.