Nitin Gadkari stated that the government is facing financial limitations to fund infrastructure projects. The goal of making the Indian economy worth USD 5 trillion by 2024 seems a daunting task because of the persisting slowdown.
Lack of Finance
Road Transport and Highways Minister, Nitin Gadkari said at, CRISIL India Infrastructure Conclave, that it is difficult for the government to support all the infrastructural projects as they require heavy investments. Thus, the government will make efforts to establish a public-private investment model that will benefit both parties. Also, he asked the financial institutions to lend full support to the government policies to enhance the investment in infrastructure.
The agency estimates 7.5% average GDP growth required for economic growth of the country. CRISIL concluded that India requires an overall increase of 3.5 times in expenditure to meet infrastructural targets. The infrastructure expenditure must increase to Rs 235 lakh crore over the next decade with states contribution of Rs 110-125 lakh crore. It also suggested a resurgence of the GST framework and project development to open new avenues for investment.
The infrastructure projects just attracted Rs 98,100 crore as investment from the private sector over the last five years. This is despite the launch of the Hybrid Annuity Model (HAM). The policy aimed to encourage investment by government’s contribution of 40% of the total construction expenditure and the rest 60% in annuity payment along with interest. Moreover, the government appointed a panel headed by, Atanu Chakraborty, an economic affairs secretary, to increase the worth of the central government’s infrastructure projects to Rs 100 trillion by 2024-25.
States already contributed Rs 77 lakh crore that is 41% of the total for infrastructural development expenditure over the decade. About two-thirds of this was spent on transport, irrigation, energy, urban & housing, and water and sanitation. Maharashtra, Karnataka, Gujarat and Tamil Nadu are said to be the top-performing states in infrastructural development with large industrial bases.
The bottom line is that the government needs to provide some lucrative incentives for private investors.