Presenting the Union Budget 2021-2022 in the Lok Sabha, Finance Minister Nirmala Sitharaman on Monday allocated total capital expenditure of Rs 5.54 lakh crore, 34.5% more than the previous budget, for the infrastructure sector. The budget estimate of capital expenditure for FY 2020-21 was Rs 4.12 lakh crore.
Fiscal deficit estimated at 6.8% of GDP for 2021-22. Follow live updates for more.
Announcing the Budget for physical and financial infrastructure, Sitharaman said that the manufacturing sector in India has to grow on double digits on a sustained basis. To attain this goal, “Production Linked Incentive Scheme (PLI) for an Atmanirbhar Bharat has been announced for 13 sectors,” she said. The government has allocated 1.97 lakh crores over five years starting this financial year for the scheme.
For the generation of employment, world-class infrastructure and to become globally competitive, seven textile parks will be established over 3 years, the finance minister said.
Sitharaman mentioned that the National Infrastructure Pipeline (NIP), which she introduced in December last year for FY 2020 to FY 2025, will be achieved in three ways- creating institutional structures, providing a big thrust of monetising assets and sharing capital investment between Centre and states.
For long-term debt financing, Sitharaman proposed a bill for the creation of a new Development Financial Institution and provided a sum of Rs 20,000 crore.
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She also said that a new scheme, named National Monetisation Pipeline, will be launched soon for the construction of new infrastructure.
“A National Monetisation Pipeline of potential brownfield infrastructure assets will be launched. An asset monetisation dashboard will also be created for tracking the progress and to provide visibility to investors.”
The next lot of airports will be monetised for operations and management concessions.
“Over 13,000 km length of roads at a cost of Rs 3.3 lakh crore has already been awarded under Rs 5.35 lakh crore Bharatmala project of which 3,800 km have been constructed. By March 2022 we’d be awarding another 8,500 and complete an additional 11,000 km of National Highway Corridor,” the finance minister said.
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The highway infrastructure work proposed includes building 8,500-km of highways by March 2022.
Sitharaman particularly mentioned West Bengal, Tamil Nadu, Kerala and Assam, the states expecting elections this year, and announced reformation for improving the transportation and infrastructure there.
She has also announced seven port projects worth more than Rs 2,000 crore investment.
The Union Housing and Urban Affairs Ministry was allocated Rs 54,581 crore for the next fiscal.
“I am providing a record sum of Rs 1,10,055 crores for Railways of which Rs 1,07,100 crores is for capital expenditure only,” Sitharaman said announcing the Budget for Railways.
Sitharaman said the allocation to rural infrastructure development has been increased to Rs 40,000 crore for the next fiscal from Rs 30,000 crore in FY21.
She also said the operation green scheme will cover 22 more perishable commodities while announcing the development of five major fishing hubs.
Sitharaman further said 1,000 more mandis will be integrated with the electronic national market and the agriculture infrastructure fund would be made available to APMCs to augment infrastructure facilities.
The agriculture infrastructure fund outlay will be increased to Rs 40,000 crore, and micro-irrigation corpus will be doubled to Rs 10,000 crore, she added.
Since the COVID-19 pandemic deepened troubles for the country’s infrastructure sector, the investment is expected to create job opportunities for the public, especially for people working in the unorganised sector. Sitharaman had earlier asserted that Budget for 2021-22 will sustain the momentum of public spending on infrastructure to ensure the economic revival.
As per NIP, nearly 7,400 projects have been included under this ambitious project within more than 30 sub-sectors out of which about 1,800 projects are already under development. Energy (24%), Roads (19%), Urban (16%), and Railways (13%) amount to over 70% of the projected capital expenditure during the said period. NIP currently comprises 39% investment by the Centre, 39% by states and 22% from the private sector.
According to Oxford economics, India currently spends around 4% of GDP on infrastructure while neighbouring country China spends over 6% of GDP. To meet the United Nations sustainable development goals, the government needs to spend at least 1.5% annually more in this sector.
As per the Economic Survey 2020-21, to achieve the GDP of $5 trillion by 2024-25, India needs to spend about $1.4 trillion on infrastructure over these years. The survey, which was tabled by Sitharaman on January 29 in the Parliament, also noted that to experience the next generation of infrastructure, the country will have to bring physical infrastructure and technology like the internet of things, automation together to maximize the efficiency of physical infrastructure.
“For a smooth and fast development, India needs adequate and timely investment in quality infrastructure,” it highlighted as the way forward.
