Union Budget 2018: Infrastructure gets Rs 5.97 lakh crore boost
Finance minister Arun Jaitley calls infrastructure development a growth driver for the economy, says India will need Rs50 trillion for investment in roads, air, rail and inland waterwaysUpdated: Feb 02, 2018 00:20 IST
India will invest as much as Rs 5.97 lakh crore in creating and upgrading infrastructure in the next financial year, finance minister Arun Jaitley said on Thursday.
Starting with an allocation of around Rs1.81 lakh crore in 2014-15, expenditure towards infrastructure reached Rs4.94 lakh crore in 2017-18.“Our country needs massive investments estimated to be in excess of Rs50 lakh crore in infrastructure to increase growth of GDP, connect and integrate the nation with a network of roads, airports, railways, ports and inland waterways and to provide good quality services to our people,” Jaitley said.
To raise resources, state-owned firms will access the equity and bond markets. The budget also levied a Rs8 per litre road and infrastructure cess on imported petrol and diesel.
“The government and market regulators have taken necessary measures for development of monetizing vehicles like Infrastructure Investment Trust (InvIT) and Real Investment Trust (ReITs) in India. The government would initiate monetizing select CPSE (central public sector enterprises) assets using InvITs from next year,” Jaitley announced.
These measures will be operationalised given that India will face a $526 billion infrastructure investment gap by 2040, according to the latest Economic Survey. “Reserve Bank of India has issued guidelines to nudge Corporates to access bond market. SEBI (Securities and Exchange Board of India) will also consider mandating, beginning with large Corporates, to meet about one-fourth of their financing needs from the bond market,” he added.
As part of the new integrated infrastructure planning model, the NDA government unveiled the largest-ever rail and road budget of Rs1.48 lakh crore and Rs1.21 lakh crore, respectively in 2018-19.
Jaitley said that during 2017-18, the cabinet approved the ambitious Bharatmala (roads) scheme to strengthen the roads network, for which the government will raise Rs5.35 lakh crore as equity from the market. India needs funds for ambitious plans such as Sagarmala (ports) and Bharatmala to improve its transport infrastructure.
“To raise equity from the market for its mature road assets, NHAI will consider organising its road assets into Special Purpose Vehicles and use innovative monetizing structures like Toll, Operate and Transfer (TOT) and Infrastructure Investment Funds (InvITs),” Jaitley said.
While the total investment for Bharatmala is estimated at Rs10 lakh crore — the largest ever outlay for a government road construction scheme — an additional Rs8 lakh crore of investments will be needed for Sagarmala until 2035.
“We are confident to complete National Highways exceeding 9000 km length during 2017-18,” Jaitley said.
The country has a road network of 3.3 million km, the second largest globally.