Boosting infrastructure sector through increase in capital expenditure

The central government has significantly increased capital expenditure in recent years. The increase was partly done to help the economy after the turmoil caused by Corona. Rising capital expenditure also tends to bridge the gap between the country's infrastructure and logistics sectors as this has increased the cost of doing business and affected the overall competitiveness of Indian companies.

Recently in marine sector Rs. 23,000 crore projects have been presented. Under the new vision for this sector, in the next 25 years Rs. An investment of 75-80 lakh crores has been envisaged. The target is to quadruple the capacity of the country's ports by 2047. It also aims to make all major ports carbon free. Apart from this, there is a target of establishing 25 cruise terminals so that the country can also be made an important center in the field of ship recycling. The growing investment in the region also underlines how committed India is to the proposed Indo-West Asia-Europe Economic Corridor.

The vision is ambitious but developing maritime capabilities is crucial to increase trade and strengthen the country's image in the region in the years to come. This should not be underestimated. The field has improved significantly in recent years. The capacity of major ports has doubled in recent years while the turnaround time for large ships has also come down to less than 24 hours from 42 hours in 2014.

Sagarmala program is also looking into many aspects in this regard. However, India's infrastructure ambitions are not limited to developing maritime capabilities. A lot of money is also being invested in roads and railways. According to analytics firm Crisil, infrastructure spending will more than double in the next seven years, to about Rs 143 lakh crore. 37 lakh crore rupees will be spent on road projects and 25 lakh crore rupees on railways.

As far as finance is concerned, it is believed that most of the expenses will be borne by the central government. According to estimates, currently half of the infrastructure expenditure will be borne by the central government while the remaining half will come from states and the private sector. A significant increase in non-fossil fuel investment is also expected. This will help curb carbon emissions.

The pace of infrastructure development and the level of spending in the coming years will depend on many factors. The private sector is often reluctant to invest due to long project completion periods and low returns in many sectors. In such a situation, the government has to continue leadership.

However, the need for faster fiscal consolidation and increased demands on the budget will come in the way of sustained higher allocations. Capacity constraints hinder the completion of large projects, often resulting in additional costs and time. Action has to be taken regarding this also.

Encouraging the private sector will be necessary considering the fiscal constraints. Policy stability will also be necessary as the private sector invests in areas such as green energy to expand investment. Macroeconomic conditions and price stability also play an important role in containing costs. Low and stable interest rates will attract the private sector as most infrastructure investment is debt-based.