The government’s infrastructure push is welcome. But more clarity is needed over financing.
On Tuesday, Finance Minister Nirmala Sitharaman revealed an aspiring infrastructure agenda, announcing projects worth 102 lakh crores, to be implemented by 2024-25. As infrastructure investment (as a proportion of GDP) has fallen sharply over the twelfth five year plan period (2013-17), attempts to revive the investment cycle are welcome.
However, considering that infrastructure investment over the past six years adds up to 51.2 lakh crores, doubling this over the next six years is a tall order. These are not normal times. The economy has slowed down considerably.
The financial system remains suffocated. And a broad-based pickup growth is unlikely in the near term. Reviving the investment cycle requires more than just aspiring targets. What is needed is a carefully thought-through road map. It is set that the Central and state government will account for 39 per cent each for the projected investment, with the private sector expected to make up the balance.