Economic Survey 2024 hails India’s infrastructure development; what will Budget 2024 offer?

Infrastructure development has been a key area for the economic development of the country. The government allocated ₹11.1 lakh crore to the infrastructure sector in the interim budget, highlighting their commitment to modernise infrastructure across various sectors.

According to the Economic Survey of 2024, road infrastructure saw the highest-ever private investment in FY24. Additionally, the government’s expenditure on developing road networks increased from 0.14% of the GDP in FY15 to 1% of the GDP in FY24. With the rapid development of road networks and highways across the country, the government also recorded its highest asset monetisation revenue of ₹40,314 crore.

Rail transport has been a key pillar of the government’s infrastructure development and is undergoing a major transformation. The railway sector has seen a 77% increase in capital expenditure over the past five years. Construction of new lines, new Vande Bharat trains, and major upgrades of railway stations are on the agenda for the sector. Railways also achieved their highest-ever production of locomotives and wagons in FY24. Moreover, railways have undertaken initiatives to be more sustainable and environmentally friendly.

Water transport has seen considerable growth in recent years, with rapid expansion in port capacity since 2014 and better connectivity. The government has ramped up its capital expenditure on ports, shipping, and waterways by 27% between FY23 and FY24. Following the launch of the Sagarmala project in 2015, 839 projects worth ₹5.8 lakh crore have been undertaken. Additionally, the government has taken initiatives to boost island development, shipbuilding, repair, and recycling.

The government has also dedicated considerable amounts to civil aviation, with a total capital expenditure of ₹72,000 crore in the past five years. As a result, the country saw the establishment and operationalisation of terminals at 21 airports in FY24.

The rise in power demand peaked at 243 GW in FY24, which was higher by 13%. The country is transitioning to green and renewable energy sources, and as of March 31, 2024, 190.57 GW of renewable energy capacity had been installed. Moreover, government initiatives have also focused on infrastructure development for water, sanitation, and water resource management.

Making housing affordable is another important aspect of the government’s plan to modernise the country’s infrastructure. Schemes such as Pradhan Mantri Awas Yojana-Urban (PMAY-U) and Affordable Rental Housing Complexes (ARHCs) have made large strides to make housing more affordable.

Budget expectations for the infrastructure sector

With the interim budget dedicating a substantial amount to infrastructure development, the government will likely focus on developing the country's road and railway networks. Additionally, the government narrowed its focus to further develop housing, renewable energy, and water infrastructure.

The Union Budget 2024 may also see a hike in the capital expenditure for City and Gas distribution.Digital infrastructure and the adoption of technology in the construction sector are areas of concern that may result in the government allocating funds to develop digital infrastructure and automation.

The infrastructure sector is also expecting more opportunities for private investment to enhance efficiency and safety. Moreover, the sector is looking for further initiatives to boost rural road and highway connectivity and schemes to support the ease of business.