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February 1, 2024: Finance Minister Nirmala Sitharaman presented the Interim Budget for 2024-25 in Parliament today, outlining a promising vision for the infrastructure sector. The government aims to bolster the industry by proposing a fourth consecutive year of capital expenditure increase, amounting to 11.1% at Rs 11.11 lakh crore. This surge represents 3.4% of the Gross Domestic Product (GDP). Notably, significant announcements were made to enhance railway infrastructure and airports, encompassing plans for three economic railway corridors and various other strategic infrastructure initiatives.
Proposal for three major railway corridors
The Indian Railways received a major push as the finance minister announced the government’s plans to set up three economic railway corridors aimed at reducing congestion and logistics costs in the country.
Further, the government proposed that around 40,000 trains operating under the Indian Railways will be upgraded to Vande Bharat Trains.
The finance minister said three corridors will be set up, including a corridor for energy, mineral, and cement, another to enhance port connectivity corridor, and a third to decongest the high traffic density corridors.
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Focus on airport expansion
The budget speech by the finance minister highlighted the government’s plans for airport infrastructure development in India. Indian carriers have proactively placed orders for over 1,000 new aircraft. The expansion of existing airports and development of new airports will continue expeditiously, the finance minister said in her speech. Further, the government will take steps to boost air connectivity in non-metro areas of the country and ease international air trade.
The finance minister highlighted that the number of airports has doubled to 149 in the past 10 years. Rollout of air connectivity to tier II, III cities under the Ude Desh ka Aam Naagrik (UDAN) scheme has been widespread as 517 new routes are carrying 1.3 crore passengers, she added.
The UDAN Scheme, a part of Prime Minister Narendra Modi’s National Civil Aviation Policy (NCAP), is a regional connectivity scheme launched by the government in October 2016. The scheme aims to provide affordable air connectivity to cities in regional and remote parts of the country.
Metro and Transit-oriented development
The interim budget 2024-25 also focused on the government’s plan to enhance metro connectivity and transit-oriented development. “We have a fast-expanding middle class, and rapid urbanisation is taking place; metro rail and Namo Bharat can be the catalyst for the required urban transformation. Expansion of these systems will be supported in large cities focusing on transit-oriented development”, the finance minister said.
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Industry views on interim budget 2024-25
According to several industry experts, the interim budget 2024-25 continues to outline the government’s vision to boost infrastructure and achieve economic growth in the coming year.
Ashish Puravankara, managing director, Puravankara Limited, said, The interim budget presented today is consistent with previous measures and will continue to scale up investment in infrastructure and transit-oriented development. The significant rise in the infrastructure outlay to Rs 11.11 lakh crore for FY25, which amounts to 3.4% of the GDP, represents promising progress towards robust nation-building. The government’s focus will lead to strong growth, contributing towards the dream of a developed India by 2047, assisted by ‘GDP’ – Governance, Development and Performance.
The financial prudence being displayed in bringing down the fiscal deficit to an estimated 5.1% is fantastic. It shows that the government is committed to strengthening the economy, controlling inflation and, therefore, interest costs while maintaining growth with investments in infrastructure.”
Dr Samantak Das, chief economist and head of research & REIS, India, JLL, said, “Fiscal prudence with continuity of focus areas – housing and infrastructure in the interim budget sets the tone for the future. The infrastructure capex outlay augmentation to 3.4% of GDP will have a multiplier effect. The focus on creating multi-modal connectivity through new rail corridors, airport and road infrastructure enhancement will support the overall logistics ecosystem while fostering new growth corridors.
The announcement on creating and enhancing tourist centres and a ranking framework based on support infra creation will bring hospitality-related development in sharp focus while creating the need and opportunity for associated RE development (holiday homes, second homes, commercial and social infrastructure) in such locations. The same holds true for improving island tourism.”
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