Budget 2023: A Boost To Infrastructure Projects
The capital investment outlay has been increased for the third year in a row by 33 per cent to INR 10 lakh crore, almost three times the outlay in 2019-20
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Finance minister Nirmala Sitharaman on Wednesday, presented her fifth Union budget in the Parliament. The government's last full budget before the general election has a strong impetus on boosting investments in infrastructure and productive capacity. The capital investment outlay has been increased for the third year in a row by 33 per cent to INR 10 lakh crore, almost three times the outlay in 2019-20.
"The total expenditure in budget estimate (BE) 2023-24 is estimated at INR 45,03,097 crore of which total capital expenditure is INR 10,00,961 crore. Budget 2023-24 reflects the strong commitment of the Union government to boost economic growth by investing in infrastructure development leading to an increase in capital expenditure by 37.4 per cent over the revised estimate (RE) 2022-23. Effective capital expenditure, at INR 13,70,949 crore in BE 2023-24, shows an increase of 30.1 per cent over RE 2022-23," quoted the budget document.
After the subdued period of the pandemic, the budget takes the lead to ramp up investment and job creation.
Increase in capital investment
The capital investment outlay stands at INR 10 lakh crore, this substantial increase will enhance growth potential, job creation, crowd-in private investments and provide a cushion against global headwinds. The direct capital investment by the Centre is complemented by the provision made for creation of capital assets through Grants-in-Aid to States. The 'Effective Capital Expenditure' of the Centre is estimated at INR13.7 lakh crore, which will be 4.5 per cent of GDP. Extending its support to state governments for capital investment, the Centre will continue the 50-year interest free loan to state governments for one more year, with an enhanced outlay of INR 1.3 lakh crore.
"The budget is progressive, growth-oriented that promises to put more disposal income in the pockets of the consuming class, particularly the middle class, while focusing on building a new India with its heavy focus on capital expenditure. The biggest positive, according to me, is the 33 per cent increase in overall capital expenditure outlay on Infrastructure development, which will take India towards become a true global powerhouse and help urbanise the hinterland. The government's decision to set up a INR 10,000 crore per year urban infrastructure development fund to be used for creating infrastructure in Tier-II and Tier-III cities will go a long way in boosting overall consumer confidence and also help generate employment," said Mohit Malhotra, chief executive officer, Dabur India Ltd.
Boost to railways, roads, logistics & regional connectivity
The newly established Infrastructure Finance Secretariat will assist all stakeholders for more private investment in infrastructure, including railways, roads, urban infrastructure and power, which are predominantly dependent on public resources.
With a capital outlay of INR 2.40 lakh crore, the Centre has manifold its railways budget allocation. "This highest ever outlay is about nine times the allocation made in 2013-14," said the finance minister in her speech. Besides, one hundred critical transport infrastructure projects, for last and first mile connectivity for ports, coal, steel, fertilizer and food grains sectors have been identified and will be taken up on priority with an investment of INR 75,000 crore, including INR 15,000 crore from private sources.
As many as fifty additional airports, heliports, water aerodromes and advanced landing grounds will be revived for improving regional air connectivity.
Urban infrastructure in Tier II and Tier III cities
States and cities will be encouraged to undertake urban planning reforms and actions to transform cities into 'sustainable cities of tomorrow'. This means efficient use of land resources, adequate resources for urban infrastructure, transit-oriented development, enhanced availability and affordability of urban land, and opportunities for all.
An Urban Infrastructure Development Fund (UIDF) will be established through use of priority sector lending shortfalls. This will be managed by the National Housing Bank, and will be used by public agencies to create urban infrastructure in Tier II and Tier III cities. "We expect to make available INR 10,000 crore per annum for this purpose," said the minister. Through property tax governance reforms and ring-fencing user charges on urban infrastructure, cities will be incentivized to improve their creditworthiness for municipal bonds. "All cities and towns will be enabled for 100 per cent mechanical desludging of septic tanks and sewers to transition from manhole to machine-hole mode. Enhanced focus will be provided for scientific management of dry and wet waste."
With an integrated and innovative approach, at least 50 destinations will be selected through challenge mode. In addition to aspects such as physical connectivity, virtual connectivity, tourist guides, high standards for food streets and tourists' security, all the relevant aspects would be made available on an App to enhance tourist experience.
"The focus of development of tourism would be on domestic as well as foreign tourists. Sector specific skilling and entrepreneurship development will be dovetailed to achieve the objectives of the 'Dekho Apna Desh' initiative," the FM said.
Under the Vibrant Villages Programme, tourism infrastructure and amenities will also be facilitated in border villages. States will be encouraged to set up a Unity Mall in their state capital or most prominent tourism center or the financial capital for promotion and sale of their own ODOPs (one district, one product), GI products and other handicraft products and for providing space for such products of all other states.
"This budget is one of the best budgets ever, truly inclusive and addresses the aspirations of every section of society. It empowers India's 1.4 billion people as drivers of the India story. I compliment the long term vision that was laid out in the budget speech as well as the many progressive announcements, like increased outlay for capital expenditure, incentives for the start-ups and MSMEs, green energy, a lower tax for the middle class and boost to tourism which will create massive jobs and reinforce India's position as the fastest growing major economy in the world," said Anil Agarwal, chairman Vedanta.