Get All Access for $5/mo

Infrastructure Gets a Big Boost, Expecting High Growth Trajectory Funding of these projects involves heavy capital expenditure and long gestation period and finding resources for the same is a crucial and challenging issue

By Jyoti Prakash Gadia

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Pixabay
Representational

Union Budget 2021 has laid significant importance on the expenditure in the infrastructure sector. The role of spending on infrastructure sector, as a creator of multiplier effect for growth, is well recognized. The infrastructure sector which includes roads, bridges, ports, power and airports, etc., has direct positive impact on construction and employment, besides increase in demand for industries such as iron and steel cement, etc.

The government has envisaged a national infrastructure pipeline (NIP) of over INR 110 lakh crore. This originally planned around 6,800 projects and in the recent budget additional projects have been announced to take the tally to more than 7,400. Fresh highway projects in select states such as Tamil Nadu, Kerala and West Bengal have been announced, with increase in expenditure of over 34 per cent. Further additional investments in airports, ports, railways, dedicated freight corridor, water ways and oil and gas projects, etc., have been announced.

Funding of these projects involves heavy capital expenditure and long gestation period and finding resources for the same is a crucial and challenging issue. The budget has addressed this in a bold and defining manner. Monetization of existing completed/running projects and disinvestments are going to be used as major source of funds. This is proposed through the innovative route of creation of INVITs (infrastructure investment trusts). As announced in the budget, in the roads sector, NHAI and in power transmission sector PGCIL (Power Grid Corporation of India) shall have separate INVITs. These work like mutual funds under the control of SEBI and arrange resources through retail and institutional investors.

Another important source of raising additional resources, announced in the budget, is through the setting up of a separate, DFI (development financial institution) with initial Equity of INR 20,000 crore. Total resources of around INR 5 lakh crore are expected to be raised through this in the course of next 3-5 years giving a fillip to the infrastructure sector. Special expertise to appraise and monitor infra projects is essential and this objective can also be achieved through this DFI.

In addition, conditionalities for foreign debt funds are proposed to be relaxed and modifications in IDFs (infrastructure debt funds) also have been proposed in the budget.

Accordingly, drastic and well thought out steps have been proposed to create a success story in development and funding of infrastructure sector to take the economy towards the revival path and a high growth trajectory.

All these steps are however long term in nature and effective implementation shall be crucial.

Jyoti Prakash Gadia

Managing Director, Resurgent India

News and Trends

"45% of All Ongoing Hydropower Projects in India are Ours": Patel Engineering

Patel Engineering reported a turnover of INR 4,400 crore in the last fiscal year, with a projected 10 per cent growth for the current year.

News and Trends

PB Fintech to Enter Healthcare Sector with New Wholly-Owned Subsidiary

The new entity, which is expected to be named either 'PB Healthcare Private Limited' or 'PB Healthcare Services Private Limited,' will focus on providing healthcare services.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Side Hustle

'Hustling Every Day': These Friends Started a Side Hustle With $2,500 Each — It 'Snowballed' to Over $500,000 and Became a Multimillion-Dollar Brand

Paris Emily Nicholson and Saskia Teje Jenkins had a 2020 brainstorm session that led to a lucrative business.

Leadership

Should I Stay or Should I Go? 8 Key Points to Navigate the Founder's Dilemma

Here are eight key signs that help founders determine whether to persevere or let go.

Science & Technology

5 Rule-Bending AI Hacks to Make Your Mornings More Productive and Profitable

By 2025, AI will transform productivity by streamlining workflows and cutting costs. Major companies like Microsoft, Google, and OpenAI are leading the way, advancing AI into "Phase 3," where tools act as digital assistants. Discover 5 AI hacks to boost efficiency and redefine your daily routine.