Centre Facing Financial Crunch To Fund Infrastructure Projects: Nitin Gadkari
Accepting that the government is facing a financial crunch, Road Transport and Highways Minister Nitin Gadkari on Tuesday, November 26, encouraged domestic companies to invest in infrastructure projects to boost a slowing economy.
“One thing is clear that the government is facing financial constraints and it is very difficult for any government to invest in all these sectors (infrastructure). That is why this is alternative with the help of public-private investment,” Gadkari said at credit rating agency CRISIL’s India Infrastructure Conclave in New Delhi.
Gadkari added that India needs to look for an infrastructure investment public-private partnerships model that is lucrative for the investors as well as the lenders.
“We need to motivate the Indian industry, investors to invest more and we need positive support from financial institutions such as banks, insurance companies. We have to identify more sectors for public-private investment,” Gadkari said.
The comments come at a time when the government aims at making India a $5 trillion economy by 2024. In September, the finance ministry had announced setting up of a task force headed by economic affairs secretary Atanu Chakraborty to prioritise the rollout of central government’s infrastructure projects worth ₹100 trillion by 2024-25.
Crisil in its annual infrastructure yearbook said that states need to increase their spending 3.5 times over the next decade to meet the infrastructure goals.
The agency estimated that India needs infrastructure spending of ₹235 lakh crore over the next decade, along with average GDP growth of 7.5 per cent. States will have to contribute to about ₹110-125 lakh crore for this infra outlay.
While Maharashtra, Karnataka, Tamil Nadu and Gujarat are the “front-runners” with the large industrial base, states such as Andhra Pradesh, Kerala, Punjab, Haryana and Telangana are expected to buck up.
The six “climber states” – Bihar, Madhya Pradesh, Odisha, Rajasthan, Uttar Pradesh, and West Bengal have witnessed a steep capital expenditure growth in the last five years, despite their low per capita incomes.
States already constitute 41 per cent of the overall infrastructure spending of ₹77 lakh crore, including public and private spending in this decade. Five sectors, transport, irrigation, energy, urban & housing, and water and sanitation accounted for two-thirds of states’ spending so far.
“Some of these sectors, which come under the purview of states, have burgeoning infrastructure deficits and will need big investment leaps to plug the gaps,” the agency said.
Crisil also recommended a revival of the GST framework, asset monetization and new avenues of commercial financing and project development to help states perform better.