Stepping Back

The Budget seeks to open fresh funding avenues for investing in infrastructure as the government’s appetite for spending has waned.

- Sumant Banerji and Rashmi Pratap

WHILE THE FIRST stint of the Modi government between 2014 and 2019 was a period of relentless public spending on infrastructure, Union Budget 2019, which heralded the beginning of its second stint, is a marked departure from the past with firm focus on finding more avenues to get funds for infrastructure projects. There is no surprise here. Less-than-expected GST receipts, higher expenditure on social sector schemes and less benign crude oil prices have restricted the government’s ability to spend more.

In its first Budget in 2014, the Modi government had allocated a record 1,91,000 crore for infrastructure, which went up significantly to 5,97,000 crore by 2018/19. The ability to raise more resources has clearly waned. Finance Minister Nirmala Sitharaman referred to this on more than one occasion during her over two-hour long Budget speech even as she mentioned a number of instruments for tapping private sector investment in infrastructure. “It is estimated that railway infrastructure will need an investment of 50 lakh crore between 2018 and 2030. Given that the capital expenditure outlay of railways is 1.5-1.6 lakh crore per annum, completing even the sanctioned projects will take decades,” she said. “It is, therefore, proposed to use Public-Private Partnership to unleash faster development and completion of tracks, rolling stock manufacturing and delivery of passenger freight services.”