Leading private capital to social infra

In the Union Budget for 2025-26, Finance Minister Nirmala Sitharaman earmarked ₹11.21 trillion for infrastructure capital expenditure — just slightly above last year's ₹11.11 trillion.

- VINAYAK CHATTERJEE

The messaging was clear: In the last 25 years, core infrastructure (especially transport and energy) had matured, and other sectors now required attention.

Key among them is clearly the social infrastructure sector — health care, education, tourism, housing, sanitation, water, skilling, and digital. These sectors also have a direct impact and visibility among the voting public, in contrast to core infrastructure. The Budget Speech mentioned that central ministries are required to come up with a three-year pipeline of projects that can be implemented in public private partnership (PPP) mode. States are also encouraged to do so, and can seek support from the India Infrastructure Project Development Fund scheme to prepare PPP proposals. So, this is clearly the time to focus on social infrastructure.

Public spending on social infrastructure is constrained by the government's commitment to fiscal consolidation. Since most of these sectors cannot generate market returns on capital deployed, enabling private capital to step in becomes crucial. The government's role should focus on providing partnering and de-risking mechanisms, such as viability gap funding (VGF) for de-risking the otherwise non-remunerative PPP projects.