Why the Union Budget will be a turning point for the infrastructure sector

Union Budget 2022-23 continues to build on the vision drawn last year. Infrastructure, undoubtedly, being the engine to propel economic growth, this year’s announcements are quite transformational in approach. They enable job creation through infrastructure development and also synergises the movement of people and goods for enhanced productivity and economic growth. Towards this, a plethora of initiatives that are announced move in this direction.

The government has not hesitated to enhance the public capital expenditure. From INR. 5.54 lakh crore in the previous budget, an increase of 35.4%, to peg it at INR 7.50 lakh crore, we will see a lot of momentum in employment generation, along with benefits to large-scale manufacturing, micro, small and medium enterprises (MSMEs), infrastructure and the services sector. Alongside, transformation agenda is seen when key infrastructure sectors, such as roads, ports, airports, railways, waterways and urban transportation, are aligned with Gati Shakti. Seamless integration of these is needed to witness the planned transformation. 

A multifold increase in capital investment allocations to states to INR 1 lakh crore will definitely nudge the states to spend much more than before to improve infrastructure. This would be channellised for schemes like Gati Shakti, digitisation, urban reforms and rural road development. A welcome measure in this direction is the focus on urban reforms where the government recognises that urban development objectives cannot be achieved without a well-defined urban planning system. Encouraging holistic and systematic planning, perhaps, is the notion behind the announcement of introducing reforms in specific areas of building bye-laws, Town Planning Scheme and Transit-oriented Development. Alongside, the importance of building capacities has not been missed to be mentioned.

Water supply, housing and roads have always taken a centre stage in infrastructure announcements and this year, too, budgetary allocations have been increased manifold INR 60,000 crore for water supply that would cover 3.8 crore households; INR 48,000 crore to provide 80 lakh houses, both in urban and rural areas; and increase in road network by 25,000 km are measures which will boost the sector.

Focus on green infrastructure needs a special mention with the announcement of the sovereign green bonds. These bonds will be used to fund projects that are environmentally beneficial and will promote sustainability. However, this requires a deeper and wider financial market readiness and acceptance amongst the institutions for implementation.

Overall, the Union Budget 2022 is a direction towards economic recovery and growth where the impetus is to come from the infrastructure sector.