India is spending 1.7% of its GDP on infra upgrade to achieve its ambitious dream of a USD 5 trillion economy

Realizing its ambition of becoming a USD 5 trillion economy by 2025-26 from the current 3.5 trillion, India is scaling up its infrastructural makeover, spending a whopping 1.7 percent of its GDP on transport infrastructure this year- twice as much as America and most European countries.

Looking to provide a strong impetus to job creation and boost economic activity amid a global slowdown, the government of India has hiked capital outlay on infra to USD 122 billion for the fiscal year beginning April.

As per official data, the railway’s capital expenditure is nine times higher than in the financial year 2013-14. The allocated Rs 2.4 lakh crore for railways capital expenditure will mostly be spent on building tracks, new coaches, electrification, and developing facilities at stations.

Similarly, capital expenditure on roads has jumped by 36 percent to Rs 2.7 lakh crore for 2023-24. In addition to this, a focus has been put on reviving 50 additional airports, heliports, water aerodromes, and advanced landing grounds for improving regional air connectivity.

The government has identified 100 critical transport infrastructure projects for last- and first-mile connectivity for the ports, coal, steel, fertilizer, and food grains sectors, which will be taken up on priority, with an investment of Rs 75,000 crore, including Rs 15,000 crore from private sources.

The road and rail sector in the financial year starting in April will account for nearly 11 percent of central government capital spending, up from 2.75 percent in 2014-15.

The increased investment towards transport infrastructural upgrades is to bring down the logistics cost in India from the current 14% of GDP today to 8% by 2030.

In addition to increased expenditure on infrastructure, the government is also speeding up bureaucratic reforms. Financial powers are being delegated and red-tapes cut.

Infrastructure spendings so far…

The core of the infrastructure spending spans from the first indigenously designed and built Vande Bharat Express-that runs at a speed of 160 kmph, two new freight corridors between Mumbai and Delhi and between Punjab and West Bengal, electrified tracks allowing goods to be moved at a faster speed, adding 10,000 kilometers of road highway length a year, increase number of airports, increasing electricity generation and deeper penetration of broadband internet connectivity.

In the last eight years, India has added 50,000 km to the national highway, which is twice as much as it managed in the previous eight. The length of the rural road network has increased from 3,81,000 km in 2014 to 7,29,000 km in 2023.

The number of airports has also doubled to 148 over the same period, while domestic passengers have risen from 60 million in 2013 to a peak of 141 million in 2019 before the pandemic. In the coming 10 years, passenger traffic is projected to rise to 400 million.

While electricity generation capacity has grown by 22 percent, renewable energy capacity has nearly doubled in the five years to 2022 with the country being globally 4th largest in renewable energy installed capacity.

Broadband connections have jumped from 61 million in 2014 to 816 million last year. A mobile-based payment system launched in 2016 accounts for over half of digital transactions.

PM Narendra Modi’s faith in the transformative power of new transport infrastructure is believed to be well-judged and is considered to be a tide that will lift all the sections of India.

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