Budget 2024-25, core to the vision of Viksit Bharat, has made significant changes and announcements to the infrastructure sector. As per the Economic Survey for 2024, the private sector investment between 2019 to 2023 has remained less than a quarter of the total contribution. To encourage higher private participation and to optimize the working capital requirements, the Government has also proposed to promote Viability Gap Funding. On similar lines for an all-rounded development of state infrastructure, long term free loans are proposed for state governments. The budget highlights on Infrastructure sector includes many improvements and changes.

Announcements for development of plug and play industrial parks, industrial corridors, roads etc. are expected to create opportunities for generating employment, improving connectivity. And promote tourism which shall further boost the Indian economy. Policy announcements and tax proposals related to the infrastructure have been discussed in this alert.

Let us have a look at the Major Highlights:

Massive Government Investment in Infrastructure

The government is committed to driving economic growth through substantial investments in infrastructure. Over the next five years, significant fiscal support will be channeled towards various projects, with an allocation of ₹11,11,111 crore (3.40% of GDP) in the current fiscal year.

Empowering States for Infrastructure Development

To foster balanced regional growth, state governments will receive similar support for infrastructure projects based on their individual priorities. Long-term interest-free loans worth ₹1.5 lakh crore will be provided to facilitate resource allocation and project implementation at the state level.

The Union Budget 2024-25 outlined specific infrastructure initiatives to propel development in Bihar and Andhra Pradesh:

Bihar:

Bihar’s infrastructure will be bolstered by a new industrial node at Gaya, poised to stimulate industrial growth in the eastern region. Road connectivity projects with an investment of 26000cr have been announced for enhancement of expressways (Patna – Purnea, Buxar- Bhagalpur) and spurs connecting key cities, further supported by a new bridge over the Ganga. Additional investments in airports, medical colleges, and sports infrastructure are also planned, aiming to improve the state’s overall development. Furthermore, the budget promises expedited external assistance for capital investments from multilateral development banks.

Andhra Pradesh:

In line with the Andhra Pradesh Reorganization Act, the government has committed to funding essential infrastructure development in the Kopparthy and Orvakal nodes of the Vishakhapatnam-Chennai and Hyderabad-Bengaluru Industrial Corridors, respectively. This investment in water, power, railways, and roads aims to fulfill commitments made during the state’s reorganization and foster industrial growth in these regions.

Boosting Industrial Growth with “Plug and Play” Parks

The government is set to accelerate industrial growth by facilitating the development of 100 “plug and play” industrial parks across the country. These parks will be strategically located in or near cities, offering complete infrastructure and a hassle-free environment for businesses to set up operations quickly. The initiative will be implemented in partnership with state governments and the private sector, utilizing town planning schemes for optimal land use.

In addition, 12 new industrial parks will be sanctioned under the National Industrial Corridor Development Programme, further enhancing manufacturing capabilities and export potential. These combined efforts aim to create a conducive ecosystem for industries to thrive, attract investments, and generate employment opportunities.

Unlocking Private Sector Participation

The budget aims to incentivize private investment in infrastructure through viability gap funding and supportive policies. A market-based financing framework will be introduced to enhance efficiency and attract greater private sector capital.

Enhancing Rural Connectivity with PMGSY Phase IV

Pradhan Mantri Gram Sadak Yojana (PMGSY) Phase IV will focus on providing all-weather connectivity to 25,000 rural habitations with increased population, improving accessibility and facilitating economic development in rural areas.

Irrigation and Flood Mitigation Projects

Significant financial support will be allocated for irrigation and flood management projects across multiple states.

Promoting Tourism as a Growth Engine

The government will prioritize positioning India as a global tourist destination, focusing on job creation, investment attraction, and economic opportunities. Development of iconic religious and historical sites like the Vishnupad Temple Corridor and Mahabodhi Temple Corridor in Bihar will be undertaken. Additionally, tourism initiatives in Odisha will be supported, highlighting the state’s natural beauty and cultural heritage.

Additionally, the government will support reviving Nalanda University and developing Nalanda as a tourist center.

Conclusion

The Union Budget 2024 demonstrates a clear commitment to infrastructure development as a catalyst for economic growth. With substantial investments planned at both the national and state levels, the budget aims to bolster key sectors like transportation, industrial growth, and tourism. Additionally, the focus on public-private partnerships and streamlined approval processes signals a concerted effort to attract private investment and accelerate project implementation.