INTERIM BUDGET: CONTINUITY OF GROWTH

India’s Interim Budget for the Financial Year 2009-10 by the Finance Minister on February 16, heralds the government’s spotlight on Infrastructure Development as a means to counter the prevailing economic woes. The minster responded to an urgent demand for new infrastructure, announcing that 9% of the country’s GDP will be spent on infrastructure by 2014, from the current 5%. Estimates suggest that a third of this investment will come from private companies, paving the way for unprecedented investment opportunity in a sector that has the appetite to absorb as much as $500 billion over the next five years.

Extending its visible hand to the sector, encouraging the public-private partnership (PPP) model, the government has already cleared 54 Central Sector infrastructure projects with an outlay of $14 billion in the financial year 2008-09 and spent an equal amount on 37 infrastructure projects so far while other 23 projects amounting to $6 billion approved for viability gap funding. Further, the corpus for the Rural Infrastructure Development Fund (RIDF) was increased to more than three times to $4 billion over the last five years.
However these initiatives pale when compared to China that spends about 11% of its GDP for infrastructure development, indicative of the scope and extent of scaling up needed in infrastructure development in India to match global standards.