Private sector participation may not pick up right away due to the lockdown and its impact over the next few months
The government should prioritize and complete ongoing projects as it will lead to some revival in economic growth, say experts
NEW DELHI :
The government will have to do the heavy lifting as far as capital expenditure is concerned, experts said, after a panel led by former economic affairs secretary Atanu Chakraborty proposed projects requiring ₹111 trillion investment during 2020-25 to develop social and economic infrastructure.
While the experts said infrastructure creation is a catalyst for economic growth, private sector participation may not pick up immediately due to the lockdown and its impact over the next few months.
These projects, under the National Infrastructure Pipeline (NIP), will see the Centre and states contribute 39% and 40% respectively toward costs, with private sector contributions making up the rest.
According to N.R. Bhanumurthy, professor at National Institute of Public Finance and Policy, the government should prioritize and complete ongoing projects as it will lead to some revival in economic growth. “If the government is able to complete some existing projects in a year’s time, that itself would work as a stimulus for the economy," he said.
Besides, there is a also a need for states to make public expenditure efficiently as just allocating funds may not be enough, Bhanumurthy said,
Chief policy adviser at EY India D.K. Srivastava said that while the pipeline is a medium-term plan, the government must spend what has already been budgeted, which too would act as a stimulus. “Spending on infra will boost employment. The government should not curtail expen-diture on this front and cut revenue expenditure," he said.
The panel was set up after Prime Minister Narendra Modi last year promised to roll out an ambitious infrastructure push worth ₹100 trillion over the next five years to make India a $5 trillion economy. Chakraborty submitted the report to finance minister Nirmala Sitharaman on Wednesday.
The report called for robust private sector participation in the infrastructure sector and optimal risk sharing between public and private sector entities, so that the risks are allocated to entities best equipped to handle them. It pointed out infrastructure trends in the country and captures sector progress, deficits and challenges.
In addition to updating existing sectoral policies, the report spelled out reforms to scale up and propel infrastructure investments in various sectors.
It suggested ways and means of financing the NIP through deepening corporate bond markets, including those of municipal bonds, setting up development financial institutions for the infrastructure sector, accelerating monetization of infra assets, land monetization, among others.
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