Govt to arrest slowdown through Rs 100 lakh cr on infra

In a bid to give a further push to the slowing economy, the Centre Saturday decided to begin spending from Rs 100 lakh crore proposed in this year's Budget for building country's infrastructure in the next five years.

The money has to be spent on creating world class infrastructure in rail, road, highways and other projects, which contribute to economic growth along with generating employment opportunities in the next five years.

The Union Budget for 2019-20 had proposed an expenditure of Rs 100 lakh crore on infrastructure in the next five years to 2024. A major part of the fund is expected to be raised through issuing infrastructure bonds and off-Budget resources.

To this end, the Ministry of Finance announced creation of a task force under the chairmanship of Economic Affairs Secretary Atanu Chakraborty to draw up a national infrastructure pipeline plan from 2019-20 to 2024-25. The task force will chalk out projects costing above Rs 100 crore each and spending plans on them.

It will submit its report to Finance Minister Nirmala Sitharaman next month.

"To achieve the GDP of $5 trillion by 2024-25, India needs to spend about $1.4 trillion (Rs 100 lakh crore) over these years on infrastructure," the Ministry of Finance said.

The announcement at a time when the economy has slowed to a six-year low of 5% is indicative of government upping its capital expenditure and providing a substitute for an almost muted private sector investment.

Analysts said a capital investment of Rs 100 lakh crore could generate over 10 crore jobs in the next five years besides creating new infrastructure and upgrading the existing ones.

On Friday, the Centre had asked its top public sector enterprises and infrastructure ministries to increase their capital expenditure and help create demand for cement, steel, electricity, coal, gas and other core sector activities.

The demand for key infrastructure segments such as cement and steel has come down in the wake of a prolonged consumption slowdown, which is evident in India's industrial production growth.

The committee that includes senior officials of Niti Aayog, finance ministry and secretaries of administrative ministries would identify technically feasible and financially viable infrastructure projects that can be initiated this year.

The panel would also list the projects that can be included in the pipeline for each of the remaining five years between 2021-24 and guide the ministries in identifying appropriate sources of financing. It would also suggest measures to monitor the projects so that cost and time overrun is minimised.

"The task force will also enable robust marketing of the pipeline of projects requiring private investment through the India Investment Grid (IIG), National Investment & Infrastructure Fund (NIIF)," the ministry said.