In previous year (2021), the budget’s focus was on the strengthening of health infrastructure, speedy implementation of the vaccination programme, and the nation-wide resilient response to the COVID-19 pandemic. The current union budget 2022 lists further reforms, at cross-sectoral level and for specific target areas, for development and financing of infrastructure projects in the country.
In this insight, we cover important policy initiatives, emerging financing modalities and key sectors set to see increased private sector participation/ PPPs in India.
Infrastructure in Budget 2022-23 - key figures
A. Key Policy Initiatives
A1. PM Gati Shakti - Multimodal Connectivity
PM Gati Shakti - National Master Plan introduced for Multimodal Connectivity in October 2021. This is a digital platform that aims to bring 16 Ministries including Railways and Roadways together for integrated planning and coordinated implementation of infrastructure connectivity projects.
PM GatiShakti is a transformative approach for economic growth and sustainable development. The approach is driven by seven engines, namely, Roads, Railways, Airports, Ports, Mass Transport, Waterways, and Logistics Infrastructure.
These engines are supported by the complementary roles of Energy Transmission, IT Communication, Bulk Water & Sewerage, and Social Infrastructure.
The approach is powered by Clean Energy and Sabka Prayas – the efforts of the Central Government, the state governments, and the private sector together – leading to huge job and entrepreneurial opportunities for all, especially the youth.
A2. Capacity Building for Infrastructure Project Development
With technical support from the Capacity Building Commission which was constituted through the Gazette of India on 1 April 2021, central ministries, state governments, and their infra-agencies will have their skills upgraded.
This will ramp up capacity in planning, design, financing (including innovative ways), and implementation management of the PM GatiShakti infrastructure projects
B. Financing for Infrastructure
B1. Key Institutions
The National Bank for Financing Infrastructure and Development (NaBFID) established in Mar 2021 and National Asset Reconstruction Company established in Sept 2021, and have commenced their activities
B2. Sovereign Green Bonds
As a part of the government’s overall market borrowings in 2022-23, sovereign Green Bonds will be issued for mobilizing resources for green infrastructure. The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy.
B3. Financing Modalities
For financing the infrastructure needs, the stepping-up of public investment will need to be complemented by private capital at a significant scale.
Measures will be taken to enhance financial viability of projects including PPP, with technical and knowledge assistance from multi-lateral agencies.
Enhancing financial viability shall also be obtained by adopting global best practices, innovative ways of financing, and balanced risk allocation.
C. Infrastructure Sectors in Focus
Transport is set to see lot of PPP activity, across roads & railways; along with emerging sectors - energy transition and EVs.
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