Business Standard

Modest allocation hike for rail, road

- DHRUVAKSH SAHA New Delhi, 1 February

Finance Minister Nirmala Sitharaman announced a 16.9 per cent increase (against Revised Estimates) in infrastruc­ture spending to ~11.11 trillion for the financial year 2024-25 (FY25) in the Interim Budget on Thursday. This is 11.1 per cent higher than the Budget Estimates for FY24, as the Centre is expected to fall short of its FY24 infrastruc­ture spending target of ~10 trillion by over ~50,000 crore.

Legacy infrastruc­ture sectors, which have been doing the heavy lifting for the Centre in postcovid Budgets, saw a moderate increase in their allocation­s.

The Ministry of Road Transport and Highways has been allocated capital expenditur­e of ~2.72 trillion in the upcoming financial year, which is merely 2.9 per cent higher than FY24 RE (revised estimates).

Similarly, the Ministry of Railways has also seen a moderate rise. The budgetary allocation for capital expenditur­e for railways increased by 5 per cent for FY25 at ~2.52 trillion. The total infrastruc­ture budget for railways increased by 2 per cent at ~2.65 trillion.

In a continuati­on of the Centre’s debt reduction strategy for government bodies, both the National Highways Authority of India (NHAI) and Railways, through its financing arm IRFC, will not be relying on external debt in FY25.

The NHAI’S capital expenditur­e allocation for FY25 has been kept at ~1.68 trillion, which is flat when compared to the FY24 RE.

The apex highway body, last year, raised the issue of not being able to meet its highway awarding commitment­s, as the revised cost estimates for the Centre’s flagship highway programme Bharatmala Pariyojana have not been approved. The increase in capital expenditur­e has received mixed reactions from the industry, as many had expected the infrastruc­ture budget to grow higher.

Jagannaray­an Padmanabha­n, Senior Director & Global Head, Transport, Mobility and Logistics, Consulting, CRISIL Market Intelligen­ce and Analytics said, “After two years of high double-digit capex allocation for the infrastruc­ture sector, the pause button seems to have been pressed.”

The finance minister also highlighte­d the strategic importance of the India-middle East Corridor, which was announced

at the G20 summit last year.

“The recently announced India-middle East-europe Economic Corridor is a strategic and economic game changer for India and others. In the words of the Prime Minister, the corridor will become the basis of world trade for hundreds of years to come, and history will remember that this corridor was initiated on Indian soil,” the finance

minister said.

Meanwhile, ahead of the Lok Sabha elections, the minister also announced her intent to give an impetus to mass transit modes such as metro and rapid rail.

The finance minister also said that the expansion of existing airports and developmen­t of new airports will continue expeditiou­sly, citing India’s growing aviation sector.

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