2022 budget may see additional allocation in infrastructure sector: Experts
The 2021-2022 budget had paved the way for infrastructure with a substantial allocation of Rs5.54 lakh cr (35% increase in capital expenditure year-on-year) and the sector was also named as one of the 6 pillars for drive India’s next phase of growth.
This year’s budget is expected to continue its momentum with a further increase in the allowance given the multiplier benefits that can boost jobs and economic development, experts say.
More details are expected on the planning for project implementation under Gati Shakti and mechanisms to accelerate progress under the National Infrastructure Pipeline (NIP). To date, approximately 50% of projects under the NIP have been awarded and 5% are complete.
“The upcoming budget could be a great opportunity to announce India’s plans for climate change adaptation and resilient infrastructure. Many countries, including the United States, for example, have developed plans in more than 20 federal agencies to ensure that facilities and operations become more resilient to climate change and have allocated substantial capital in this direction in the framework of the Infra Bill,” said Suresh Subudhi, Managing Director. and Senior Partner, BCG and Yashi Tandon, Senior Knowledge Analyst, BCG.
Meanwhile, Amit Kapur, Co-Manager, J Sagar Associates (JSA) said to actualize the ambitious targets set for investment and job creation through the National Infrastructure Pipeline, overcome the challenges posed by COVID, the Union budget to define a clear policy track for the development of infrastructures covering
1. Create a facilitating environment through the effective implementation of the recommendations of the Kelkar Committee on the revival of PPPs in particular
• Establish 3PI to provide a robust tendering process, fair contract design, and contract management and enforcement.
• Resolve credit risk for payments by SOEs and provide for the risks of changing laws (such as climate change and environmental protection laws, tax laws) and force majeure.
• Implement the Specific Relief (Amendment) Act 2018 by creating special tribunals for the expedited resolution of disputes in PPP projects.
2. Foster energy transition through climate change by establishing carbon markets, ancillary service markets that would finance climate transition by pricing the positive externalities of EVs, battery storage and grid stability.
3. Secure cheaper long-term financing for infrastructure assets by easing investment restrictions through IRDA, PFRDA, Sovereign Wealth Funds, financing and strengthening the National Bank for the financing of infrastructure and development, by establishing a robust bond market
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