Infrastructure woes

Redistributive schemes take their toll on allocation

The first National Democratic Alliance government, under Atal Bihari Vajpayee, gave infrastructure development priority and treated it as the most important engine of economic growth and job creation in the country. Under Prime Minister Narendra Modi too this focus has stayed, as reflected in allocations in the last four Budgets. In this year’s interim Budget, however, the central focus was on reaching out to the disadvantaged sections of society. To a great extent, the government’s Budget priorities mirrored the electoral pressures as well as the populist tone across political parties in the run-up to the elections. That is why the focus was on the direct income support for small and marginal farmers, the pension scheme for unorganised sector workers, and the income tax rebate to those earning up to Rs 5 lakh annually. On the whole, it appears the government has had to rationalise its resources and cut its budgetary allocations to infrastructure development in order to accommodate the additional expenditure on account of schemes such as PM-KISAN and income tax rebate.

That does not mean that Finance Minister Piyush Goyal did not showcase what all have been achieved by the government in the past five years. In particular, he singled out the success of the UDAN (Ude Desh ka Aam Nagrik) scheme, which has resulted in the number of operational airports crossing 100. As a result, domestic passenger traffic has doubled during the last five years. He also pointed out the success of the Indian Railways in safety. A big aspect of that success story is the fact that all unmanned level crossings on the broad gauge network have been eliminated. These changes have meant fast connectivity to those parts of the country that were difficult to access in the past. For example, Arunachal Pradesh is now on the air map and states such as Meghalaya and Mizoram now figure on India’s rail map for the first time. Another first was the movement of the first freight container from Kolkata to Varanasi, using inland waterways. On the roads and railways front, too, there is much to cheer when one looks back. With 27 km of highways being built each day (the pace has increased in recent months), India is the fastest highway developer in the world.

Despite these successes, the interim Budget has been disappointing on this front; it’s clear politically guided redistributive schemes have taken their toll on this sector’s allocation. As such, even though the railways has received its highest ever capital expenditure (capex) of Rs 1.58 trillion, including an all-time high budgetary support of Rs 64,587 crore, the road and aviation sectors were not that lucky. For instance, the government has reduced its budgetary support to the National Highways Authority of India (NHAI) by over Rs 631 crore. As a result, the NHAI would have to now gear up for higher fundraising through borrowing and monetising road assets. Similarly, budgetary support for Sagarmala, the flagship scheme for reducing logistic costs along the coastal areas, is down to Rs 550 crore in FY20 after the government could spend only Rs 381 crore in FY19 despite a Budget allocation of Rs 600 crore.