Vinayak Chatterjee: Union Budget: The infrastructure story

The 46 per cent allocation for infrastructure in the Budget is noteworthy. More important is the doubling of outlay in three years

On February 26, even before the dust had settled in Parliament, media headlines screamed: “46 per cent of outlays for infrastructure.” Based on this headline, commentators, for the next few days, mouthed the common refrain that this Budget was truly weighted towards infrastructure development, and that it marked an epochal shift. Was it?

While the dust was settling, Bidisha Ganguly, economic research head, the Confederation of Indian Industry (CII), made a quick dive for relevant statistics and came up with a few home truths. There evidently is no epochal shift on the 46 per cent of Plan allocation. Infrastructure allocations had touched a high of 48.6 per cent in 2005-06.

But yes, there has been a staggering increase of Rs 0.87 lakh crore for infrastructure, from Rs 0.86 lakh crore in 2007-08 (the first year of the 11th Five Year Plan) to Rs 1.73 lakh crore in 2010-11. This clearly underscores the UPA government’s commitment to put its money where its mouth is. To understand the scale, note that this increase of Rs 0.87 lakh crore is equal to what is currently earmarked for paying salaries and other current expenses of the three armed forces of India.

Rural development and infrastructure have clearly been the thrust areas of the UPA’s governance plank. The steep rise in allocations for infrastructure in recent years is clear.
 

ALLOCATIONS FOR INFRA IN THE UNION BUDGET
Year	Infrastructure allocation  (Rs lakh crore)	As % of  Plan allocation
2001 - 02	0.34	33.9
2002 - 03	0.36	31.8
2003 - 04	0.54	44.9
2004 - 05	0.6	41.5
2005 - 06	0.7	48.6
2006 - 07	0.81	46.9
2007 - 08	0.86	41.9
2008 - 09	0.97	39.8
2009 - 10	1.55	47.7
2010 - 11	1.73	46.5

A few perspectives on this are in order:
Perspective one: The total size of the Union Budget is Rs 11.09 lakh crore. The infrastructure allocation is thus 16 per cent of the Union Budget.

Perspective two: The Union Budget is split between non-Plan and Plan expenditures. An amount of Rs 7.36 lakh crore has been allocated towards the non-Plan expenditure and Rs 3.73 lakh crore are allocated towards the Plan expenditure. Infrastructure development falls into the Plan expenditure category.

Perspective three: Of the Rs 3.73 lakh crore of Plan expenditure, the infrastructure allocation is Rs 1.73 lakh crore. This is the 46 per cent of Plan allocation that is being applauded.

The question then is: What is this Rs 1.73 lakh crore, or 46 per cent, composed of.
 

OUTLAYS FOR INFRA UNDER PLAN EXPENDITURE
(Rs crore)	2007-08	2008-09	2009-10	2010-11
Central Plan Outlay (Budget Support) on Infrastructure (including others)	66,991	74,760	1,20,946	1,37,485
Ministry of Civil Aviation	200	190	190	2,000
Ministry of Communication and IT	2,115	2,655	3,581	5,320
Ministry of Housing and Urban Poverty Alleviation	500	850	850	1,000
Ministry of Power	5,483	6,000	9,230	10,630
Ministry of Road Transport and Highways	12,499	13,450	15,450	18,000
Department of Rural Development	27,500	31,500	62,670	66,100
Department of Drinking Water Supply	7,560	8,500	9,200	10,580
Ministry of Urban Development	2,300	2,500	3,060	5,400
Railways	6,886	7,100	14,600	15,875
Central Assistance for States and UTs  on Infrastructure (including others)	19,010	22,084	34,187	36,069
MPs Local Area Development Scheme	1,580	1,580	1,580	1,580
Accelerated Irrigation Benefit Programme  and other water source programmes	3,580	5,550	9,700	11,500
Roads & Bridges	1,512	1,606	1,989	1,819
Backward Region Grant Fund	5,800	5,800	5,800	7,300
JNNURM	4,988	6,248	11,619	11,619
Annual cap