Budget 2023 to increase capex for infra projects for growth: Experts

From giving a boost to capex spending for the infrastructure sector to focusing on urban development schemes, here are the expectations of the experts for infrastructure sector from Union Budget 2023

Union Budget 2023 will increase capital expenditure for infrastructure by 25-30 per cent as it spends on highways, railways, and digital infrastructure, experts have said.

The government’s infrastructure focus will continue, as such spending has a multiplier effect on overall economic growth. FY24 budgetary allocation for roads and highways is likely to increase by 12-15 per cent and for railways, it will rise by 30 per cent, said Mehul Pandya, managing director and chief executive officer of CareEdge (CEO), a rating and advisory group.

The last Budget focused on high-impact areas and increased capex outlay by 35.4 per cent (from Rs 5.54 trillion to Rs 7.50 trillion in FY 2022-23) and that investment is likely to strongly augment infrastructure spending, according to a report by EY.

The last Budget announced a public-private-partnership (PPP) model and its GatiShakti National Masterplan was at the centre stage with respect to the efforts augmenting national infrastructure, according to a KPMG report. 

Here's a look at what experts expect from Budget for infrastructure:

Capex for infra sector

According to a survey by CareEdge titled, 'CareEdge Survey Findings and Expectations From the Union Budget 2023-24', the infrastructure sector is likely to be among focus areas of spending this year. The survey said capex (spending?) for FY24 is likely to be between Rs 7.5-8.5 trillion.

"Continued budgetary push to the infrastructure sectors is critical to realise India's vaunted ambition of sustaining and enhancing its high growth rate relative to other major economies," said Jagannarayan Padmanabhan, director--consulting, CRISIL Market Intelligence & Analytics.

"This budget, the allocation for all the ministries involved in infrastructure creation is expected to be similar to the last one or slightly higher (in absolute terms)," he said.

Arindam Guha, Partner, leader--Government & Public Services, Deloitte India, said the actual capex during April’ 22 and September’22, was over 50 per cent of the budgeted capex for 2022-23, with the spend in certain sectors like Railways being close to the annual budgeted amount. 

"In the forthcoming budget 2023-24, while the per cent increase in budgeted capex may not be as high as last year’s budget, we do expect to see a continued uptrend in capex," said Guha.

Urban development schemes

According to a report by LiveMint, India has been witnessing a renewed emphasis on urban development in the last few years, especially since the roll-out of several centrally sponsored schemes such as PMAY-Urban, Metro Rail & RRTS, Smart Cities Mission, Swachh Bharat Mission, AMRUT Mission, DAY-NULM. The upcoming Budget is expected to take this momentum forward.

Abhaya K Agarwal, national leader, Government, and Public sector Infrastructure at EY India, said national highways will get a huge share in terms of allocation, as the last Budget had announced ambitious projects.

"It is anticipated that highways may get a hike of 20-30 per cent as compared to its previous share in capital expenditure. In terms of urban infrastructure, ‘Smart Cities Mission’ may not get a major boost owing to the inadequate implementation of the mission projects in the past," said Agarwal.

Guha said: "Urban Rejuvenation Mission: AMRUT and Smart Cities Mission, National Highways as well as Railways are likely to get a higher share of investments since they fall under the government's jurisdiction and have demonstrated the capacity to conceptualize and implement capital projects. While Urban Infrastructure does have a significant requirement, it falls under the administrative jurisdiction of State (and even city) governments where the capacity to implement large capital projects and providing matching financial contribution has often been a constraint."