'Budget must spur private sector spending on infra'

Experts want to see incentives extended to the sector in the form of sops and tax breaks

- N Madhavan

In the last seven years, between 2016-17 and 2023-24, the allocation for infrastructure in the Union budget has quadrupled from ₹2.47 trillion to 10 trillion. As a proportion of GDP, it more than doubled from 1.6% to 3.4%.

Now, with all eyes on the 1 February interim budget, experts say the government must renew its focus on infrastructure spending, but with a twist this time around: the budget, they say, should include proposals that will boost private sector investment.

They want to see incentives by way of sops and tax breaks.

The focus on infrastructure spending began post-pandemic. With the engines of economic growth-private investment, public consumption and exports-having ground to a halt, the government opted to revive growth through a large dose of public capital expenditure.

The government also hoped public spending will, in turn, catalyze dormant private investment. It has achieved the first objective, but had less success with the second.

Economic growth has revived and has gathered pace. In the first quarter of 2023-24, GDP growth was 7.8% and in the second quarter 7.6%. The government has estimated 2023-24 growth at 7.3% after hitting 7.2% in 2022-23.