Elections, manifestos, and the infra agenda

A review of the election manifestos of the leading political parties prior to the 2014 and 2019 general elections makes for interesting reading.

These manifestos were critiqued by this columnist in the Infratalk of April 9, 2014 ("The Manifesto Route to Nation-building"), and April 17, 2019 ("The Infra Quotient in Manifestos"). But this is not the occasion to look at the rear-view mirror; rather let's focus on the road ahead through the windscreen of infra-sector requirements.

The most important issue is to clearly recognise the resources the nation would need to invest over the next five years. To address that issue, three fundamental public expenditure tenets need to be understood, and accepted.

One, during a post-Budget interactions in February 2023, a very senior finance ministry official revealed on national television that the government possessed confidential data indicating that every 1 rupee spent on infrastructure resulted in 3 rupees of gross domestic product (GDP), whereas 1 rupee spent on any kind of direct benefit transfer (DBT) resulted in an addition of 90 paisa to GDP. Thus, the case for continuing large dollops of public expenditure on infra capex to pump-prime the economy must necessarily continue to be part of the core economic strategy.

Two, it is now widely accepted by mainstream political parties that India's target for investments in infrastructure, or gross capital formation in infrastructure (GCFI), should be at levels of 8 per cent of GDP.