Infrastructure Sector Analysis Budget 2023
Infrastructure Sector Analysis Budget 2023
The roadmap for budget 2023 has been announced by the government in India. The projected expenditure on infrastructure at the central level is estimated at Rs. 21,484 crores for the first year of the new government. The main source of funds, taxation would be ignored and based on loans raised from state governments, which could pay interest on their part to the federal government.Why is the infrastructure budget important?The infrastructure sector is crucial to the economy of any nation. Infrastructure is the physical, technical, and social systems that enable people to use their resources effectively and efficiently.
The infrastructure sector is a key driver of economic growth, employment creation, human development, poverty reduction, and reduction in inequality. Infrastructure is essential for economic development as it provides services such as water supply and sanitation, energy supply, transport, communication, and information technology.The sector has been identified by the World Economic Forum (WEF) as one of the most important areas in which to focus further investment efforts in order to reduce global poverty.Changes in allocation for infrastructure sectors for Budget 2023 The budget for the infrastructure sector in 2023 is $1.4 billion. This is a decrease from the $1.8 billion budgeted for 2020. The Government's spending on infrastructure has increased by over 50% since 2016, from $3 billion to $5 billion per year by 2021/22. This increase was expected as part of the long-term plan for infrastructure investment set out in the 2017–18 Budget, which outlined ambitious targets for investment in transport, water, and digital connectivity over the next decade. In order to meet these targets, funding would need to increase by around 5% per year over the next five years (2021/22–2026/27). The budget for the infrastructure sector in 2023 is Rs 1, 38,000 crores. The government has allocated Rs 50,000 crore for the construction of roads, bridges, and highways.
The Ministry of Road Transport & Highways (MoRTH) has also been allocated Rs 30,000 crore for laying down new roads and widening existing ones. The MoRTH has been given an additional allocation of Rs 15,000 crore to build roads that will connect remote areas in the country with cities and towns. A total of Rs 10,000 crore has been earmarked for building new railway lines under the Bharatmala Pariyojana scheme.
Under the Pradhan Mantri Gram Sadak Yojana program, the government will spend Rs 4,700 crore to provide basic amenities like water supply and electricity to more than 40 million households by 2022. If we look at the global infrastructure sector, it is estimated that by 2023, it will be worth $4.4 trillion. This is an increase of about 4% on the current value but this does not include any potential growth over the next five years. The figure also includes investment in transport infrastructure which accounts for 40% of all investments made in this sector. The total value of infrastructure projects across all countries is expected to reach $3 trillion by 2023 according to data from The World Bank Group.
In terms of raw materials, steel is the most expensive when it comes to infrastructure projects with a cost per ton of $7,500; concrete comes in second at $6,300 per ton while iron ore ranks third at $5,400 per ton. The budget 2023 has been prepared to keep in mind that it should be a balanced budget with an emphasis on social security, health care, and education. We have taken into consideration all the social needs so that we can provide for them through additional funds. We have also given special attention to increasing our exports which will help us in reducing our trade deficit and foreign debt which is currently over $400 billion dollars.
The government has also set aside Rs. 1,00,000 crore for the railway network expansion project which is expected to cost Rs. 6,000 crores annually over a period of five years beginning from 2023-2024. The government plans to expand railway tracks by adding another 110 km along with laying new rail tracks between Mumbai and Delhi via Jhajjar and Amritsar besides doubling railway lines in Mumbai (Mahim), Pune (Pimpri), Chennai (Tambaram), and Hyderabad (Secunderabad).In 2023-24, it plans to spend Rs 3 lakh crore on rural roads and Rs 1 lakh crore on urban roads. To improve road quality across the country, the government will spend Rs 1 lakh crore on building new highways in rural areas and Rs 60,000 crore on developing existing highways over five years beginning in 2023-24.
It is clear that there is an urgent need for the government to provide a comprehensive and coordinated strategy for the development of infrastructure in the country. This concern will hopefully be at the top of their agenda as they plan for the 2023 budget.
Compiled By:
Dr Neha Arora, Associate Professor, Department of Mgmt. and Commerce
Dr Shikha Patheja, Associate Professor, Department of Mgmt. and Commerce
Ms Kirti Tanwar, Assistant Professor,Department of Mgmt. and Commerce
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Disclaimer
The information or content mentioned in the blog is only for reference purposes and based on the information publicly available as on the date of publication. The authors take no responsibility for its reliability and accuracy. It is advised to take appropriate legal/professional advice before undertaking any business activity or otherwise based on the above.
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The information or content mentioned in the blog is only for reference purposes and based on the information publicly available as on the date of publication. The authors take no responsibility for its reliability and accuracy. It is advised to take appropriate legal/professional advice before undertaking any business activity or otherwise based on the above.
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