India’s spend of 1.7% of GDP on Logistics to set stage for $5 Trn economy

NEW DELHI : India will spend a whopping 1.7 per cent of its GDP on transport infrastructure this year — around twice the level in America and most European countries — a feat that has been noticed even by The Economist which called it ‘eye-watering’ upgrade that will set stage to achieve a USD5trillioneconomy.

Prime Minister Shri Narendra Modi’s Government has hikedcapitaloutlayoninfrastructuretoUSD122billionforthe fiscalyearstartingAprilasitlookstoprovideastrongimpetus to job creation and boost economic activity amid a global slowdown.

According to official data, the Modi Government has allocated Rs 2.4 lakh crore for railways capital expenditure, nine times higher than the amount in the financial year 2013-14. The funds will mostly be spent on building tracks, new coaches,electrification,anddevelopingfacilitiesatstations.

Allocationforroadshasjumped36%toRs2.7lakhcrorefor 2023-24. There is also the focus on reviving 50 additional airports, heliports, water aerodromes and advance landing groundsforimprovingregionalairconnectivity.

The Government has identified 100 critical transport infrastructure projects for last- and first-mile connectivity for the ports, coal, steel, fertiliser, and food grains sectors, where it intends to ramp up investments. “They will be taken up on priority with an investment of Rs 75,000 crore, including Rs 15,000 crore from private sources,” Finance Minister Smt Nirmala Sitharaman had said in her speech presenting theBudgetfor2023-24onFebruary1.

The unprecedented infrastructural makeover at such sheer scale and speed will help India fulfil its ambition to turn intoaUSD5trillioneconomyby2025-26,upfromUSD3.5trillion.

In the financial year starting in April, road and rail will account for nearly 11 per cent of Central Government capital spending,upfrom2.75percentin2014-15.

If infrastructure was a Central Government Department, it would have the third-biggest budget after the finance and Defence Ministries. The stated aim of this “generous spending” is to cut the cost of logistics within India from around14percentofGDPtodayto8percentby2030,itsaid.

India has added 50,000 km of national highway in the past eightyears,twiceasmuchasitmanagedinthepreviouseight. The length of the rural road network has increased from 3,81,000kmin2014to7,29,000kmin2023.

Over the same period, the number of airports has doubled to 148. “Modi’s faith in the transformative power of new transport infrastructure is well judged,” The Economist said. It is a precondition for the high growth that India aspires to achieve.ItisarisingtidethatwillliftallthesectionsofIndia.