India's improved 1.7% spend on logistics to set stage for US$ 5 trillion economy

This year, India will spend a staggering 1.7% of its gross domestic product (GDP) on transportation infrastructure, which is roughly twice the amount spent in the United States and most of Europe. The Economist praised this feat as an ‘eye-watering’ improvement that will pave the way for a US$ 5 trillion economy.

The Government has increased the capital outlay on infrastructure to US$ 122 billion for the fiscal year starting April as it aims to strongly boost economic activity and create jobs in the midst of a worldwide slowdown. The government has allocated US$ 29 billion (Rs. 2.4 lakh crore) for capital expenditures on railways, which is nine times more than it did in the fiscal year 2013-14, according to the official statistics. The money will primarily be used for railway construction, the purchase of new coaches, electrification, and the improvement of station facilities.

The amount allotted for roadways has increased 36% to US$ 33 billion (Rs. 2.7 lakh crores) for 2023-24. For better regional air connectivity, there is also an emphasis on revitalising 50 additional airports, heliports, water aerodromes, and advanced landing grounds. For last- and first-mile connectivity for the ports, coal, steel, fertiliser, and food grains sectors, where it plans to increase investments, the government has identified 100 key transport infrastructure projects.

Road and rail will make up nearly 11% of central government capital expenditure in the fiscal year beginning in April, up from 2.7% in 2014-15.

The Vande Bharat Express, the nation’s first domestically designed and constructed high-speed train, two new freight corridors between Punjab and West Bengal and between Mumbai and Delhi, electrified tracks to allow for the faster movement of goods, more airports, increased electricity production, and deeper penetration of broadband internet are among the major infrastructure investments.

In the last eight years, India has added 50,000 km of new national roadway, which is twice as much as it did in the eight years prior. The network of country roads will be longer in 2023 than it was in 2014, at 7,29,000 km. Moreover, the electricity generation capacity has jumped by 22% and the broadband connections have jumped from 61 million in 2014 to 816 in 2022.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.