Thursday , October 28 2021

States need to scale up infra spending to Rs 110 lakh crore over next decade: Crisil

In order to achieve India’s massive infrastructure targets, Credit ratings agency Crisil, in its ‘Infrastructure Yearbook 2019’ has said that states need to scale up Infrastructure spending to Rs 110 lakh crore over the next decade starting FY21 from an estimated Rs 32 lakh crore in the current decade. It noted that states already account for 41 percent of the overall infrastructure spending of Rs 77 lakh crore this decade.

According to the report, for the country-wide infrastructure, required spending will be Rs 235 lakh crore over the next decade, and called for average gross domestic product (GDP) growth of 7.5 percent and infrastructure spending of above 6 percent of GDP to help achieve this. It pointed out that five sectors – transport, irrigation, energy, urban & housing, and water & sanitation – accounted for two-thirds of states’ spending. It added that some of these sectors, which come under the purview of states, have burgeoning infrastructure deficits, and need big investment leaps to plug the gaps.

Ratings agency further stated that unless states contribute nearly 50 percent of infrastructure investments, India’s build-out momentum could taper sharply. It also said that with private investments tepid in recent years, and fiscal limitations on central spending, states have been keeping public spending going. It noted that they will need to strengthen fiscal health and build institutional capacity to sustain far higher levels of capex. It added that the spending trajectory of 15 large states, which accounted for 83 percent of infrastructure capex during fiscals 2015-2019, will be crucial to the overall goal.

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