The tapering economic growth rate over the past seven quarters and the recent developments in the political landscape has raised a question on the fate of big ticket projects. Although the year started with a renewed focus on infrastructure spending with the government allocating more than 48% of the total planned expenditure in the 2011-12 budget, many of the new projects could not take off due to delays in approval and decision making. New project launches have dropped by 32% in 2011-12 as compared to the previous year. Even the growth rate of core industries which contribute significantly to the infrastructure sector has slowed down to 4.4% for the first nine months of 2011-12 against 5.7% growth achieved in the corresponding period of previous year.  

It is quite evident from the previous experience of the country that in order to sustain a healthy GDP growth rate, equivalent investment in infrastructure is required. In the last budget the government announced tax rebate under 80CCF for investments in infrastructure bonds. This has helped institutions such as NHAI, REC and others to raise large amount of funds from public for infrastructure investment during the year and hopefully this tempo continues for the coming year too. The budget should continue to focus on other such fiscal incentives which help in increasing the infrastructure spending in the country. 

Rising urbanization and migration to cities is inevitable and this has resulted in an urgent need for revamping the existing urban infrastructure in most of the Indian cities. Therefore, a roadmap to address the challenges of rising urbanization is required. This roadmap should focus on enhancing connectivity and developing infrastructure as also establishing an authority to safeguard the rights of the consumer. Strategic partnership similar to the one witnessed in the case of Delhi Mumbai Industrial Corridor (DMIC) should be initiated on several other such infrastructure projects that are dying for government attention.

If the country has to bounce back to the higher rates of growth to accelerate poverty alleviation, it is important that the budget as a statement of intent expresses the long term game plan for infrastructure improvement in the economy and through that process stepping up the country’s economic development.
 
The author is Vice Chairman & Managing Director, Knight Frank India