With the formulation of the NLP (National Logistics Policy) in place and the Gati Shakti Mission gaining momentum, stakeholders in the urban infrastructure sector will be following announcements related to the financial schemes and policy reforms in the upcoming Union Budget for 2023-2024. The government’s proposed National Monetisation pipeline has been moving slowly and required a special financing mechanism. According to a report, as against the goal of Rs.1.62 lakh crore in revenues and investment in 2023-23, the government is expected to experience a shortfall of approx Rs. 50,000 crore. The pipeline’s earnings will be used to fund the construction of new infrastructure. As such, the sector anticipates financing schemes that will seek to maintain the pace of Infrastructure development.
The government’s proposed National Monetisation pipeline has been moving slowly and required a special financing mechanism
Last year in April, the Ministry of Finance announced the “Scheme for Special Assistance to the States for Capital Investment for 2022-2023” for the states with a total amount of Rs.1 Lakh crore in the form of an interest-free loan for 50 years for capital investments. Out of the Rs. 1 lakh crore, Rs.5000 crore was dedicated to Gati Shakti Mission-focused multimodal connectivity and infrastructure Projects. The scheme was launched in 2020-21.
As per the scheme, while the allocation for PM Gati Shakti Mission-focused projects is limited to Rs.5000 crores out of Rs.1 lakh crore, an additional amount from savings under other parts of the scheme may also be reallocated to these projects based on the response of states and the use of the fund. Stakeholders will pay attention if the scheme is extended with modifications.
The pipeline’s earnings will be used to fund the construction of new infrastructure
Arindam Guha, Partner and leader, of Government & Public Services, at Deloitte India, has called for the establishment of a dedicated asset monetization fund at the central and state level and operationalising single window credit guarantee facilities despite the slowdown in the asset monetization process. He said the proposed structure will enable the state governments to raise additional resources for their infrastructure investments both through funds from private and not-for-profit investors and higher returns through effective investments.
Vice President and Sector Head of ICRA, Abhishek Gupta said They expect the Union Budget 2023-2024 to increase focus on urban infrastructure with increased allocation towards urban transportation (Metro/ Mass Rapid Transit System), water, supply, sewage management, and sanitation. Amrut 2.0 and Swachh Bharat Mission Urban 2.0 were introduced in Fiscal Year (FY) 2022 with respective indicative total outlays of Rs. 2 lakh crore and Rs. 1.4 lakh crore, Over the next 5 years till FY 2026.