India's high growth imperative in 2023 and beyond will primarily be driven by major strides in key sectors, with infrastructure development being a critical force leading to economic progress. To achieve a US$ 26 trillion economy, infrastructure investments and ease of doing business initiatives will play a pivotal role. Prime Minister Narendra Modi has emphasized the importance of infrastructure as a crucial pillar for good governance across sectors.
The government has launched the US$ 1.3 trillion national master plan for infrastructure, Gati Shakti, to bring about systemic and effective reforms in the sector. Infrastructure development is vital for India's economic growth and includes power, bridges, dams, roads, and urban infrastructure. It acts as a catalyst for the growth of allied sectors like townships, housing, and construction projects.
In Budget 2023-24, capital investment outlay for infrastructure is being increased by 33% to Rs.10 lakh crore (US$ 122 billion), which would be 3.3% of GDP. The National Infrastructure Pipeline (NIP) includes 9,142 projects across 34 sub-sectors with an estimated investment of US$ 1.9 trillion. The transportation sector and roads and bridges sub-sector account for a significant number of under-development projects.
India's logistics market is estimated to reach US$ 556.97 billion by 2027, growing at a CAGR of 6.28%. The country aims to reduce logistics cost from 14% to 8% of GDP, leading to a reduction of approximately 40% within the next five years. Investments in airports, metro networks, and urban freight are also expected to drive growth in the infrastructure sector.
The government has introduced various initiatives to boost the infrastructure sector. Under Budget 2023-24, there is a focus on increasing capital investment outlay, enhancing private investment in infrastructure, and providing interest-free loans to state governments. Additionally, there are plans for new transport infrastructure projects, airports, and urban infrastructure development funds.
Investments from foreign entities, public-private partnerships, and government allocations have contributed to the growth of the infrastructure sector. Several infrastructure projects, including those related to roads, railways, and airports, have been initiated or are under development.
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